VTB Group announces IFRS results for July and 7 months of 2019


VTB Bank, the parent company of VTB Group, today publishes its unaudited consolidated IFRS results for July 2019 and the 7 months ended 31 July 2019. The P&L statement components have been compared with modified financial results for 7 months 2018 (excluding Post bank, VTB Insurance and other companies deconsolidated later on), for the purposes of accuracy of the year-on-year analysis.

Dmitry Olyunin, First Deputy President and Chairman of VTB Management Board, said: "We achieved robust growth in core business and continued to grow our market shares, especially in Retail and SME business segments. Net profit for 7M 2019 reached RUB 97.3 bn which corresponds to ROE of 11%.

“In July, the profitability metrics improved substantially, with net profit of RUB 20.5 bn (16% ROE) supported by the recovery in net interest margin and reduction of cost of risk on the backdrop of stable asset quality.

“The results of July and 7M 2019 support our guidance on full year 2019 business growth as well as net profit target of RUB 200 bn”.

In 7M and July 2019 VTB Group grew its operations and strengthened market shares.

  • Total assets amounted to RUB 15.2 trillion as of 31 July 2019, up 0.9% in July and up 2.9% year-to-date. Gross loans and advances to customers increased by 1.8% year-to-date to 11.6 trillion as of 31 July 2019 (31 December 2018: RUB 11.4 trillion) driven by an increase in retail and SME lending. Gross loans to individuals increased by 0.7% in July and by 11.1% year-to-date, while loans to legal entities decreased by 0.2% in July and by 1.5% year-to-date.
  • The Group’s market share in Russia in corporate and retail lending stood at 19.3% (+70 bps ytd) and 18.0% (+20 bps ytd), respectively.
  • Total customer deposits increased by 1.2% in July and by 4.4% year-to-date, reaching RUB 10.9 trillion as of 31 July 2019. Deposits from legal entities increased by 2.3% in July and by 2.9% year-to-date, while deposits from individuals remained practically unchanged in July and increased by 6.4% year-to-date outperforming the banking sector dynamics.
  • As of 31 July 2019 the Group’s market share in Russia in corporate and retail funding was 20.7% (+90 bps ytd) and 14.9% (flat ytd), respectively.

Bottom line supported by NIM recovery and stronger net fee and commission income.

  • Net profit was RUB 20.5 billion (up 33% y-o-y) in July 2019 and RUB 97.3 billion (down 14% y-o-y) in 7M 2019 versus net profit of RUB 15.4 billion in July 2018 and RUB 112.7 billion in 7M 2018. Since in 6M 2019 net profit was down 21% y-o-y, July trend was positive and bodes well for the full year 2019 net profit growth.
  • Net interest income was RUB 38.0 billion in July 2019 and RUB 251.6 billion in 7M 2019, down 0.6% and down 2.8% y-o-y respectively. The monetary policy easing contributed to pick-up of net interest margin after it bottomed out in the beginning of the year, to 3.4% in July 2019 and 3.3% in 7M 2019.
  • Net fee and commission income was RUB 7.6 billion in July 2019 and RUB 52.5 billion in 7M 2019, up 3.9% and up 8.4% y-o-y, respectively. The Group’s retail and SME business lines key contributors to net fee and commission income growth.

Strong asset quality led to a decrease in cost of risk and positively affected bottom line result of VTB Group.

  • Total provision charge for credit losses and other provisions amounted to RUB 5.7 billion in July 2019 and RUB 51.1 billion in 7M 2019, down 46.3% and down 28.3% y-o-y, respectively. Cost of risk was 0.5% in July 2019 and 0.8% in 7M 2019 reflecting stable loan quality across all business lines.

Cost growth driven by rollout of transformation and recent acquisitions.

  • Staff costs and administrative expenses amounted to RUB 19.2 billion in July 2019 and RUB 144.8 billion in 7M 2019, up 8.5% and up 20.2% y-o-y, respectively. The increase in staff costs and administrative expenses followed the Group’s growing investment into transformation and IT development carried out in line with the development strategy. Recent acquisitions and the subsequent consolidation of three banks (Bank Vozrozhdenie, West Siberian Commercial Bank and Sarovbusiness bank) put additional pressure on staff costs and administrative expenses. Due to higher operating revenues cost to income ratio started to improve from 1H 2019 levels and reached 38.5% in July 2019 and 45.3% in 7M 2019 (compared to 46.6% in 6M 2019).

VTB maintained balance sheet stability and increased capital adequacy levels as profitability was improving

  • In 7M 2019 the Group achieved diversified asset growth as the share of the loan portfolio in total assets remained flat at 72%.
  • Customer deposits and accounts amounted to 80% of the Group’s total liabilities as of 31 July 2019 (30 June 2019: 80%, 31 December 2018: 79%).
  • Loan-to-deposit ratio was at target level of 100% as of 31 July 2019 (30 June 2019: 102%; 31 December 2018: 103%);
  • VTB Group maintains sufficient Basel capital levels. Higher profitability supported capital adequacy in July. As of 31 July 2019, Tier 1 CAR increased by 20 bp to 12.2% (30 June 2019: 12.0%; 31 December 2018: 12.0%), and total CAR reached 13.4% (30 June 2019: 13.2%; 31 December 2018: 13.5%).