VTB Group announces IFRS results for 1Q 2019

дата30.05.2019

VTB Bank (“VTB” or “the Bank”), the parent company of VTB Group (“the Group”), today publishes its Interim Condensed Consolidated Financial Statements for the first three months ended 31 March 2019.

Andrey Kostin, VTB President and Chairman of the Management Board, said: "With net profit of RUB 46.5 billion and ROE of 12% in Q1 2019, we remain confident in our ability to deliver on our full year guidance. VTB’s core business remains strong: we brought staff costs and administrative expenses down by 3.8% year-on-year, and our Retail business continues to outperform the market both in loans and deposits, with VTB further strengthening its market shares during the quarter.

“While we continue to deliver on the main targets of our 2017-2019 strategy, VTB recently adopted its new strategy for 2019-2022, which entails a significant transformative agenda that will ultimately make VTB more profitable and better positioned to outpace the rapid changes taking place in the industry landscape, enabling us to be the bank of choice for every type of client.”

FINANCIAL AND OPERATING HIGHLIGHTS

Income Statement

RUB billion

1Q 2019

1Q 2018

Change, %

Net interest income

104.2

116.3

(10.4%)

Net fee and commission income

21.6

21.9

(1.4%)

Operating income before provisions

137.0

152.6

(10.2%)

Provision charge*

(15.2)

(20.7)

(26.6%)

Staff costs and administrative expenses

(60.7)

(63.1)

(3.8%)

Net profit

46.5

55.5

(16.2%)

*Includes provision charge for impairment of debt financial assets and provision charge for impairment of other assets, credit related commitments and legal claims.

  • Net profit for 1Q 2019 decreased by 16.2% year-on-year to RUB 46.5 billion, primarily due to lower net interest income and a 22.2% year-on-year decline in other operating income, which was partially balanced by a decline in provision charges and improvements in staff costs and administrative expenses.
  • Net interest income was 10.4% lower year-on-year at RUB 104.2 in 1Q 2019 and the net interest margin declined by 90 bp year-on-year to 3.2% for 1Q 2019. Funding costs rose by 40 bps year-on-year to 5.3% for 1Q 2019, contributing to a 24.7% year-on-year rise in interest expense (including payments to deposit insurance system), while interest income rose at a slower pace of 8.3% year-on-year as return on interest-earning assets declined by 40 bps year-on-year to 8.3%.
  • Net fee and commission income declined by 1.4% year-on-year to RUB 21.6 billion in 1Q 2019. Total fee and commission income rose by 8.4% to RUB 33.6 billion, while total fee and commission expense increased by 31.9% to RUB 12.0 billion with a significant 36% year-on-year rise in commission expenses on settlement transactions and trade finance to RUB 10.2 billion.
  • The cost of risk was just 0.5% in 1Q 2019, down from 1.7% in 4Q 2018 and 1.6% for FY 2018. This sharp improvement in CoR was driven by a 26.6% year-on-year drop in the provision charge for 1Q 2019, which amounted to RUB 15.2 billion.
  • The Group’s costs to operating income before provisions ratio was 44.3% in 1Q 2019, compared to 41.3% for 1Q 2018. Despite the higher ratio staff costs and administrative expenses declined by 3.8% year-on-year in the first quarter, to RUB 60.7 billion.

Statement of financial position

RUB billion

31-Mar-19

31-Dec-18

Change in 1Q 2019, % or bp

Total assets

14,841.8

14,760.6

0.6%

Loans and advances to customers, including pledged under repurchase agreements (gross), as reported

11,291.5

11,427.1

(1.2%)

Gross loans to legal entities

8,125.5

8,438.6

(3.7%)

Gross loans to individuals

3,166.0

2,988.5

5.9%

Customer deposits

10,149.0

10,403.7

(2.4%)

Deposits from legal entities

5,582.2

5,995.8

(6.9%)

Deposits from individuals

4,566.8

4,407.9

3.6%

NPL ratio

5.8%

5.7%

10 bps

LDR ratio

104.0%

102.8%

120 bps

Tier 1 CAR

12.3%

12.0%

30 bps

Total CAR

13.7%

13.5%

20 bps

  • In 1Q 2019 the Group’s loan book declined by 1.2% to RUB 11,291.5 billion as 5.9% growth in gross loans to individuals was balanced by a 3.7% decline in gross loans to legal entities. The Group’s market share in Russia in corporate and retail lending stood at 18.5% and 18.4%, respectively.
  • The Group’s NPL ratio was 5.8% of gross customer loans as of 31 March 2019, representing a 10 bps increase compared to 5.7% as of 31 December 2018. The allowance for loan impairment at the end of the first quarter was 6.5% of the total loan book, compared to 6.4% as of 31 December 2018. The NPL coverage ratio was unchanged during the first three months of the year, remaining at 112.0% as of 31 March 2019.
  • Customer deposits amounted to RUB 10,149.0 billion as of 31 March 2019, declining by 2.4% during the quarter and bringing customer funding to 76% of the Group’s liabilities, while the loans-to-deposit ratio rose slightly to 104.0% as of 31 March 2019, compared to 102.8% at the end of 2018.
  • Deposits from legal entities contracted by 6.9% in 1Q 2019, while deposits from individuals rose by 3.6%. The Group’s market share in Russia in corporate and retail funding stood at 19.4% and 14.8%, respectively.
  • The Group continued to maintain a low reliance on wholesale funding, with the share of debt securities issued in total liabilities at just 2.2% as of 31 March 2019, compared to 2.0% as of 31 December 2018.
  • VTB Capital continued its award-winning performance, being named by EMEA Finance Magazine as the best local investment bank in Russia, best Russian asset manager, best securitisation house in EMEA and best rouble bond house, while VTB Capital Broker was also honoured as best broker in Russia.
  • VTB maintained solid capital levels during the first quarter, with the Total and Tier 1 capital adequacy ratios amounting to 13.7% and 12.3%, respectively as of 31 March 2019, compared to 13.5% and 12.0%, respectively, as of 31 December 2018.