13th Mar 2015 08:45
JSC VTB Bank / Miscellaneous 13.03.2015 09:44 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 2014 13 March 2015 VTB Group today publishes its Consolidated Financial Statements with theIndependent Auditor's Report for the year ended 31 December 2014. Andrey Kostin, VTB President and Chairman of the Management Board, said:'2014 was a very challenging year for both the Russian economy and thebanking sector, and in this context I am satisfied that VTB's businessmodel has demonstrated its resilience in the face of the economic downturn.During 2014, our clients were affected by an economic slowdown and toughgeopolitical environment, as well as by the rapid depreciation of therouble and subsequent spike in interest rates. This led to elevated riskcosts for VTB, which in turn resulted in subdued net profit despite ourvery strong operational results. In this environment the Russian state, our main shareholder, has providedtimely and adequate support to the banking sector, enabling systemicallyimportant banks, including VTB, to maintain strong capital and fundingbases, and thus to continue providing credit to strategically importantsectors of the economy. While the operating environment is expected toremain difficult in the medium term, we believe we are well positioned tofurther strengthen our franchise. Our top priorities will continue to bemaintaining a high quality of client service across all business segments,further improving cost efficiency, and adhering to conservative riskmanagement policies.' FINANCIAL AND OPERATING HIGHLIGHTS Income Statement RUB billion 2014 2013 Change, % or p.p.Net interest income 354.3 323.0 9.7%Net fee and commission income 63.1 55.4 13.9%Operating income before provisions 547.5 429.3 27.5%Provision charge for impairment* (275.4) (99.2) 177.6%Staff costs and administrative expenses (239.3) (210.9) 13.5%Net profit 0.8 100.5 (99.2%)Return on equity 0.1% 11.8% (11.7 p.p.) * Including provision charge for impairment of debt financial assets andprovision charge for impairment of other assets, credit related commitmentsand legal claims. - In an extremely challenging operating and geopolitical environment VTB Group posted strong pre-provision operating income for FY 2014, supported by healthy year-on-year growth of net interest income (+9.7%) and net fee and commission income (+13.9%). - The Group's net interest margin ('NIM') contracted during the year, mainly driven by increases in the Central Bank of Russia's (CBR) key rate. The sharp hike in the CBR's rate from 10.5% to 17.0% in December 2014 had a significant impact on the Group's cost of funds and NIM, which contracted to 3.5% in 4Q 2014 (from 4.1% in 3Q 2014) and to 4.1% in FY 2014 versus 4.5% in FY 2013. - The challenging economic environment in Russia and the crisis in Ukraine contributed to an increase in the Group's cost of risk ('CoR') to 3.4% of average gross loans and advances to customers in FY 2014 from 1.6% in FY 2013. In 4Q 2014 the Group saw a quarter-on-quarter increase in the annualised CoR to 4.6% versus 3.4% in 3Q 2014. The total of provision charge for impairment of debt financial assets and provision charge for impairment of other assets, credit related commitments and legal claims increased to RUB 275.4 billion for FY 2014, versus RUB 99.2 billion in FY 2013. - Staff costs and administrative expenses amounted to RUB 239.3 billion in FY 2014, up 13.5% year-on-year, compared to 16.4% year-on-year growth in FY 2013. The Group posted a considerable year-on-year improvement in its cost-to-income ratio, which stood at 43.7% in FY 2014 versus 49.1% in FY 2013. Statement of financial position RUB billion 31 Dec 31 Dec Change, % 2014 2013 or p.p.Total assets 12,190.8 8,768.5 39.0%Cash and short term funds 695.2 354.3 96.2%Loans and advances to customers, including 9,150.4 6,620.7 38.2%pledged under repurchase agreements (gross)Corporate gross loans 7,205.3 5,099.9 41.3%Gross loans to individuals 1,945.1 1,520.8 27.9%Customer deposits 5,669.4 4,383.4 29.3%Corporate deposits 3,520.3 2,590.0 35.9%Deposits from individuals 2,149.1 1,793.4 19.8%NPL ratio 5.8% 4.7% 1.1 p.p.Tier 1 ratio 9.8% 10.9% (1.1 p.p.)Total CAR 12.0% 14.7% (2.7 p.p.) - Expansion of the Group's loan portfolios across all business segments and USD appreciation against the rouble (by 67% in FY 2014 and 43% in 4Q 2014) were the key drivers behind the growth of the Group's loans and advances to customers. More than a quarter of the Group's customer loans are denominated in USD. - Loan-book quality developed in line with macroeconomic and banking sector trends in 2014. The NPL ratio was 5.8% of gross customer loans, including those pledged under repurchase agreements (the 'total loan book'), as of 31 December 2014 versus 4.7% as of 31 December 2013. - VTB has adjusted its corporate lending policies to limit new issuance of FX-denominated credit by tightening collateral requirements and overall origination policies in response to adverse macroeconomic conditions. The Group continued to adhere to conservative provisioning policies, driving the allowance for loan impairments to 6.7% of the total loan book as of 31 December 2014, compared to 5.5% at the start of the year. The NPL coverage ratio remained at a conservative level of 114.8% as of 31 December 2014, versus 115.5% as of 31 December 2013. - The Group's customer deposits grew by 29.3% during 2014, mainly reflecting the Group's strong deposit-taking capacity in its core businesses, including a solid increase in deposits from corporate clients, as well as the revaluation of FX-denominated deposits during the period. - Given the riskier operating environment and revaluation of the Group's FX-denominated assets, VTB's top priority continues to be strengthening its capital base and capital adequacy ratios. In September 2014, following a decision of VTB's Extraordinary General Meeting of shareholders, the Group converted subordinated loans received by its banks in 2008 (as part of the Russian Government's support package) into new preference shares that have Common Equity Tier 1 treatment under Basel III and CBR regulations. - In December 2014, the Russian Government placed a RUB 100 billion subordinated deposit in VTB Bank from the Russian National Wealth Fund. The deposit was recognised by the Central Bank of Russia as Tier 2 capital. As of 31 December 2014, the Group's total and Tier 1 capital adequacy ratios were 12.0% and 9.8%, respectively, versus 14.7% and 10.9% as of 31 December 2013. KEY BUSINESS SEGMENT HIGHLIGHTS VTB Group key segments in 2014 RUB billion Corporate- Mid- Retail Treasury VTB Group Investment Corpora- business (before banking te intersegment banking eliminations)Revenues from 445.0 108.5 413.7 147.3 1,164.4externalcustomersNet interest 109.1 121.6 194.7 (79.7) 355.1incomeNet fee and 13.1 12.1 35.5 1.2 62.9commissionincomeProvision (119.8) (63.7) (92.1) 0.4 (275.4)charge forimpairment*Net operating 29.5 71.5 167.4 6.3 282.1incomeStaff costs and (53.4) (28.7) (118.5) (6.3) (246.2)administrativeexpensesNet profit (34.2) 31.9 37.6 - 2.9 * Including provision charge for impairment of debt financial assets andprovision charge for impairment of other assets, credit related commitmentsand legal claims. - The Group's key business segments continued to deliver strongly in core income lines in 2014. However, a considerable increase in provision charges has put pressure on each segment's profitability. Retail business and Mid-Corporate banking (MCB) remained profitable, despite severe macroeconomic headwinds. - Loan book growth in the Retail business was primarily driven by mortgages during both FY 2014 and 4Q 2014, as the Group continued to see strong demand for this type of loan across Russia, and continued to prioritise less risky products while expanding its asset base. VTB Group gross loans to individuals RUB billion 31 Dec 31 Dec Change, % 2014 2013Gross loans to individuals 1,945.1 1,520.8 27.9%Mortgage loans 795.3 539.9 47.3%Consumer loans 901.1 741.4 21.5%Credit cards 113.8 86.2 32.0%Car loans 129.7 133.2 (2.6%)Reverse sale and repurchase agreements and 5.2 20.1 (74.1%)other loans - Mortgage loans reached 40.9% of the Group's gross loans to individuals as of 31 December 2014, versus 35.5% as of 31 December 2013. The share of consumer loans and credit card loans in the portfolio was 46.3% and 5.9%, respectively, versus 48.8% and 5.7% at 31 December 2013. The share of car loans in the portfolio decreased to 6.7% as of 31 December 2014, versus 8.8% at the start of the year. - The Group's retail banks have considerably reduced approval rates for the riskiest customer segments and further strengthened their debt collection function. As a result, the Group has delivered a consistent decline in cost of risk in retail loans on a quarter-on-quarter basis since 1Q 2014. VTB Group cost of risk in loans to individuals % 4Q 2014 3Q 2014 2Q 2014 1Q 2014Provision charge / Average gross 2.7% 4.4% 5.1% 5.5%loans, annualised - 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 1,700 as of 31 December 2014. This represents a reduction of approximately 100 offices in 4Q 2014, as the Group started to optimise the network of its consumer finance entity Leto Bank in response to challenging market conditions. The combined number of the Group's ATMs exceeded 12,200 at the end of 2014. - During 2014, the Group's Corporate-Investment banking saw solid demand for credit from large, high-quality borrowers as international debt capital markets remained largely closed for Russian issuers. In 4Q 2014, corporate lending in Russia slowed due to FX rates volatility and the spike in interest rates. - MCB grew its gross loan book efficiently to RUB 1,047.8 billion as of 31 December 2014. In 2H 2014, the MCB team adjusted its credit origination policies to prioritise the quality of the portfolio. - 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. For 2014, VTB Capital's debt capital markets team took the top spot in the Dealogic's Russia domestic DCM bookrunner ranking, arranging 37 transactions worth a total of USD 4.3 billion and taking 15.9% market share. VTB Capital also ranked #1 in equity capital markets in Russia and CIS with four transactions totalling USD 467 million (22.5% of the market). Contacts: Investor relations:Tel: +7 495 775 71 39Email: [email protected] VTB Bank Consolidated Statements of Financial Position as at 31 December(in billions of Russian Roubles) 2013 (restat- 2014 ed) AssetsCash and short-term funds 695.2 354.3Mandatory cash balances with central banks 85.5 58.7Financial assets at fair value through profit or loss 681.7 406.4Financial assets, other than loans and advances tocustomers and due from other banks, pledged underrepurchase agreements 184.0 173.2Due from other banks, including pledged underrepurchase agreements 814.5 446.2- Due from other banks 740.3 443.4- Due from other banks, pledged under repurchaseagreements 74.2 2.8Loans and advances to customers, including pledgedunder repurchase agreements 8,537.3 6,259.6- Loans and advances to customers 8,074.7 5,969.0- Loans and advances to customers, pledged underrepurchase agreements 462.6 290.6Investment financial assets 132.2 140.8Investments in associates and joint ventures 96.3 87.6Assets of disposal groups held for sale 11.1 36.7Land, premises and equipment 246.9 170.3Investment property 192.3 160.7Goodwill and other intangible assets 161.8 162.5Deferred income tax asset 66.9 45.5Other assets 285.1 266.0 Total assets 12,190.8 8,768.5 LiabilitiesDue to other banks 733.2 624.6Customer deposits 5,669.4 4,383.4Other borrowed funds 2,729.2 1,485.9Debt securities issued 921.4 738.2Liabilities of disposal groups held for sale 4.7 20.7Deferred income tax liability 26.6 15.0Other liabilities 710.1 262.6 Total liabilities before subordinated debt 10,794.6 7,530.4Subordinated debt 265.2 291.0 Total liabilities 11,059.8 7,821.4 EquityShare capital 352.1 138.1Share premium 433.8 433.8Perpetual loan participation notes 126.6 73.6Treasury shares and bought back perpetual loanparticipation notes (6.7) (3.6)Other reserves 42.8 35.6Retained earnings 169.3 262.0 Equity attributable to shareholders of the parent 1,117.9 939.5 Non-controlling interests 13.1 7.6 Total equity 1,131.0 947.1 Total liabilities and equity 12,190.8 8,768.5 VTB Bank Consolidated Income Statements for the Years Ended 31 December(in billions of Russian Roubles) 2014 2013 Interest income 844.1 686.3Interest expense (489.8) (363.3) Net interest income 354.3 323.0Provision charge for impairment of debt financial assets (255.4) (96.9) Net interest income after provision for impairment 98.9 226.1 Net fee and commission income 63.1 55.4 (Losses net of gains) / gains less losses arising fromfinancial instruments at fair value through profit orloss (3.0) 13.2Gains less losses from investment financial assetsavailable-for-sale - 7.3Losses net of gains arising from foreign currencies (3.2) (8.7)Government grant from Deposit Insurance Agency 99.2 -Gains on initial recognition of financial instruments,restructuring and other gains on loans and advances tocustomers 3.5 9.1Share in profit of associates and joint ventures 0.3 2.2Gain from disposal of subsidiaries and associates 15.1 2.8Gains net of losses / (losses net of gains) arisingfrom extinguishment of liabilities 0.8 (3.7)Provision charge for impairment of other assets, creditrelated commitments and legal claims (20.0) (2.3)Excess of fair value of acquired net asset over cost 0.3 8.0Other operating income 18.5 9.6 Non-interest gains 111.5 37.5 Net insurance premiums earned 43.9 29.4Net insurance claims incurred, movement in liabilitiesto policyholders and acquisition costs (31.8) (16.4)Revenue from other non-banking activities 38.1 34.2Cost of sales and other expenses from other non-bankingactivities (45.9) (36.1) Revenues less expenses from non-banking operations 4.3 11.1 Impairment of goodwill (5.7) -Staff costs and administrative expenses (239.3) (210.9) Non-interest expenses (245.0) (210.9) Profit before tax 32.8 119.2 Income tax expense (31.5) (24.1) Net profit after tax 1.3 95.1 (Loss) / profit after tax from subsidiaries acquiredexclusively with a view to resale (0.5) 5.4 Net profit 0.8 100.5 Net profit attributable to:Shareholders of the parent 4.1 101.5Non-controlling interests (3.3) (1.0) Basic and diluted earnings per share(expressed in Russian Roubles per share) (0.00023) 0.00805 Basic and diluted earnings per share before profit aftertax from subsidiaries acquired exclusively with a viewto resale(expressed in Russian Roubles per share) (0.00019) 0.00760 13.03.2015 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: MSCTIDM: VTBRSequence Number: 2562Time of Receipt: March 13, 2015 09:44:48 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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