17th Nov 2015 06:34
JSC VTB Bank / 3rd Quarter ResultsJSC VTB Bank: VTB Group announces IFRS results for the first ninemonths and third quarter of 2015 17-Nov-2015 / 07:34 CET/CESTDissemination 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 the first nine monthsand third quarter of 2015 17 November 2015 VTB Bank ('VTB' or 'the Bank'), the parent company of VTB Group ('theGroup'), today publishes its Interim Condensed Consolidated FinancialStatements as at 30 September 2015 with the Independent Auditors' Report onReview of these Statements. Andrey Kostin, VTB President and Chairman of the Management Board, said:'Our financial results reconfirm that VTB Group is on track to achieve itsfull-year targets despite turbulent economic conditions. During the thirdquarter, we posted healthy growth in both loans and deposits whilestrengthening our balance sheet through the issuance of preference shares. 'As our liabilities continued to price in lower interest rates, we sawfurther improvements in margins, which together with solid fee incomecontributed to the continued recovery of the Group's results overall. Costof risk remains under control despite heavy provision charges againstcertain corporate exposures. In line with the Group's strategy, stringentcost management has remained a top priority throughout the year, and weexpect it to continue to be an important driver of our bottom line for therest of 2015 and beyond. 'Our liquidity position and deposit taking capacity remain very strong, andwe deliberately continued to reduce our dependence on wholesale fundingsources, having repaid over 3.3 billion US dollars of external debt andhaving bought back over 1.3 billion US dollars of outstanding bonds fromthe market since the beginning of the year. 'I am also pleased to note that in September 2015 we started to publishIFRS results on a monthly basis, which we hope will contribute to thetransparency and predictability of VTB Group's performance for investorsand all of our stakeholders.' FINANCIAL AND OPERATING HIGHLIGHTS Income Statement RUB billion 9M 9M 2014 Change 3Q 3Q 2014 Change 2015 (resta- 2015 (resta- ted) ted)Net interest income 202.5 268.2 (24.5 88.4 92.2 (4.1%) %)Net fee and commission income 54.0 44.8 20.5% 21.4 14.8 44.6%Operating income before 305.3 348.7 (12.4 127.3 130.3 (2.3%)provisions %)Provision charge* (136. (166.3) (17.7 (57.0) (69.6) (18.1 9) %) %)Staff costs and (172. (161.3) 7.2% (59.9) (54.0) 10.9%administrative expenses 9)Net (loss) / profit (10.9) 5.4 n.a. 6.2 0.4 1,450 .0% *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 33.8% year-on-year in 9M 2015 to RUB 809.9 billion, due to higher interest rates in Russia and growth in the Group's interest-earning assets. At the same time, the Group's liabilities repriced faster than assets following the CBR key rate spike in December 2014, causing interest expense to surge by 80.1% year-on-year to RUB 607.4 billion in 9M 2015. This resulted in a 24.5% year-on-year decline in net interest income and brought the Group's net interest margin (NIM) down to 2.5% in 9M 2015, versus 4.3% for 9M 2014. The easing of CBR's monetary policy and the continued re-pricing of assets and liabilities enabled the Group to post its third consecutive quarterly NIM improvement, to 3.2% in 3Q 2015, versus 2.5% in 2Q 2015 and 1.7% in 1Q 2015. - The strong fee generating capabilities of Retail business and Transaction banking (as part of Corporate-Investment banking and Mid-Corporate banking) enabled the Group to deliver a record quarterly and nine-months net fee and commission income of RUB 21.4 billion and RUB 54.0 billion, respectively, despite muted economic activity during the year to date. - For 9M 2015, the Group's provision charge was RUB 136.9 billion, down 17.7% year-on-year. In 3Q 2015, the Group's provision charge was RUB 57.0 billion, down 18.1% year-on-year. The Group's cost of risk (annualised ratio of provision charge for loan impairment to average gross loans and advances to customers) was 1.9% in 9M 2015 (2.4% in 3Q 2015) versus 2.9% in 9M 2014 (3.4% in 3Q 2014). - Costs remained under control, in line with VTB's strategy. Staff costs and administrative expenses were up by 7.2% and 10.9% year-on-year (below the rate of inflation) during 9M 2015 and 3Q 2015, respectively. The Group's annualised costs-to-average assets ratio improved to 1.9% for 9M 2015 from 2.3% for 9M 2014, and to 2.0% in 3Q 2015 from 2.2% in the same period last year. Statement of financial position RUB billion 30 Sept 30 June 31 Dec Change Change 2015 2015 2014 in 9M in 3Q (restat- 2015 2015 ed)Total assets 12,791.5 11,742.9 12 190.8 4.9% 8.9%Cash and short term funds 592.4 624.7 695.2 (14.8%) (5.2%)Loans and advances to 9,516.5 8,607.7 9,150.4 4.0% 10.6%customers, includingpledged under repurchaseagreements (gross)Gross loans to legal 7,594.4 6,719.9 7,205.3 5.4% 13.0%entitiesGross loans to individuals 1,922.1 1,887.8 1,945.1 (1.2%) 1.8%Customer deposits 7,144.1 6,078.3 5,669.4 26.0% 17.5%Deposits from legal 4,550.6 3,773.8 3,520.3 29.3% 20.6%entitiesDeposits from individuals 2,593.5 2,304.5 2,149.1 20.7% 12.5%NPL ratio 6.8% 7.0% 5.8% 1.0 p.p. (0.2 p.p.)Tier 1 CAR 12.9% 10.1% 9.8% 3.1 p.p. 2.8 p.p.Total CAR 15.2% 12.4% 12.0% 3.2 p.p. 2.8 p.p. - In 3Q 2015, the Group's loan book resumed its growth, driven primarily by current activity financing provided to large corporate customers and government bodies. USD appreciation against the RUB during the quarter also contributed to the expansion of loans and advances to customers, as over 30% of the Group's total customer loans are denominated in US dollars. - The NPL ratio was 6.8% of gross customer loans, including those pledged under repurchase agreements (the 'total loan book') as of 30 September 2015, down from 7.0% as of 30 June 2015 and up from 5.8% as of 31 December 2014. The allowance for loan impairments was 7.1% of the total loan book as of the end of 3Q 2015, versus 7.6% as of 30 June 2015 and 6.7% at the start of the year. The NPL coverage ratio remained at a comfortable level of 104.7% at 30 September 2015, compared to 109.0% as of 30 June 2015 and 114.8% at the beginning of the year. - Customer deposits grew faster than loans during both 3Q 2015 (up 17.5%) and 9M 2015 (up 26.0%), due to the Group's strong deposit taking capacity in key business segments and the revaluation of FX-denominated deposits. In the third quarter, VTB Group deposits in both the retail and corporate segments grew at a faster pace than the Russian banking sector. As of 30 September 2015, the Group's market shares in retail and corporate deposits were 10.3% and 20.5%, respectively. - The Group continued to reduce its reliance on wholesale funding, with the share of debt securities issued in total liabilities falling to 5.9% as of 30 September 2015, from 6.5% as of 30 June 2015 and 8.3% as of 31 December 2014. During 9M 2015, VTB and its subsidiaries made repayments on their international public debt amounting to a total of USD 3.3 billion. Also, as the Group maintained its focus on efficient liability management, VTB was able to benefit from volatility in debt capital markets and further optimise its balance sheet by buying back its Eurobonds. In July and October 2015, the Bank bought back USD 763.0 million of its USD-denominated Eurobonds, CHF 461.5 million of CHF-denominated Eurobonds and AUD 126.7 million of Eurobonds issued in Australian dollars through public tenders. - In July 2015, VTB took an important step to strengthen its core Tier 1 capital by placing new preference shares worth approximately RUB 307 billion, which were acquired by the State Corporation Deposit Insurance Agency. As of 30 September 2015, the Group's total and Tier 1 capital adequacy ratios were 15.2% and 12.9%, respectively, versus 12.4% and 10.1% as of 30 June 2015 and 12.0% and 9.8% as of 31 December 2014. KEY BUSINESS SEGMENT HIGHLIGHTS VTB Group key segments in 9M 2015 % of the Group total* Corporate- Mid-Corporate Retail Investment banking banking businessAssets 44.9% 5.0% 22.5%Loans and advances to 63.6% 7.9% 21.8%customers (net)Customer deposits 42.9% 8.5% 42.1%Revenues from external 48.8% 8.2% 30.9%customersNet interest income 21.1% 11.4% 58.0%Net fee and commission 20.7% 16.1% 55.1%incomeProvision charge** 31.7% 18.3% 51.3%Net operating income 47.1% 4.6% 54.6%Staff costs and 26.7% 11.1% 51.6%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. - Higher funding costs and provision charges put pressure on profitability across all key segments throughout the first nine months of the year. For 9M 2015, Corporate-Investment banking (CIB) delivered RUB 23.1 billion of net profit, despite the macroeconomic headwinds. In 3Q 2015, Retail business posted a positive net result for the second consecutive quarter, earning a net profit of RUB 2.9 billion for 9M 2015. Mid-Corporate banking (MCB)'s net loss for 9M 2015 was RUB 9.4 billion. - In Retail business, the Group's loan book returned to growth in 3Q 2015, primarily driven by mortgage lending under the Russian Government's programme to subsidise mortgage interest rates. In consumer lending, the Group continued to stick to lower approval rates on the back of weaker real disposable incomes and consumer spending in Russia. VTB Group gross loans to individuals RUB billion 30 Sept 30 June 31 Dec Change in Change in 2015 2015 2014 9M 2015 3Q 2015Gross loans to 1,922.1 1,887.8 1,945.1 (1.2%) 1.8%individualsMortgage loans 832.9 802.9 795.3 4.7% 3.7%Consumer loans 848.7 844.3 901.1 (5.8%) 0.5%Credit cards 127.0 122.8 113.8 11.6% 3.4%Car loans 106.6 110.9 129.7 (17.8%) (3.9%)Other loans 6.9 6.9 5.2 32.7% 0.0% - Mortgage loans reached 43.3% of the Group's gross loans to individuals as of 30 September 2015, versus 40.9% as of 31 December 2014. The shares of consumer loans and credit card loans in the portfolio were 44.2% and 6.6%, respectively, versus 46.3% and 5.9% at 31 December 2014. The share of car loans in the portfolio decreased to 5.5% as of 30 September 2015, versus 6.7% at the start of the year. - Retail business has been pursuing opportunities to grow fee-based revenues, in particular through active cross selling of ancillary insurance products, including mortgage-linked products from VTB Insurance and life insurance plans from VTB Life Insurance for private banking clients. The Retail business's net fee and commission income reached RUB 29.8 billion in 9M 2015, or 55.1% of the Group's total. - In 3Q 2015, the Group continued to optimise its retail business branch network and staff in line with the market trends. The total number of the Group's retail offices in Russia (operating under the brands VTB24, Bank of Moscow, and Leto Bank) was more than 1,650 as of 30 September 2015. The combined number of the Group's ATMs exceeded 12,800 at the end of 9M 2015. - In Corporate-Investment banking (CIB), the Group saw a recovery in borrowers' appetite for new borrowings and refinancing, as interest rates continued to decline during 3Q 2015. The CIB continued to focus on optimising risk and preserving the quality of the Group's loan portfolio. CIB's 9M 2015 net profit of RUB 23.1 billion was supported by solid results from Investment and Transaction banking. - A continued decline in market yields as well as stronger investor demand in debt capital markets (DCM) spurred new issuance of Russian corporate debt in 3Q 2015. VTB Capital, the Group's investment banking franchise, remained # 1 in the Thomson Reuters DCM bookrunner ranking based on the volume of transactions for Russian issuers, with 28 deals worth USD 7.4 billion in 9M 2015. As a result, VTB Capital's share of the market was 52.3%. According to Thomson Reuters, VTB Capital also maintained its leading position in Russian equity capital markets, having arranged four transactions worth USD 481 million and taking 51.6% of the market in 9M 2015. In Russian M&A, VTB Capital advised on 10 transactions worth USD 9.1 billion, corresponding to 40.0% of the market in 9M 2015. Also, VTB Capital was named Best Investment Bank in Russia by Euromoney Awards for Excellence 2015. - In Mid-Corporate banking (MCB), the Group's loan book returned to growth in 3Q 2015, as interest rates in Russia became more affordable for MCB's customer segment. Throughout 9M 21015, MCB maintained its focus on tight loan origination policies and risk management standards, as well as on documentary business with high quality customers. Contacts: Investor relations:Tel: +7 495 775 71 39Email: [email protected] VTB Bank Interim Consolidated Statement of Financial Position as at 30 September2015(in billions of Russian roubles) 31 30 December September 2015 2014 (unaudi- (restat- ted) ed) AssetsCash and short-term funds 592.4 695.2Mandatory cash balances with central banks 86.9 85.5Non-derivative financial assets at fair value throughprofit or loss 265.3 275.0Derivative financial assets 313.4 407.0Financial assets, other than loans and advances tocustomers and due from other banks, pledged underrepurchase agreements 31.3 184.0Due from other banks, including pledged underrepurchase agreements 1,213.5 814.5- Due from other banks 1,176.6 740.3- Due from other banks, pledged under repurchaseagreements 36.9 74.2Loans and advances to customers, including pledgedunder repurchase agreements 8,842.2 8,537.3- Loans and advances to customers 8,577.4 8,074.7- Loans and advances to customers, pledged underrepurchase agreements 264.8 462.6Investment financial assets 309.4 132.2Investments in associates and joint ventures 103.7 96.3Assets of disposal groups held for sale 14.7 11.1Land, premises and equipment 279.9 246.9Investment property 233.7 192.3Goodwill and other intangible assets 160.7 161.8Deferred income tax asset 67.6 66.9Other assets 276.8 284.8 Total assets 12,791.5 12,190.8 LiabilitiesDue to other banks 1,067.1 733.2Customer deposits 7,144.1 5,669.4Derivative financial liabilities 284.5 397.8Other borrowed funds 1,524.9 2,729.2Debt securities issued 676.2 921.4Liabilities of disposal groups held for sale 10.3 4.7Deferred income tax liability 26.1 26.6Other liabilities 353.8 312.3 Total liabilities before subordinated debt 11,087.0 10,794.6Subordinated debt 282.8 265.2 Total liabilities 11,369.8 11,059.8 EquityShare capital 659.5 352.1Share premium 433.8 433.8Perpetual loan participation notes 149.0 126.6Treasury shares and bought back perpetual loanparticipation notes (2.3) (6.7)Other reserves 48.6 42.8Retained earnings 122.3 169.3 Equity attributable to shareholders of the parent 1,410.9 1,117.9 Non-controlling interests 10.8 13.1 Total equity 1,421.7 1,131.0 Total liabilities and equity 12,791.5 12,190.8 VTB Bank Interim Consolidated Income Statement for the Three Months and Nine MonthsEnded 30 September 2015 (unaudited)(in billions of Russian roubles) For the three- For the nine- month period month period ended 30 September ended 30 September 2014 2014 (restat- (restat- 2015 ed) 2015 ed) Interest income 275.2 218.4 809.9 605.5Interest expense (186.8) (126.2) (607.4) (337.3) Net interest income 88.4 92.2 202.5 268.2Provision charge for impairment ofdebt financial assets (55.3) (65.0) (128.9) (157.8) Net interest income after provisionfor impairment 33.1 27.2 73.6 110.4 Net fee and commission income 21.4 14.8 54.0 44.8 Gains net of losses arising fromfinancial instruments at fair valuethrough profit or loss 11.4 1.3 29.9 6.8Gains less losses from investmentfinancial assets available-for-sale (0.6) - (0.2) 0.8Gains net of losses / (losses netof gains) arising from foreigncurrencies 0.8 5.9 22.2 (5.5)(Losses)/gains on initialrecognition of financialinstruments, restructuring andother gains on loans and advancesto customers (0.1) (0.1) (1.1) 1.6Share in profit/(loss) ofassociates and joint ventures 1.9 (0.2) 4.0 0.1Gain from disposal of subsidiariesand associates 0.8 3.1 0.7 12.4Losses net of gains arising fromextinguishment of liabilities (1.0) (0.3) (1.0) (1.1)Provision charge for impairment ofother assets, credit relatedcommitments and legal claims (1.7) (4.6) (8.0) (8.5)Other operating income 5.2 5.0 14.4 11.4Other operating expense (1.2) (0.9) (3.6) (2.6) Non-interest gains 15.5 9.2 57.3 15.4 Net insurance premiums earned 11.7 11.6 71.2 34.5Net insurance claims incurred,movement in liabilities topolicyholders and acquisition costs (12.2) (7.3) (71.0) (22.3) Revenues less expenses frominsurance activity (0.5) 4.3 0.2 12.2 Revenue from other non-bankingactivities 6.1 7.7 18.6 16.7Cost of sales and other expensesfrom other non-banking activities (8.1) (8.7) (25.7) (27.1)Net (loss)/gain from change in fairvalue of investment propertyrecognised on revaluation 2.8 6.4 (9.6) 10.7 Revenues less expenses from othernon-banking activities 0.8 5.4 (16.7) 0.3 Impairment of goodwill - (0.2) - (0.7)Staff costs and administrativeexpenses (59.9) (54.0) (172.9) (161.3) Non-interest expenses (59.9) (54.2) (172.9) (162.0) (Loss)/profit before tax 10.4 6.7 (4.5) 21.1 Income tax expense (4.3) (4.8) (4.8) (17.2) Net (loss)/profit after tax 6.1 1.9 (9.3) 3.9 (Loss)/profit after tax fromsubsidiaries acquired exclusivelywith a view to resale 0.1 (1.5) (1.6) 1.5 Net (loss)/profit 6.2 0.4 (10.9) 5.4 Net (loss)/profit attributable to:Shareholders of the parent 7.6 1.8 (4.2) 6.1Non-controlling interests (1.4) (1.4) (6.7) (0.7) Basic and diluted earnings per share(expressed in Russian roubles pershare) 0.00065 0.00010 (0.00108)(0.00002) Basic and diluted earnings pershare before profit after tax fromsubsidiaries acquired exclusivelywith a view to resale (expressed inRussian roubles per share) 0.00064 0.00022 (0.00096)(0.00014) VTB Bank Interim Consolidated Statement of Comprehensive Income for the Three Monthsand Nine Months Ended 30 September 2015 (unaudited)(in billions of Russian roubles) For the three- For the nine- month period month period ended 30 September ended 30 September 2015 2014 2015 2014 Net (loss)/profit 6.2 0.4 (10.9) 5.4 Other comprehensive income/(loss)Other comprehensive income/(loss)to be reclassified to profit orloss in subsequent periodsNet result on financial assetsavailable-for-sale, net of tax (0.6) (5.7) 4.9 (7.7)Cash flow hedges, net of tax 0.2 0.2 0.1 0.4Share of other comprehensiveincome/(loss) of associates andjoint ventures 3.6 (0.1) 3.0 (0.1)Effect of translation, net of tax 12.0 9.9 (1.1) 13.6 Total other comprehensive income tobe reclassified to profit or lossin subsequent periods 15.2 4.3 6.9 6.2 Other comprehensive income/(loss)not to be reclassified to profit orloss in subsequent periodsActuarial losses net of gainsarising from difference betweenpension plan assets and obligations - - 0.2 (0.2) Total other comprehensive income /(loss)not to be reclassified toprofit or loss in subsequent periods - - 0.2 (0.2) Other comprehensive income, net oftax 15.2 4.3 7.1 6.0 Total comprehensive (loss)/income 21.4 4.7 (3.8) 11.4 Total comprehensive income/(loss)attributable to:Shareholders of the parent 22.4 4.9 2.6 10.8Non-controlling interests (1.0) (0.2) (6.4) 0.6 --------------------------------------------------------------------- 17-Nov-2015 The EquityStory.RS, LLC Distribution Services includeRegulatory Announcements, Financial/Corporate News and Press Releases.Media archive at www.dgap.de/ukreg --------------------------------------------------------------------- Language: English Company: JSC VTB Bank 12, Presnenskaya emb. Moscow Russia Phone: +7 (495) 739-77-99 Fax: +7 (495) 739-77-99 E-mail: [email protected] Internet: www.vtb.com ISIN: US46630Q2021 Listed: Foreign Exchange(s) London Category Code: QRT TIDM: VTBR Sequence Number: 2913 Time of Receipt: 17-Nov-2015 / 07:30 CET/CEST End of Announcement EquityStory.RS, LLC News Service --------------------------------------------------------------------- 413629 17-Nov-2015UK-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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