19th May 2015 08:01
JSC VTB Bank / 1st Quarter Results 19.05.2015 08:00 Dissemination of a Regulatory Announcement, transmitted byEquityStory.RS, LLC - a company of EQS Group AG.The issuer is solely responsible for the content of this announcement.--------------------------------------------------------------------------- VTB Group announces IFRS results for 1Q 2015 19 May 2015 VTB Bank ('VTB' or 'the Bank'), the parent company of VTB Group ('theGroup'), today publishes its Interim Condensed Consolidated FinancialStatements for the three months ended 31 March 2015, with the IndependentAuditor's Report on Review of these Statements. Andrey Kostin, VTB President and Chairman of the Management Board, said:'VTB Group's first quarter results reflect the significant challenges thatthe Russian economy faced at the end of 2014 and beginning of 2015. Thesharp rise in interest rates had a detrimental effect on our margins, andthe general economic slowdown led us to continue building significantprovisions against our credit exposures. 'At the same time, the Russian economy has demonstrated notable resilienceto the adverse environment, with both our clients and VTB Group avoidingthe more pessimistic scenarios. We maintain adequate coverage ofnon-performing loans and satisfactory capital levels. We also see that therecent easing of monetary policy is contributing to improved margins andwill be supportive of the economy, as well as of VTB Group's performancegoing forward. 'VTB's business model has proved that it is strong and sustainable even inthe most challenging environment, and we remain well-positioned to offerhigh-quality products and services to our clients. We also continuefocusing on initiatives to further optimise costs and to improve theGroup's efficiency.' FINANCIAL AND OPERATING HIGHLIGHTS Statement of financial position RUB billion 31 Mar 31 Dec Change, % 2015 2014 or p.p.Total assets 12,438.3 12,190.8 2.0%Cash and short term funds 674.8 695.2 (2.9%)Loans and advances to customers, including 8,898.5 9,150.4 (2.8%)pledged under repurchase agreements (gross)Gross loans to legal entities 6,997.3 7,205.3 (2.9%)Gross loans to individuals 1,901.2 1,945.1 (2.3%)Customer deposits 6,450.5 5,669.4 13.8%Deposits from legal entities 4,226.9 3,520.3 20.1%Deposits from individuals 2,223.6 2,149.1 3.5%NPL ratio 6.4% 5.8% 0.6 p.p.Tier 1 CAR 9.7% 9.8% (0.1 p.p.)Total CAR 11.9% 12.0% (0.1 p.p.) - On the back of high interest rates and low economic activity, the Russian banking sector saw a continued slowdown in demand for loans in 1Q 2015. This trend, combined with the seasonality factor, as well as tight lending policies and approval criteria for loan applications, contributed to the contraction of the Group's loan book since the start of the year. - Loan book quality continued to develop in line with macroeconomic and banking sector trends in 1Q 2015. The NPL ratio was 6.4% of gross customer loans, including those pledged under repurchase agreements (the 'total loan book'), as of 31 March 2015, versus 5.8% as of 31 December 2014. The allowance for loan impairments reached 7.2% of the total loan book as of 31 March 2015, compared to 6.7% at the start of the year. The NPL coverage ratio remained at a conservative level of 112.0% as of 31 March 2015, versus 114.8% as of 31 December 2014. - The healthy 13.8% growth in deposits during 1Q 2015 was mainly attributable to an increase in deposits from legal entities. This drove the share of customer deposits in the Group's total liabilities up to 57.0% as of 31 March 2015, from 51.3% at the start of the year. With capital markets remaining effectively closed for Russian banks, the Group continued to reduce its reliance on wholesale funding, with the share of debt securities issued in total liabilities falling to 7.0% as of 31 March 2015, from 8.3% as of 31 December 2014. During 1Q 2015, VTB and its subsidiaries made repayments on their international public debt in the total amount of USD 2.0 billion. - Risk-weighted assets remained substantially unchanged during the first three months of the year, reaching RUB 10,073.3 billion. As a result, VTB Group maintained healthy capital adequacy ratios. As of 31 March 2015, the Group's total and Tier 1 capital adequacy ratios were 11.9% and 9.7% respectively, versus 12.0% and 9.8% as of 31 December 2014. Income Statement RUB billion 1Q 2015 1Q 2014 Change, % or p.p.Net interest income 46.1 89.9 (48.7%)Net fee and commission income 15.4 14.3 7.7%Operating income before provisions 89.5 104.7 (14.5%)Provision charge* (48.9) (48.0) 1.9%Staff costs and administrative expenses (59.2) (52.8) 12.1%Net (loss) / profit (18.3) 0.4 - *Includes provision charge for impairment of debt financial assets andprovision charge for impairment of other assets, credit related commitmentsand legal claims. - VTB Group interest income increased by 44.6% year-on-year to RUB 272.2 billion in 1Q 2015, due to an increase in the Group's interest earning assets and higher interest rates in Russia. At the same time, as the Group's liabilities continued to price in the CBR's key rate hike from December 2014, interest expense surged by 130.0% year-on-year to RUB 226.1 billion for 1Q 2015. This led to a 48.7% year-on-year reduction in net interest income to RUB 46.1 billion for 1Q 2015. These same factors also led to a decrease in the Group's net interest margin to 1.7% for 1Q 2015, versus 4.5% for 1Q 2014. - The strong fee generating capabilities of Retail business and Transaction banking (as part of Corporate-Investment banking and Mid-Corporate banking) allowed the Group to deliver 7.7% year-on-year growth in net fee and commission income, despite a slowdown in business activity in 1Q 2015. - Although the challenging economic environment in Russia continues to impact negatively the real sector of the economy, the Group's tight lending and risk management policies helped it to post a considerable quarter-on-quarter decrease in provision charges. This led to a decrease in the Group's cost of risk (annualised ratio of provision charge for loan impairment to average gross loans and advances to customers) to 2.2% in 1Q 2015, from 4.6% in 4Q 2014, and 2.8% in 1Q 2014. - Staff costs and administrative expenses were up 12.1% year-on-year in 1Q 2015, due to the larger scale of the Group's business. During the quarter, VTB Group continued to reduce its headcount and implement other cost-cutting initiatives across all geographies. The Group's annualised costs-to-average assets ratio improved to 1.9% for 1Q 2015, from 2.3% for 1Q 2014. Despite the slight contraction in its balance sheet, the Group continued to deliver consistent growth in assets per employee, which stood at RUB 125.3 million as of 31 March 2015, versus RUB 120.6 million as of 31 December 2014, and RUB 88.3 million as of 31 March 2014. KEY BUSINESS SEGMENT HIGHLIGHTS VTB Group key segments in 1Q 2015 % of the Group total* Corporate- Mid-Corporate Retail Investment banking banking businessAssets 43.3% 6.9% 20.8%Loans and advances to 61.6% 10.9% 23.6%customers (net)Customer deposits 46.7% 8.7% 40.1%Revenues from external 50.1% 9.9% 30.8%customersNet interest income 20.6% 19.6% 78.1%Net fee and commission 20.1% 21.4% 56.5%incomeProvision charge** 11.9% 26.2% 59.9%Net operating income 79.2% 1.0% 57.4%Staff costs and 27.6% 12.1% 51.1%administrative expenses *Before intersegment eliminations **Includes provision charge for impairment of debt financial assets andprovision charge for impairment of other assets, credit related commitmentsand legal claims. - Elevated funding costs and considerable provision charges put pressure on profitability across all segments. For 1Q 2015, Corporate-Investment banking (CIB) delivered RUB 10.1 billion of net profit, despite the macroeconomic headwinds. Mid-Corporate banking (MCB) and Retail business posted net losses of RUB 5.8 billion and RUB 6.0 billion, respectively. - In the Retail business VTB Group's mortgage loan portfolio was flat in 1Q 2015, as demand for this type of lending slowed in Russia. On the back of weaker real disposable incomes and consumer spending, as well as lower approval rates for the riskiest retail lending products, VTB Group's consumer loan book contracted, which was the main factor behind the decrease in total retail loans in 1Q 2015. VTB Group gross loans to individuals RUB billion 31 March 31 Dec Change, % 2015 2014Gross loans to individuals 1,901.2 1,945.1 (2.3%)Mortgage loans 799.2 795.3 0.5%Consumer loans 856.5 901.1 (4.9%)Credit cards 118.9 113.8 4.5%Car loans 119.4 129.7 (7.9%)Reverse sale and repurchase agreements and 7.2 5.2 38.5%other loans - Mortgage loans reached 42.0% of the Group's gross loans to individuals as of 31 March 2015, versus 40.9% as of 31 December 2014. The share of consumer loans and credit card loans in the portfolio was 45.1% and 6.3%, respectively, versus 46.3% and 5.9% at 31 December 2014. The share of car loans in the portfolio decreased to 6.3% as of 31 March 2015, versus 6.7% at the start of the year. - VTB Group deposits from individuals grew faster than the market average during the period, which reflects the strength of the Group's deposit-taking franchise, enhanced by VTB24's (the Group's core retail bank) strong brand and the solid deposit-taking capacity of VTB24's private banking business. - The total number of the Group's retail offices in Russia (operating under the VTB24, Bank of Moscow and Leto Bank brands) stood at more than 1,660 as of 31 March 2015. The combined number of the Group's ATMs exceeded 12,550 at the same date. - Corporate-Investment banking saw weaker demand for loans from corporate clients due to higher interest rates and subdued levels of business activity. In this environment, the CIB focused on optimising risks and preserving the quality of the Group's loan portfolio. The Group also saw a strong 20.1% increase in corporate customer deposits in 1Q 2015. CIB's net profit of RUB 10.1 billion was supported by the solid results of Transaction banking as well as by a recovery in market prices across various asset classes during 1Q 2015. - The Group's investment banking franchise, VTB Capital, maintained its status as Russia's leading investment bank, despite challenging conditions and subdued activity in the Russian capital markets, as it once again confirmed its leading position in both trading and investment banking. According to Dealogic, VTB Capital took third place in the domestic debt capital markets bookrunner ranking, and was #1 in equity capital markets in Russia and CIS in 1Q 2015. Also, in April 2015, VTB Bank Custody was recognised as the best in the Russian market in Global Custodian's 2014 client-perception survey. - Mid-Corporate banking continued to adhere to tight loan origination policies and risk management standards. For 1Q 2015, MCB posted solid fee income, increasing its share in the Group's total net fee and commission income to 21.4%, as VTB's transaction banking business continued to increase its penetration into the medium-sized client segment, in line with the Group's strategy. Contacts: Investor relations:Tel: +7 495 775 71 39Email: [email protected] VTB Bank Interim Consolidated Statement of Financial Position as at 31 March 2015(in billions of Russian roubles) 31 March 31 2015 December (unaudi- ted) 2014 AssetsCash and short-term funds 674.8 695.2Mandatory cash balances with central banks 88.7 85.5Non-derivative financial assets at fair value throughprofit or loss 291.1 275.0Derivative financial assets 351.1 407.0Financial assets, other than loans and advances tocustomers and due from other banks, pledged underrepurchase agreements 87.5 184.0Due from other banks, including pledged underrepurchase agreements 1,451.4 814.5- Due from other banks 1,345.0 740.3- Due from other banks, pledged under repurchaseagreements 106.4 74.2Loans and advances to customers, including pledgedunder repurchase agreements 8,259.7 8,537.3- Loans and advances to customers 7,830.8 8,074.7- Loans and advances to customers, pledged underrepurchase agreements 428.9 462.6Investment financial assets 154.4 132.2Investments in associates and joint ventures 98.8 96.3Assets of disposal groups held for sale 11.5 11.1Land, premises and equipment 256.4 246.9Investment property 218.5 192.3Goodwill and other intangible assets 162.2 161.8Deferred income tax asset 65.6 66.9Other assets 267.2 284.8 Total assets 12,438.9 12,190.8 LiabilitiesDue to other banks 736.8 733.2Customer deposits 6,450.5 5,669.4Derivative financial liabilities 348.6 397.8Other borrowed funds 2,386.1 2,729.2Debt securities issued 795.6 921.4Liabilities of disposal groups held for sale 7.2 4.7Deferred income tax liability 27.8 26.6Other liabilities 300.5 312.3 Total liabilities before subordinated debt 11,053.1 10,794.6Subordinated debt 272.0 265.2 Total liabilities 11,325.1 11,059.8 EquityShare capital 352.1 352.1Share premium 433.8 433.8Perpetual loan participation notes 131.5 126.6Treasury shares and bought back perpetual loanparticipation notes (6.9) (6.7)Other reserves 39.6 42.8Retained earnings 150.5 169.3 Equity attributable to shareholders of the parent 1,100.6 1,117.9 Non-controlling interests 13.2 13.1 Total equity 1,113.8 1,131.0 Total liabilities and equity 12,438.9 12,190.8 VTB Bank Interim Consolidated Income Statement for the Three Months Ended 31 March2015 (unaudited)(in billions of Russian roubles) For the three- month period ended 31 March 2015 2014 Interest income 272.2 188.2Interest expense (226.1) (98.3) Net interest income 46.1 89.9Provision charge for impairment of debt financial assets (48.4) (47.6) Net interest (expenses)/income after provision forimpairment (2.3) 42.3 Net fee and commission income 15.4 14.3 Gains net of losses / (losses net of gains) arisingfrom financial instruments at fair value through profitor loss 16.5 (4.4)(Losses net of gains) / gains less losses frominvestment financial assets available-for-sale (0.3) 0.5Gains net of losses / (losses net of gains) arisingfrom foreign currencies 17.7 (8.2)(Losses)/gains on initial recognition of financialinstruments, restructuring and other gains on loans andadvances to customers (0.9) 0.1Share in profit of associates and joint ventures 1.5 0.6Gain from disposal of subsidiaries and associates - 9.0Losses net of gains arising from extinguishment ofliabilities - (1.0)Provision charge for impairment of other assets, creditrelated commitments and legal claims (0.5) (0.4)Other operating income 4.4 3.1 Non-interest gains/(losses) 38.4 (0.7) Net insurance premiums earned 10.6 11.4Net insurance claims incurred, movement in liabilitiesto policyholders and acquisition costs (9.5) (7.8)Revenue from other non-banking activities (3.7) 7.2Cost of sales and other expenses from other non-bankingactivities (8.3) (9.5) Revenues less expenses from non-banking operations (10.9) 1.3 Impairment of goodwill - (0.5)Staff costs and administrative expenses (59.2) (52.8) Non-interest expenses (59.2) (53.3) (Loss)/profit before tax (18.6) 3.9 Income tax benefit/(expense) 1.3 (5.4) Net loss after tax (17.3) (1.5) (Loss)/profit after tax from subsidiaries acquiredexclusively with a view to resale (1.0) 1.9 Net (loss)/profit (18.3) 0.4 Net (loss)/profit attributable to:Shareholders of the parent (14.3) 2.4Non-controlling interests (4.0) (2.0) Basic and diluted earnings per share(expressed in Russian roubles per share) (0.00112) 0.00019 Basic and diluted earnings per share before profit aftertax from subsidiaries acquired exclusively with a viewto resale(expressed in Russian roubles per share) (0.00104) 0.00004 VTB Bank Interim Consolidated Statement of Comprehensive Income for the Three MonthsEnded 31 March 2015 (unaudited)(in billions of Russian roubles) For the three- month period ended 31 March 2015 2014 Net profit (18.3) 0.4 Other comprehensive income:Other comprehensive income to be reclassified to profitor loss in subsequent periods:Net result on financial assets available-for-sale, netof tax 5.7 (4.5)Cash flow hedges, net of tax (0.3) 1.0Share of other comprehensive income of associates andjoint ventures 0.4 (0.1)Effect of translation, net of tax (9.0) 6.7 Total other comprehensive income to be reclassified toprofit or loss in subsequent periods (3.2) 3.1 Other comprehensive income not to be reclassified toprofit or loss in subsequent periods:Land and premises revaluation, net of tax 0.1 - Total other comprehensive income not to be reclassifiedto profit or loss in subsequent periods 0.1 - Other comprehensive income, net of tax (3.1) 3.1 Total comprehensive income (21.4) 3.5 Total comprehensive income attributable to:Shareholders of the parent (17.3) 4.9Non-controlling interests (4.1) (1.4) 19.05.2015 The EquityStory.RS, LLC Distribution Services include RegulatoryAnnouncements, Financial/Corporate News and Press Releases.Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: EnglishCompany: JSC VTB Bank 12, Presnenskaya emb. Moscow RussiaPhone: +7 (495) 739-77-99Fax: +7 (495) 739-77-99E-mail: [email protected]: www.vtb.comISIN: US46630Q2021Listed: LondonCategory Code: QRFTIDM: VTBRSequence Number: 2676Time of Receipt: May 19, 2015 07:52:34 End of Announcement EquityStory.RS, LLC News-Service ---------------------------------------------------------------------------UK-Regulatory-announcement transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.
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