Russia's VTB reports profitable Q1, on track for sharp recovery

By Elena Fabrichnaya

MOSCOW (Reuters) - Russia's No. 2 lender VTB on Thursday posted first quarter net profit of 146.7 billion roubles ($1.8 billion) and kept its forecast for record profits this year as the bank recovers from a $7.7 billion sanctions-induced loss in 2022.

VTB, heavily exposed to international markets and with more than 20% of its loan portfolio in foreign currencies, was particularly hard hit in the early stages of the conflict in Ukraine, as Western sanctions targeted Russia's financial sector.

Russian banks were ordered to limit disclosures by the central bank last year. VTB did not provide a comparative figure for its first-quarter results, but said its net interest margin increased to 3.1% and its return on equity was 35.3%.

The bank's total loan portfolio rose 3.3% year-on-year in the first quarter to 17.9 billion roubles, the bank said, while the share of non-performing loans climbed 30 basis points in the period to 4.4%.

Russian banks have rallied after an initial hit from last year's sanctions against Moscow, with lenders now jostling for business from the state, particularly a burgeoning defence budget, and the country's big corporate accounts.

An additional issue of ordinary shares strengthened VTB's capital base in the first quarter, CFO Dmitry Pyanov said in a statement, with results driven by steady banking revenues as the cost of risk normalises.

Pyanov said the final price of VTB's second additional share issue will be determined in May.

Pyanov said VTB would not have to contribute to a one-off, "voluntary" windfall tax totalling around 300 billion roubles ($3.98 billion) the government plans to levy on big business in light of Russia's widening budget deficit and a narrowing current account surplus.

He said the 2022 loss excluded the bank from participating under the current version of the draft law. Rival Sberbank has already pledged to pay.

($1 = 81.8500 roubles)

(Reporting by Elena Fabrichnaya; Writing by Alexander Marrow; Editing by Lincoln Feast)