VTB Group reports first quarter 2012 net income of RUB 23.3 billion (approx. US$ 793 million), compared to RUB 26.1 billion in Q1 2011.

VTB Group today publishes its Interim Condensed Consolidated Financial Statements as at 31 March 2012 with the Independent Auditors' Report on Review of these Statements.

Andrey Kostin, VTB President and Chairman of the Management Board, said: "We delivered solid results with a strong ROE of 15% for the first three months of 2012. Having grown substantially over the past few years, we are now focused on extracting value from VTB's unique franchise by optimising our asset base, further strengthening risk management policies and improving our operational efficiency. We believe these steps will help us maintain a strong position in an extremely challenging global market environment."

Income statement

– VTB Group posted a net profit of RUB 23.3 billion for 1Q 2012, versus RUB 26.1 billion in 1Q 2011. Return on equity (ROE) was a strong 15% and earnings per share were RUB 0.0022, versus an ROE of 18% and earnings per share of RUB 0.0025 in 1Q 2011.

– Key business segments - Corporate and Investment Banking (CIB) and Retail Banking both made strong contributions to the Group’s performance with profit before tax of RUB 22.6 billion and RUB 10.9 billion, respectively.

– Operating income before provisions was RUB 95.4 billion for 1Q 2012, an increase of 30.9% from RUB 72.9 billion in the same period last year.

– Net interest income before provisions reached RUB 54.0 billion, an increase of 17.4% from RUB 46.0 billion in 1Q 2011, mainly due to year-on-year growth in average interest-earning assets. Net interest margin stood at 3.8% in 1Q 2012 versus 4.8% in 1Q 2011, primarily due to an increase in the cost of interest-bearing liabilities, in line with sector-wide trends.

– Net fee and commission income increased to RUB 10.3 billion in 1Q 2012, up 28.8% from RUB 8.0 billion in 1Q 2011. This growth was primarily driven by the Group’s Retail Banking and Transaction Banking businesses, which delivered net fee and commission income of RUB 6.3 billion and RUB 3.5 billion, up year-on-year 65.8% and 25.0%, respectively.

– The net result from financial instruments amounted to RUB 4.0 billion in 1Q 2012 as compared to RUB 9.7 billion in 1Q 2011; the net result arising from foreign currencies amounted to RUB 18.8 billion in 1Q 2012 versus RUB 5.9 billion in 1Q 2011.

– The provision charge for impairment of debt financial assets amounted to RUB 20.4 billion in 1Q 2012 versus RUB 7.7 billion in 1Q 2011 - a result of more conservative countercyclical provisioning in the current economic environment. The provision charge for impairment of customer loans reached 1.7% of the average loan portfolio, up from 1.1% in the same period last year, despite an overall contraction in the Group’s non-performing loans in 1Q 2012.

– Staff costs and administrative expenses amounted to RUB 42.5 billion in 1Q 2012, an increase of 28.8% from RUB 33.0 billion in 1Q 2011 driven by the Group’s strategic acquisitions. The Group’s cost-to-income ratio was 44.5% in 1Q 2012 versus 45.3% in 1Q 2011.


Statement of financial position

– Total gross loans amounted to RUB 4,551.5 billion as of 31 March 2012, a decrease by 0.8% from RUB 4,590.1 billion at the start of the year. Loan book growth was constrained by US dollar depreciation against the rouble of c. 9% during 1Q 2012 as approximately one third of the Group’s loan portfolio was denominated in US dollars. Corporate gross loans at the end of 1Q 2012 amounted to RUB 3,690.4 billion, a decrease of 2.0% compared to RUB 3,766.0 billion at year end 2011. Retail gross loans at 31 March 2012 equalled RUB 861.1 billion, up 4.5% from RUB 824.1 billion at 31 December 2011.

– Loan book quality improved further with total NPLs decreasing by 2.6% during 1Q 2012. In the same period, the NPL ratio largely remained stable at 5.5% of total gross loans (including financial assets classified as customer loans pledged under repurchase agreements), up from 5.4% mainly due to the contraction of the Group’s loan portfolio. The NPL coverage ratio at 31 March 2012 increased to 118.4% up from 111.3% as of 31 December 2011.

– Customer deposits reached RUB 3,332.9 billion as at 31 March 2012, versus RUB 3,596.7 billion at year end 2011. Corporate deposits amounted to RUB 2,143.2 billion at the end of 1Q 2012 versus RUB 2,435.3 billion at the end of 2011. Retail deposits reached RUB 1,189.7 billion at 31 March 2012, as compared to RUB 1,161.4 billion as of 31 December 2011.

– During 1Q 2012, the Group’s capital adequacy ratios improved. The Tier 1 capital adequacy ratio (CAR) amounted to 9.6% as of 31 March 2012 versus 9.0% as of 31 December 2011, while total CAR was 13.7% as of 31 March 2012 versus 13.0% as of 31 December 2011. The Group’s 1Q 2012 total equity and capital adequacy ratios include the impact of VTB Bank’s share buyback from shareholders that participated in the Group’s 2007 IPO. Based on an estimate of the potential amount of shares to be repurchased, the Group made an accrual of liability of RUB 13.8 billion, with a corresponding entry in the relevant line in the Group’s equity.

Source: VTB Bank
Date: 05.07.2012