JSC VTB Bank (VTBR)
JSC VTB Bank:
07-Aug-2020 / 09:37 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
7 August 2020
VTB Group announces IFRS results for 2Q 2020
VTB Bank ("VTB" or "the Bank"), the parent company of VTB Group ("the
Group"), today publishes its Interim Condensed Consolidated Financial
Statements for the three months and half-year ended 30 June 2020 with the
independent auditor's report on review of these statements.
Andrey Kostin, VTB President and Chairman of the Management Board, said:
"In the first half of the year, VTB Group delivered good net operating
income performance, including impressive growth in net fee and commission
income, despite a sharp decline in business activity as a result of the
COVID-19 pandemic. Our key priority is to enhance operating efficiency and
optimise costs, and since the beginning of the year we continued to ensure
income grow faster than expenses, with costs growing at a reasonably slow
pace. Nonetheless, the sharp increase in provisions put significant pressure
on our bottom line. VTB Group's net profit for January-June 2020 came to RUB
41.9 billion, which represents a ROE of 4.9%.
"VTB Group responded to unprecedented challenges facing the economy and the
banking system with efficiency and confidence. Our strong market position
and the vast experience of our team, as well as our ongoing work to
transform our customer service and internal processes, enabled us to
maintain smooth, high-quality service in all customer segments and to
increase the penetration of digital services.
"VTB is a socially responsible company and we implemented a wide array of
support programmes for clients facing difficult situations.
"The current recovery in economic and business activity gives grounds for
cautious optimism. In the second half of the year, we will continue focusing
on enhancing the customer experience, expanding existing customer
relationships and broadening our client base while conservatively managing
risks and continuing to optimise costs."
FINANCIAL HIGHLIGHTS
RUB billion 30-Jun-2020 31-Mar-2020 1-Jan- 2020 Change Change
in 1H in 2Q
2020, % 2020, %
or pp or pp
Total assets 16,346.9 16,588.7 15,516.1 5.4% -1.5%
Loans and 11,947.2 12,058.6 11,461.5 4.2% -0.9%
advances to
customers,
including
pledged
under
repurchase
agreements
(gross)
Legal 8,347.0 8,565.4 8,096.2 3.1% -2.5%
entities
Individuals 3,600.2 3,493.2 3,365.3 7.0% 3.1%
Customer 11,852.4 11,819.7 10,974.2 8.0% 0.3%
funding
Legal 6,583.5 6,408.2 5,932.6 11.0% 2.7%
entities
Individuals 5,268.9 5,411.5 5,041.6 4.5% -2.6%
NPL ratio 5.1% 4.9% 4.7% 0.4 pp 0.2 pp
LDR ratio 94.1% 95.5% 98.2% -4.1 pp -1.4 pp
The loan book expanded by 4.2% in 1H 2020
? In the first half of 2020, the Group's total loan book grew by 4.2% to
RUB 11,947.2 billion.
? The retail portfolio grew by 7.0% in 1H 2020, driven primarily by a
10.8% increase in mortgage lending.
? As of 30 June 2020, secured loans (mortgages and car loans) accounted
for 53% of total retail lending, an increase of 1 pp from 31 March 2020
and from the beginning of the year.
? In 1H 2020, the corporate loan book grew by 3.1% to RUB 8.3 trillion.
Excluding the impact of the revaluation of loans denominated in foreign
currencies, the corporate loan book contracted by 1.0%.
? The Group's market share in Russia in corporate and retail lending was
17.0% and 18.0% (-1.2 pp and +0.6 pp for 1H 2020), respectively.
Customer funding increased by 8.0% in 1H 2020, with considerable growth in
both retail and corporate funding
? Customer funding grew by 8.0% in 1H 2020 to RUB 11,852.4 billion.
Customer funding from legal entities and individuals rose by 11.0% and
4.5%, respectively.
? Customer funding as a share of the Group's liabilities increased by 1.5
pp in 2Q 2020 to 81.0%. The loans-to-deposits ratio (LDR) was 94.1% as of
30 June 2020, compared with 95.5% as of 31 March 2020 and 98.2% as of 31
December 2019.
? The Group's market share in Russia in corporate and retail funding stood
at 20.4% (+0.2 pp since the beginning of the year) and 14.9% (-0.2 pp
since the beginning of the year), respectively.
Income statement
RUB billion 1H 2020 1H 2019 Change, % 2Q 2020 2Q 2019 Change, %
Net interest 252.0 213.6 18.0% 132.3 109.4 20.9%
income
Net fee and 52.9 44.9 17.8% 24.9 26.0 -4.2%
commission
income
Operating 290.5 269.8 7.7% 127.3 132.8 -4.1%
income
before
provisions
Provision -113.9 -45.4 150.9% -68.8 -30.2 127.8%
charge*
Staff costs -129.1 -125.6 2.8% -65.0 -64.9 0.2%
and
administrati
ve expenses
Net profit 41.9 76.8 -45.4% 2.1 30.3 -93.1%
ROE 4.9% 10.1% -5.2 pp 0.5% 7.9% -7.4 pp
*Includes provision charge for credit losses on debt financial assets,
provision charge for credit losses on credit-related commitments and other
financial assets, and provision charge for legal claims and other
commitments.
Net operating income before provisions increased 7.7% in 1H 2020
? The Group's net profit for 1H 2020 amounted to RUB 41.9 billion, a
decrease of 45.4% year-on-year as a result of growing provision charges.
? Net interest income for 1H 2020 amounted to RUB 252.0 billion, an
increase of 18.0% year-on-year due to organic business growth and a
further increase in net interest margin. Net interest margin was 3.7% in
1H 2020, up from 3.3% in 1H 2019. In 2Q 2020, net interest margin was
3.9%, up from 3.3% in 2Q 2019. Changes in the base rate for contributions
to the Mandatory Deposit Insurance Fund since the beginning of 2020 had a
positive impact on net interest margin in 2Q 2020.
? Funding costs stood at 4.0% in 1H 2020, which is a 1.3 pp year-on-year
decrease, driving a 17.2% reduction in interest expense, while interest
income declined at a slower pace of 3.4%. At the same time, the return on
interest-earning assets decreased by 0.6 pp year-on-year to 7.8%.
? Net fee and commission income increased by 17.8% year-on-year to RUB
52.9 billion in 1H 2020. The growth in net fee and commission income was
driven mainly by robust growth in commissions on trade finance and
steadily increasing commissions from the sale of insurance products.
External factors, including declining oil prices and the COVID-19 pandemic,
impact provision charges in 1H 2020
? Cost of risk increased by 0.9 pp in 1H 2020 to 1.7%. Provision charges
amounted to RUB 113.9 billion, an increase of 150.9% year-on-year. The
increase in provision charges was due to the impact of the COVID-19
pandemic on loan quality.
? The NPL ratio stood at 5.1% of gross customer loans as of 30 June 2020,
compared with 4.9% as of 31 March 2020 and 4.7% as of 31 December 2019.
The Group increased the allowance for loan impairments as a portion of the
total loan book to 6.7% as of 30 June 2020, compared with 6.4% as of 31
March 2020 and 6.0% as of 31 December 2019. The NPL coverage ratio was
131.7%, compared with 128.6% as of 31 March 2020 and 128.7% as of 31
December 2019.
VTB Group achieved further improvements in operating efficiency in 1H 2020
? Personnel and administrative expenses in 1H 2020 amounted to RUB 129.1
billion, an increase of 2.8% year-on-year. Cost increases due to the
indexation of wages in December 2019 for non-executive employees in the
regional network, the implementation of unplanned measures related to
ensuring safety and business continuity during the COVID-19 pandemic, as
well as the ongoing technological transformation programme, including an
increase in IT staff, were largely offset by ongoing cost-saving
programmes.
? The Group's key long-term priorities are improving operating efficiency
and optimising baseline costs. In 1H 2020, the costs-to-income (CIR) ratio
decreased to 44.4% from 46.6% a year earlier.
Other results
VTB remained the outright leader in investment banking
In 1H 2020, VTB Capital remained #1 in investment banking services in Russia
and the #1 M&A advisor in Russia and Eastern Europe, and it was also #1 in
debt capital markets in Russia according to Dealogic, Refinitiv and
Mergermarket.
Continued growth of VTB's investment products sales platform
? In 1H 2020, VTB Capital Investments' assets under management increased
by 35% to RUB 2.6 trillion, while the total number of clients exceeded 950
thousand. The number of retail clients using VTB Bank's brokerage services
increased by 38% to 884 thousand; 98% of brokerage accounts since the
beginning of the year have been opened online. The number of active
clients investing in the stock market has doubled since the beginning of
the year, and the value of transactions on Moscow Exchange in 1H 2020 has
already exceeded the total amount for FY 2019.
? The number of active users of the VTB My Investments mobile platform in
the first half of the year doubled to more than 350 thousand, while the
number of active users per day reached 150 thousand, with monthly
transactions of over RUB 740 billion.
? VTB Capital Investments integrated its proprietary financial management
platform into Yandex.Plus. The creation of this new service has enabled
users of the country's leading Internet resource to invest in stocks and
bonds available on the Moscow and St Petersburg stock exchanges, to
exchange foreign currencies at near-market rates, and much more.
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