VTB Group announces IFRS financial results for August and 8M 2023

VTB Bank, the parent company of VTB Group (“the Group”), published its unaudited consolidated financial results in accordance with IFRS for August and 8 months of 2023.

Dmitry Pianov, First Deputy Chairman of the Management Board and Chief Financial Officer of VTB Bank, said:

“The results achieved by VTB Group in August demonstrate the resilience of business model and the profit generation capacity against the backdrop of monetary policy tightening. Steady growth in business volumes, primarily in the retail segment, coupled with strong credit quality of loan book bodes well for delivering robust key revenues and achieving profitability targets for the current year”.

Business volumes grew against the backdrop of the rising demand for retail lending

As of 31 August 2023, the total loan book before provisions amounted to RUB 19.8 trillion, an increase of 14.1% since the beginning of the year (adjusted for currency revaluation, the increase was 9.8%).

Loans to individuals increased by 3.4% in August and by 15.5% since the beginning of the year to RUB 6.5 trillion. Loans to legal entities increased by 1.1% in August (adjusted for currency revaluation, lending was up by 0.2%). The cumulative increase over 8 months of the year was 13.4%, reaching RUB 13.3 trillion (adjusted for currency revaluation, the increase since the beginning of the year was 7.3%). As a result, the share of loans to individuals in the Group’s total loan book increased to 33% in 8M 2023 (32% as of 31 December 2022).

As of 31 August 2023, total customer funding had increased by 11.1% to RUB 20.6 trillion (adjusted for currency revaluation, the increase was 7.2%). Since the beginning of 2023, customer funding from legal entities rose by 9.1% to RUB 12.1 trillion. Adjusted for currency revaluation, the increase in customer funding from legal entities amounted to 4.8% in 8M 2023. In August, customer funding from legal entities decreased by 4.1% against the backdrop of reduction of funds placement by the Ministry of Finance of Russia. Customer funding from legal entities not including funds from the Government decreased by 0.1% (adjusted for currency revaluation, the decrease was 1.0%). Customer funding from individuals increased by 3.0% in August and by 14.2% since the beginning of the year to RUB 8.5 trillion (adjusted for currency revaluation, customer funding from individuals increased by 10.8%).

The share of customer funding in the Group’s total liabilities in 8M 2023 was 79.7% (81.0% as of 31 December 2022).

The loans-to-deposits ratio (LDR) increased to 90.1% as of 31 August 2023, compared to 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 351.4 billion in 8M 2023 and RUB 25.9 billion in August 2023. Return on equity was 28.4% in 8M 2023 and 14.5% in August 2023, while return on assets was 2.0% in 8M2023 and 1.1% in August 2023.

Net operating income before provisions amounted to RUB 804.1 billion in 8M 2023 and RUB 96.6 billion in August 2023. Net interest income amounted to RUB 500.2 billion in 8M 2023 and RUB 66.1 billion in August 2023. Net interest margin was 3.2% in 8M 2023 and 3.1% in August 2023. Net fee and commission income amounted to RUB 139.6 billion in 8M 2023 and RUB 22.6 billion in August 2023.

The Group’s cost of risk was 1.1% in 8 months and 1.9% in August 2023. At the same time, the provision charge amounted to RUB 137.4 billion in 8M 2023 and RUB 31.6 billion in August 2023.

The Group’s NPL ratio amounted to 4.1% as of 31 August 2023 (4.1% as of 31 December 2022). The NPL coverage ratio remained at a high level of 152.5% as of 31 August 2023 (147.2% as of 31 December 2022).

Staff costs and administrative expenses amounted to RUB 237.1 billion in 8M 2023 and RUB 31.8 billion in August 2023. The ratio of costs to operating income before loan loss provisions amounted to 29.8% in 8M 2023 and to 33.2% in August 2023.

The Bank’s capital adequacy ratios are at levels exceeding the regulatory minimums. As at 1 September 2023, the N1.0 ratio (total capital) was 9.5% (minimum allowable value – 8%), N1.1 (CET 1 capital) was 6.3% (minimum allowable value – 4.5%) and N1.2 (Tier 1 capital) was 8.9% (minimum allowable value – 6%).