VTB Group announces IFRS results for 2Q 2018

дата09.08.2018

VTB Bank ("VTB" or "the Bank"), the parent company of VTB Group ("the Group"), today publishes its Interim Condensed Consolidated Financial Statements for the three months and first half of the year ended 30 June 2018, with the Independent Auditor’s Report on Review of these Statements. 

Andrey Kostin, VTB President and Chairman of the Management Board, said: “In the first half of 2018 VTB Group recorded strong net income of RUB 98.5 billion and delivered a sound ROE of 14%. We can also report tangible progress across all key strategic development targets. 

“We achieved robust growth in the Retail and Medium and Small businesses, while the profitability of Corporate-Investment banking improved further. This underscores the success of our continued effort to further diversify the business mix and grow our core revenues.     

“A combination of proactive cost management and synergies resulting from intragroup reorganisations, including the recent successful merger of VTB24 into VTB Bank, allowed us to keep cost growth below inflation and deliver a cost-income ratio below 40%. 

“We continued to strengthen VTB’s balance sheet and improve the funding base, further increasing the proportion of customer deposits in total liabilities to 80%, growing the share of retail deposits in total customer funding to 41%, and reducing the loans-to-deposit ratio to a conservative 95.7%.   

“In June 2018, VTB paid out dividends representing a three-times increase for holders of common shares over the previous year, while at the same time maintaining a solid capital base. We remain committed to developing the VTB franchise as a best-in-class, modern customer-oriented bank while increasing profitability and shareholder value.”

FINANCIAL AND OPERATING HIGHLIGHTS

Income Statement

RUB billion

1H2018

1H2017

Change, %

2Q 2018

2Q 2017

Change, %

Net interest income

238.1

227.1

4.8%

121.8

114.1

6.7%

Net fee and commission income

46.1

43.1

7.0%

24.2

23.4

3.4%

Operating income before provisions

316.3

276.4

14.4%

163.7

131.2

24.8%

Provision charge for credit losses and other provisions

(69.0)

(76.0)

(9.2%)

(48.3)

(30.1)

60.5%

Staff costs and administrative expenses

(124.7)

(122.6)

1.7%

(61.6)

(61.0)

1.0%

Net profit

98.5

57.9

70.1%

43.0

30.3

41.9%

  • Net profit for 1H 2018 increased by 70.1% year-on-year to RUB 98.5 billion, supported by continuous year-on-year growth in net interest income and net fee and commission income.
  • Higher lending volumes drove net interest income growth of 4.8% year-on-year to RUB 238.1 billion in 1H 2018. The net interest margin remained unchanged year-on-year at 4.1% for 1H 2018, while it grew to 4.2% in Q2 2018 versus 4.1% in Q1 2018 and 4.1% for FY 2017.
  • Net fee and commission income grew by 7.0% year-on-year to RUB 46.1 billion in 1H 2018, as VTB’s core commission-generating businesses continued to grow.
  • The cost of risk was 1.6% in 1H 2018, unchanged from 1H 2017 and 1.6% in FY 2017. The provision charge for 1H 2018 amounted to RUB 69.0 billion, down by 9.2% year-on-year.
  • The Group improved its cost efficiency in 1H 2018: the ratio of costs to operating income before provisions declined to 39.4%, compared to 44.4% for the same period a year earlier. Staff costs and administrative expenses increased by 1.7% year-on-year in 1H 2018, to RUB 124.7 billion.

Statement of financial position 

All numbers and ratios as of 30 June 2018 below are compared with corresponding numbers and ratios as at 31 March 2018 and 1 January 2018, and have been compiled in accordance with IFRS 9 and IFRS 15. All changes shown for comparative numbers and ratios also reflect the transition to IFRS 9 and IFRS 15.

RUB billion

30-Jun-18

31-Mar-18

1-Jan-18

Change in 6M 2018, % or p.p.

Change in 2Q 2018, % or p.p.

Total assets

13,683.3

13,109.4

12,947.4

5.7%

4.4%

Loans and advances to customers (gross)

10,206.2

9,952.8

9,841.1

3.7%

2.5%

Gross loans to legal entities

7,457.6

7,353.5

7,307.4

2.1%

1.4%

Gross loans to individuals

2,748.6

2,599.3

2,533.7

8.5%

5.7%

Customer deposits

9,839.2

9,333.3

9,144.7

7.6%

5.4%

Deposits from legal entities

5,775.3

5,513.9

5,523.1

4.6%

4.7%

Deposits from individuals

4,063.9

3,819.4

3,621.6

12.2%

6.4%

NPL ratio

7.6%

7.1%

6.9%

0.7 p.p.

0.5 p.p.

LDR ratio

95.7%

98.7%

99.6%

(3.9 p.p.)

(3.0 p.p.)

Tier 1 CAR

12.2%

12.7%

12.6%

(0.4 p.p.)

(0.5 p.p.)

Total CAR

13.9%

14.5%

14.4%

(0.5 p.p.)

(0.6 p.p.)

  • In 1H 2018 the Group’s loan book grew by 3.7% to RUB 10,206.2 billion as gross loans to individuals and legal entities rose by 8.5% and 2.1% in the first half of the year, respectively.
  • The Group’s NPL ratio was 7.6% of gross customer loans as of 30 June 2018, compared to 6.9% as of 1 January 2018. The allowance for loan impairments increased to 7.7% of the total loan book as of 30 June 2018, compared to 7.5% on 1 January 2018. The NPL coverage ratio was 102.3% at 30 June 2018, versus 107.9% as of 1 January 2018. In July-August 2018 the Group reached settlements on two non-performing loans, and subsequently the gross amount of non-performing loans decreased by RUB 60.7 billion to RUB 712.1 billion, or 7.0% of total gross loans. This would correspond to an NPL coverage ratio of 110.4%.
  • Customer deposits continued to grow and reached 80% of the Group’s liabilities as of 30 June 2018, while the loans-to-deposit ratio was 95.7% at the end of the first half, compared to 99.6% as of 1 January 2018.
  • The Group’s market share in Russia in corporate and retail funding stood at 22.3% and 13.9%, respectively. In 1H 2018, customer deposits grew by 7.6% to RUB 9,839.2 billion as of 30 June 2018 on the back of an increase in deposits from legal entities and individuals by 4.6% and 12.2%, respectively.
  • The Group continued to maintain a low reliance on wholesale funding, with the share of debt securities issued in total liabilities decreasing to 1.9% as of 30 June 2018, compared to 2.8% as of 1 January 2018.
  • VTB Capital delivered strong performance during the quarter, and once again led the DCM, ECM and M&A league tables in 1H 2018. VTB Capital’s research team was also rated #1 in Russia by Institutional Investor in June 2018.
  • Capital adequacy ratios remained sound following the RUB 73.5 billion dividend distribution in June 2018, with continued lending growth backed by solid profitability during 1H 2018: as of 30 June 2018, the Group’s total and Tier 1 capital adequacy ratios were 13.9% and 12.2%, respectively, versus 14.4% and 12.6% as of 1 January 2018.