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VTB Group results for the nine months ended 30 September 2007

 
21 December 2007

Moscow, 21 December 2007, OJSC VTB Bank announces consolidated results for the nine months ended 30 September 2007 in compliance with the International Financial Reporting Standards and publishes a complete version of its financial statements.

As of 30 September 2007, VTB Group assets increased by 41.7% from the beginning of the year and amounted to USD 74,255 million. Total loan portfolio increased by 53.3% and amounted to USD 46,345 million, while household loans were 2.2 times as much. Net interest income before provision for credit portfolio impairment increased by 46.2% against the previous year and amounted to USD 1,732 million, and net commission income posted a 56.8% rise to USD 414 million. In the reporting period, operating profit of the Group increased by 41.9% and amounted to USD 2,570 million as compared to USD 1,811 million for the 9 months ended 30 September 2006. Net profit was USD 1.051 million for the 9 months of the current year as compared to USD 816 million for the same period in 2006.

Performance highlights

Profit and Loss Account (against 9M2006):

  • Interest income increased to USD 3,643 million (+41.2%);
  • Net interest income before provision for credit portfolio impairment increased to USD 1,732 million (+46.2% or by USD 547 million);
  • Net commission income increased to USD 414 million (+56,8% or USD 150 million);
  • Consolidated net profit for 9M2007 amounted to USD 1,051 million (+28.8%), mainly owing to an increase in net interest income and net commission income.

Assets and liabilities (against 31 December 2006):

  • Total customer loan portfolio (before provision for impairment) increased by 53.3% to USD 46,345 million. Total volume household loans increased by USD 3,084 million (+121.8%) and amounted to USD 5,617 million. Household loans within total loan portfolio increased to 12% as of 30 September 2007 against 8% as of 31 December 2006. Total corporate loan portfolio increased by 47.0% and amounted to USD 40,728 million against USD 27,702 million as of the year-end 2006;
  • Total value of the securities portfolio was USD 13,985 million against USD 8,957 million (including nearly 5% of shares in EADS);
  • Customer accounts posted an increase to USD 28,923 million (+44.7%), including increased household deposits by 31.4% to USD 9,630 million;
  • Borrowings in Capital Markets (comprising outstanding debt securities, subordinated debt and other borrowings) increased by 10.5% to USD 19,011 million. Within total liabilities, such borrowings decreased from 37.9% in 2006 to 32.6%.

Complete version of financial standards is available at VTB web-site: www.vtb.ru < http://www.vtb.ru/rus/web.html?s1=6006&l=1>.

Andrey Kostin, VTB Bank Chairman and CEO, says that due to the Bank's sustained growth above average market the targets set are sure to be achieved by the current year-end.

Nikolai Tsekhomsky, Member of the Management Board, says that financial results for the 3rd Quarter have again shown that income quality continues improving due to an increase in net interest income and net commission income.

 

Interim Condensed Consolidated Balance Sheet (expressed in millions of US dollars)

As of 30 September 2007
(unaudited)

As of 31 December 2006 

Assets

Cash and short-term funds

3 297

3 581

Mandatory cash balances with central banks

1 133

648

Financial assets at fair value through profit or loss

9 583

5 120

Financial assets pledged under repurchase agreements and loaned financial assets

3 149

2 938

Due from other banks

6 452

6 813

Loans and advances to customers

45 025

29 262

Financial assets available-for-sale

1 239

888

Investments in associates

191

200

Investment securities held-to-maturity

14

11

Premises and equipment

1 566

1 422

Investment property

188

178

Intangible assets

479

455

Deferred tax asset

211

93

Other assets

1 728

794

Total assets

74 255

52 403

Liabilities

Due to other banks

9 245

7 587

Customer deposits

28 923

19 988

Other borrowed funds

5 714

4 468

Debt securities issued

12 130

11 565

Deferred tax liability

114

125

Other liabilities

1 070

509

Total liabilities before subordinated debt

57 196

44 242

Subordinated debt

1 167

1 169

Total liabilities

58 363

45 411

 

Equity

Share capital

3 084

2 500

Share premium

8 792

1 513

Treasury stock

(20)

-

Unrealised gain on financial assets available-for-sale and cash flow hedge

62

154

Currency translation difference

580

352

Premises revaluation reserve

332

341

Retained earnings

2 674

1 744

Equity attributable to shareholders of the parent

15 504

6 604

Minority interest

388

388

Total equity

15 892

6 992

 

 

Total liability and equity

74 255

52 403


 

Interim Condensed Consolidated Statements of Income (expressed in millions of US dollars)

For the three- month period ended

For the nine-month period ended

30 September

30 September

2007

2006

2007

2006

Interest income

1 408

942

3 643

2 580

Interest expense

(680)

(551)

(1 911)

(1 395)

 

Net interest income

728

391

1 732

1 185

Provision for charge for impairment

(215)

(188)

(355)

(373)

 

 

Net interest income after provision for loan impairment

513

203

1 377

812

 

 

Gains less losses arising from financial assets at fair value through profit or loss

110

88

196

174

Net gains (losses) from available-for-sale financial assets

(34)

-

(33)

119

Gains less losses arising from dealing in foreign currencies

206

48

347

48

Foreign exchange translation gains less losses

107

26

134

253

Fee and commission income

168

121

468

303

Fee and commission expense

(21)

(18)

(54)

(39)

Share in income of associates

-

8

7

13

Income arising from non-banking activities

30

23

73

61

Other operating income

14

19

55

67

Net non-interest income

580

315

1 193

999

Operating income

1 093

518

2 570

1 811

 

Staff costs and administrative expenses

(480)

(306)

(1 289)

(883)

Expenses arising from non-banking activities

(20)

(17)

(47)

(50)

Profit from disposal of associates and subsidiaries

62

56

80

56

 

 

Profit before taxation

655

251

1 314

934

 

Income tax expense

(108)

(19)

(263)

(128)

 

Profit after taxation from continued operations

547

232

1 051

806

 

Profit from discontinued operations

-

8

-

10

Profit from discontinued operations

 

Net profit

547

240

1 051

816

 

 

Net profit attributable to:

Shareholders of the parent

555

227

1 029

781

Minority interest

(8)

13

22

35


 

Interim Condensed Consolidated Statements of Cash Flows

For the nine-month period
ended 30 September

2007

2006

Cash flows from operating activities

Interest received

3 571

2 288

Interest paid

(1 871)

(1 321)

Income received on operations with financial assets at fair value through profit or loss

145

111

Income received on dealing in foreign currency

203

73

Fees and commissions received

468

303

Fees and commissions paid

(70)

(37)

Income arising from non-banking activities and other operating income received

106

128

Staff costs, administrative expenses and expenses arising from non-banking activities paid

(1 196)

(921)

Income tax paid

(265)

(206)

Cash flows from operating activities before changes in operating assets and liabilities

1 091

418

 

Net decrease (increase) in operating assets

Net (increase) decrease in mandatory cash balances with central banks

(449)

(112)

Net decrease (increase) in restricted cash

11

8

Net increase (decrease) in financial assets at fair value through profit or loss and financial

(4 655)

572

Net (decrease) increase in due from banks

557

(1 339)

Net increase in loans and advances to customers

(15 078)

(6 751)

Net increase in other assets

(895)

(380)

Net (decrease) increase in operating liabilities

Net increase in due to banks

1 423

(183)

Net increase in customer deposits

7 989

6 504

Net decrease in promissory notes and certificates of deposits issued

(576)

(430)

Net increase in other liabilities

184

130

Net cash used in operating activities

(10 398)

(1 563)

 

 

Cash flows from investing activities

Dividends received

22

27

Proceeds from sales or maturities of financial assets available-for-sale

690

616

Purchase of financial assets available-for-sale

(443)

(2 040)

Purchase of subsidiaries, net of cash acquired

(11)

(14)

Sale of disposal group held for sale

-

122

Acquisition of minority interest in subsidiaries

(50)

-

Disposal of associates

44

-

Disposal of subsidiaries, net of cash disposed

66

(16)

Purchase of associates

(10)

-

Purchase of investment securities held-to-maturity

(9)

-

Proceeds from redemption of investment securities held-to-maturity

6

2

Purchase of premises and equipment

(216)

(184)

Proceeds from sale of premises and equipment

30

32

Purchase of intangible assets

(12)

(2)

Proceeds from disposal of intangible assets

-

6

Net cash (used in) from investing activities

107

(1 451)


 

For the nine-month period
ended 30 September

 

2007

2006

Cash flows from financing activities

Dividends paid

(133)

(63)

Proceeds from issuance of RUR denominated bonds

-

659

Redemption of RUR denominated bonds

(102)

(72)

Proceeds from issuance of Eurobonds

2 524

1 248

Redemption of Eurobonds

(1 300)

(350)

Proceeds from issuance of SSD debentures (Schuldscheindarlehen)

-

254

Redemption of debentures (Schuldscheindarlehen)

(227)

(157)

Proceeds from syndicated loans

1 518

2 963

Repayment of syndicated loans

(595)

(1 210)

Proceeds from other borrowings

1 294

709

Repayment of other borrowings

(918)

(499)

Proceeds from share issue, less denominated bonds

7 842

-

Cash paid for treasury stock

(20)

-

 

 

Net cash from financing activities

9 883

3 482

 

 

 

Effect of exchange rate changes on cash and cash equivalents

135

116

 

 

 

 

Net (decrease) increase in cash and cash equivalents

(273)

584

 

 

 

 

Cash and cash equivalents at beginning of the year

3 479

2 541

 

Cash and cash equivalents at the end of the period

3 206

3 125

 

 


Some of the information in this press release may contain projections or other forward-looking statements regarding future events or future financial performance of VTB Bank (hereinafter - "VTB") and its subsidiaries (hereinafter together with VTB - "VTB Group"). Such forward-looking statements are based on a great deal of assumptions related to current and future plans of the Group in conducting its business and circumstances in which it will conduct its business in the future. We notify you that such forward-looking statements do not guarantee certain results in the future and are related to risks, uncertainty and assumptions, which cannot be predicted for sure. Therefore, our actual results and performance may differ materially from projections and forecasts made in such forward-looking statements with respect to future events. Above forward-looking statements are made as of the press release date and are subject to amendment without any notice. We do not intend to update these statements in order to bring them in line with actual results.


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