VTB Bank, the parent company of VTB Group (“the Group”), published its unaudited consolidated financial results in accordance with IFRS for July and 7 months of 2023.
Dmitry Pianov, Deputy Chairman of the Management Board and Chief Financial Officer of VTB Bank, said:
“In July, VTB Group repeatedly achieved robust bottom line combined with solid business growth and proactive capital management. Importantly, July’s net income does not contain significant volatile components, which reflects our consistent efforts to minimize market risk exposure.
Seven-month net profit and the solidness of our business model allow us to confirm our forecasts for record earnings in 2023 even amid a tightening operating environment due to hike in the key rate by the Bank of Russia in August”.
Business volumes grew against the backdrop of the rising demand for retail lending
As of 31 July 2023, the total loan book before provisions amounted to RUB 19.4 trillion, an increase of 12.0% since the beginning of the year (adjusted for currency revaluation, the increase was 8.5%).
Loans to individuals increased by 2.1% in July and by 11.6% since the beginning of the year to RUB 6.3 trillion. Loans to legal entities increased by 2.3% in July (adjusted for currency revaluation, lending was up by 1.4%). The cumulative increase over 7 months of the year was 12.2%, reaching RUB 13.2 trillion (adjusted for currency revaluation, the increase since the beginning of the year was 7.1%). As a result, the share of loans to individuals in the Group’s total loan book remained at 32% in 7M 2023.
As of 31 July 2023, total customer funding had increased by 12.6% to RUB 20.9 trillion (adjusted for currency revaluation, the increase was 9.3%). In July, customer funding from legal entities increased by 4.2% (adjusted for currency revaluation, funding from legal entities increased by 3.5%). Since the beginning of 2023, customer funding from legal entities rose by 13.7% to RUB 12.7 trillion. Adjusted for currency revaluation, the increase in customer funding from legal entities amounted to 10.2% in 7M 2023. Customer funding from individuals increased by 1.0% in July and by 11.0% since the beginning of the year to RUB 8.2 trillion (adjusted for currency revaluation, customer funding from individuals increased by 8.1%).
The share of customer funding in the Group’s total liabilities increased in 7M 2023 to 82.4% (up from 81.0% as of 31 December 2022).
The loans-to-deposits ratio (LDR) decreased to 87.3% as of 31 July 2023, down from 88.0% at the end of 2022.
Substantial improvement in profitability driven by a strong increase in key banking revenues and stabilisation of loan book quality
VTB Group’s net profit amounted to RUB 325.4 billion in 7M 2023 and RUB 35.6 billion in July 2023. Return on equity was 30.7% in 7M 2023 and 20.2% in July 2023, while return on assets was 2.2% in 7M2023 and 1.5% in July 2023.
Net operating income before provisions amounted to RUB 707.5 billion in 7M 2023 and RUB 87.6 billion in July 2023. Net interest income amounted to RUB 434.1 billion in 7M 2023 and RUB 66.2 billion in July 2023. Net interest margin was 3.2% in July and in 7M 2023. Net fee and commission income amounted to RUB 117.0 billion in 7M 2023 and RUB 19.3 billion in July 2023.
The Group’s cost of risk was 1.0% in 7 months and in July 2023. At the same time, the provision charge amounted to RUB 105.8 billion in 7M 2023 and RUB 13.4 billion in July 2023.
The Group’s NPL ratio amounted to 4.4% as of 31 July 2023 (4.1% as of 31 December 2022). The NPL coverage ratio remained at a high level of 142.2% as of 31 July 2023 (147.2% as of 31 December 2022).
Staff costs and administrative expenses amounted to RUB 205.3 billion in 7M 2023 and RUB 39.2 billion in July 2023. Higher profitability supported a considerable improvement in operating efficiency: the ratio of costs to operating income before loan loss provisions amounted to 29.3% in 7M 2023 and to 38.1% in July 2023.
The Bank’s capital adequacy ratios are at levels exceeding the regulatory minimums. As at 1 August 2023, the N1.0 ratio (total capital) was 9.4% (minimum allowable value — 8%), N1.1 (CET 1 capital) was 6.2% (minimum allowable value — 4.5%) and N1.2 (Tier 1 capital) was 8.8% (minimum allowable value — 6%).
Risk-weighted assets (RWA) (the denominator of the N1.0 capital adequacy ratio) increased by 13.2% to RUB 17 183.49 billion as of 1 August 2023.
