VTB Group announces IFRS financial results for July and 7M 2021
VTB Bank, the parent company of VTB Group (the “Group”), today publishes its unaudited consolidated financial results in accordance with IFRS for July and the first seven months of 2021.
Dmitry Pianov, a member of the Management Board and Chief Financial Officer of VTB Bank, said:
"In July, VTB Group once again achieved excellent financial results based on strong growth in interest and transaction income and solid business growth, primarily in Retail and SME Banking.
"The cost of risk remains within our target parameters, driven by positive economic developments and a favourable operating environment.
"We continue to invest significant resources in our digital transformation while keeping costs on target.
"Our results for July and 7M affirm our guidance and establish a solid basis for successful results for the full year."
Growing business volumes amid an increase in the share of retail lending
As of 31 July 2021, the total loan book before loan loss provisions amounted to RUB 14.1 trillion, an increase of 7.2% since the beginning of the year (adjusted for currency revaluation, the increase was 7.9%).
Since the start of 2021, loans to individuals have increased by 12.6% to RUB 4.3 trillion, while lending to legal entities has increased by 5.0% to RUB 9.8 trillion over the same period (adjusted for currency revaluation, the volume of loans to legal entities increased by 6.0%).
Retail lending continued to grow at a faster pace. The share of loans to individuals in the Group’s total loan book increased to 31% as of 31 July 2021, up from 29% at the end of 2020.
As of 31 July 2021, total customer funding had increased by 16.5% to RUB 14.9 trillion (adjusted for currency revaluation, the increase was 17.2%).
Since the beginning of the year, customer funding from legal entities has increased by 26.9% to RUB 9.0 trillion on the back of strong growth in current-account balances (adjusted for currency revaluation, the increase was 27.7%). Customer funding from individuals has increased by 3.6% to RUB 5.9 trillion since the beginning of the year as a result of a substantial increase in savings-account balances along with a decrease in funds invested in term deposits (adjusted for currency revaluation, individual customer funding increased by 4.2%).
The share of customer funding in the Group’s total liabilities increased in 7M 2021 to 83.6% (up from 78.1% as of 31 December 2020).
The loans-to-deposits (LDR) ratio decreased to 88.2% as of 31 July 2021, down from 95.6% at the end of 2020.
The Group’s profitability improved significantly on the back of strong growth in core banking revenues and stable loan book quality
VTB Group’s net profit was RUB 200.9 billion in 7M 2021 and RUB 30.2 billion in July 2021, increasing 4.7x and 27.5x, respectively, year-on-year. Return on equity was 18.3% in 7M 2021 and 17.6% in July 2021, up from 4.3% and 0.8% in the respective periods of 2020.
Net interest income amounted to RUB 361.0 billion in 7M 2021 and RUB 55.0 billion in July 2021, increasing by 21.4% and 21.1% year-on-year, respectively. Net interest margin showed resilience to changes in the key rate, amounting to 3.8% in July and in 7M 2021.
Net fee and commission income amounted to RUB 98.7 billion in 7M 2021 and RUB 14.6 billion in July 2021, increasing by 35.6% and 21.7% year-on-year, respectively. The considerable increase in net fee and commission income was driven by the expansion of the Group’s transactional business and a steadily increasing volume of commissions from the sale of insurance products and commissions from the brokerage business.
The cost of risk was 0.8% both in 7M 2021 and in July 2021, down from 2.2% and 4.9% in the respective periods of 2020. At the same time, the provision charge amounted to RUB 63.5 billion for 7M 2021 and RUB 9.2 billion in July 2021, decreasing by 60.9% and 81.1% year-on-year, respectively.
The Group’s NPL ratio decreased by 90 b.p. to 4.8% as of 31 July 2021. The NPL coverage ratio was 137.3% as of 31 July 2021, up from 120.6% as of the end of 2020.
Staff costs and administrative expenses amounted to RUB 158.9 billion in 7M 2021 and RUB 23.3 billion in July 2021, increasing by 5.8% and 10.4% year-on-year, respectively, driven by a planned increase in digital transformation costs.
Higher profitability supported a considerable improvement in operating efficiency: the ratio of costs to pre-provision operating income decreased 8.1 p.p. in 7M 2021 to 33.5%.