VTB Group announces IFRS results for 2Q 2016
Andrey Kostin, VTB President and Chairman of the Management Board, said: “VTB’s results for the first half of the year demonstrate the steady improvement in our profitability as we continue to contribute to the recovery of the Russian economy through our retail, corporate and investment banking franchises.
“I would especially highlight the successful integration of Bank of Moscow into VTB Bank during the second quarter of this year. Meticulous preparation and hard work made the transition seamless for clients, and allowed VTB to further streamline its corporate structure and achieve business synergies.
“Post Bank continues to develop at full speed, with more than 1,000 client centres already opened in 280 cities across 59 Russian regions. This is an impressive feat for a bank that was launched only at the beginning of this year. Development of Post Bank will further broaden and enhance the reach of our retail franchise in client segments and locations.
“On the investment banking side, VTB Capital remains Russia’s strongest investment banking franchise having solely arranged Russia’s USD 1 billion sovereign Eurobond issue in May 2016.
”Looking ahead, we are in a good position to benefit as Russia returns to economic growth, with a strong balance sheet, solid capital ratios and a sharp focus on continuously improving operational efficiency.”Net profit in 1H 2016 was RUB 15.4 billion, supported by strong net interest income and solid growth of net fee and commission income on a pickup in overall business activity.
- VTB Group net interest income increased by 88.0% year-on-year to RUB 207.0 billion in 1H 2016. After the Central Bank of Russia’s key rate spike in December 2014, the easing of monetary policy throughout 2015 - 2016, combined with continued re-pricing of assets and liabilities, helped bring the net interest margin for 1H 2016 to 3.7%, up from 2.0% in 1H 2015. Net interest margin in 2Q 2016 grew to 4.0%, versus 3.4% in 1Q 2016.
- The stabilisation of business activity in Russia, combined with the strong fee-generating capabilities of the Group’s Retail business and transaction banking (as part of Corporate-Investment banking and Mid-Corporate banking), contributed to strong 12.3% year-on-year growth in net fee and commission income.
- For 1H 2016, the Group’s provision charge was RUB 102.9 billion, up 28.8% year-on-year. The Group’s cost of risk (the annualised ratio of the provision charge for loan impairment to average gross loans and advances to customers) was 1.4% in 1H 2016, compared to 1.7% in 1H 2015, the Group's cost of risk taking into account provisions for credit related commitments (the annualised ratio of the provision charge for loan impairment including provision charge for impairment of credit related commitments to average gross loans and advances to customers including average credit related commitments) was 2.0% in 1H 2016 compared to 1.6% in 1H 2015.Staff costs and administrative expenses for 1H 2016 amounted to RUB 116.3 billion, an increase of 9.9% year-on-year. The Group's annualised costs-to-average assets ratio was 1.8% for 1H 2016 versus 1.7% for 1H 2015, while the ratio of cost to operating income before provisions improved to 49.1% for 1H 2016 versus 61.9% for 1H 2015.
- The Group’s NPL ratio was 7.1% of gross customer loans, including those pledged under repurchase agreements (the “total loan book”), as of 30 June 2016, compared to 7.2% at 31 March 2016 and 6.3% as of 31 December 2015. The allowance for loan impairments was 7.4% of the total loan book as of the end of 2Q 2016, versus 7.3% on 31 March 2016 and 6.7% as of 31 December 2015. The NPL coverage ratio remained at a comfortable 103.9% at 30 June 2016, versus 102.3% as of 31 March 2016, and 105.8% as of 31 December 2015.
- Customer deposits grew by 8.1% in 1H 2016, driven by 14.3% growth in corporate deposits during the period. As of 30 June 2016, the Group’s market shares in retail and corporate deposits stood at 11.0% and 24.7%, respectively.
- The Group continued to reduce its reliance on wholesale funding, with the share of debt securities issued in total liabilities decreasing to 4.2% as of 30 June 2016, down from 4.5% as of 31 March 2016 and 5.1% as of 31 December 2015. Since the beginning of 2016, VTB and its subsidiaries made repayments on their international public debt amounting to a total of USD 2.2 billion.
- VTB maintained solid capital adequacy ratios. As of 30 June 2016, the Group’s total and Tier 1 capital adequacy ratios were 15.1% and 13.3%, respectively, versus 15.6% and 13.7% as of 31 March 2016, and 14.3% and 12.4% as of 31 December 2015.