VTB Bank, the parent company of VTB Group (“the Group”), published its unaudited consolidated financial results in accordance with IFRS for October and 10 months of 2023.
Dmitry Pianov, First Deputy Chairman of the Management Board and Chief Financial Officer of VTB Bank, said:
“Over the 10 months of 2023, VTB Group delivered robust capital return of over 25%, as well as significant growth in business volumes; loan portfolio increased by 19% since the beginning of the year. Despite a challenging operating environment including the pressure on net interest margin, as well as decelerating loan portfolio growth amid a doubling of the key rate since July, our key income lines remain sufficiently resilient to enable us to achieve record profitability in 2023”.
Business volumes grew against the backdrop of the rising demand for retail lending
As of 31 October 2023, the total loan book before provisions amounted to RUB 20.6 trillion, an increase of 19.0% since the beginning of the year (adjusted for currency revaluation, the increase was 15.3%).
Loans to individuals increased by 2.0% in October and by 21.8% since the beginning of the year to RUB 6.8 trillion. Loans to legal entities increased by 3.3% in October (adjusted for currency revaluation, lending was up by 4.1%). The cumulative increase over 10 months of the year was 17.6%, reaching RUB 13.8 trillion (adjusted for currency revaluation, the increase since the beginning of the year 12.4%). As a result, the share of loans to individuals in the Group’s total loan book increased to 33% in 10M 2023 (32% as of 31 December 2022).
As of 31 October 2023, total customer funding had increased by 16.4% to RUB 21.6 trillion (adjusted for currency revaluation, the increase was 12.9%). Since the beginning of 2023, customer funding from legal entities rose by 15.3% to RUB 12.8 trillion. Adjusted for currency revaluation, the increase in customer funding from legal entities amounted to 11.7% in 10M 2023. In October, customer funding from legal entities increased by 5.3% against the backdrop of funds placement by the Ministry of Finance of Russia (adjusted for currency revaluation, the increase was 6.1%). Customer funding from individuals increased by 1.0% in October and by 17.9% since the beginning of the year to RUB 8.7 trillion (adjusted for currency revaluation, customer funding from individuals increased by 14.8%).
The share of customer funding in the Group’s total liabilities in 10M 2023 was 79.7% (81.0% as of 31 December 2022).
The loans-to-deposits ratio (LDR) increased to 90.3% as of 31 October 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 402.8 billion in 10M 2023 and RUB 26.8 billion in October 2023. Return on equity was 25.3% in 10M 2023 and 14.7% in October 2023, while return on assets was 1.8% in 10M 2023 and 1.1% in October 2023.
Net operating income before provisions amounted to RUB 955.3 billion in 10M 2023 and RUB 88.0 billion in October 2023. Net interest income amounted to RUB 634.9 billion in 10M 2023 and RUB 64.1 billion in October 2023. Net interest margin was 3.1% in 10M 2023 and 2.9% in October 2023. Net fee and commission income amounted to RUB 178.7 billion in 10M 2023 and RUB 20.5 billion in October 2023.
The Group’s cost of risk was 1.1% in 10 months and 1.6% in October 2023. At the same time, the provision charge amounted to RUB 152.1 billion in 10M 2023 and RUB 22.3 billion in October 2023.
The Group’s NPL ratio amounted to 3.4% as of 31 October 2023 (4.1% as of 31 December 2022). The NPL coverage ratio remained at a high level of 167.6% as of 31 October 2023 (147.2% as of 31 December 2022).
Staff costs and administrative expenses amounted to RUB 307.1 billion in 10M 2023 and RUB 34.7 billion in October 2023. The ratio of costs to operating income before loan loss provisions amounted to 32.1% in 10M 2023 and to 39.4% in October 2023.
The Bank’s capital adequacy ratios are at levels exceeding the regulatory minimums. As at 1 November 2023, the N1.0 ratio (total capital) was 9.1% (minimum allowable value – 8%), N1.1 (CET 1 capital) was 6.0% (minimum allowable value – 4.5%) and N1.2 (Tier 1 capital) was 8.5% (minimum allowable value – 6%).
