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JSC VTB Bank (VTBR)
VTB Group announces IFRS financial results for November and 11M 2021
VTB Bank, the parent company of VTB Group ("the Group"), today publishes its unaudited consolidated financial results in accordance with IFRS for November and 11 months of 2021.
Dmitry Pianov, a member of the Management Board and Chief Financial Officer of VTB Bank, said:
"VTB Group is on track to set new records in 2021, both in terms of profitability and business volumes, and our 11M 2021 performance confirms these expectations.
"VTB Group earned net income of RUB 309 billion in January to November 2021, meaning that we have already delivered on our annual guidance and that we have hit the profit target that we expected to achieve only in 2022. Record high profit was primarily a result of strong growth in core banking revenues, backed by solid net interest margins and stable asset quality. The ongoing digital transformation has have also supported a significant improvement in operational efficiency.
"The results of the first 11 months support all our guidance for the full year 2021".
Business volumes grew, with a rising share of retail lending
As of 30 November 2021, the total loan book before provisions amounted to RUB 14.7 trillion, an increase of 11.4% since the beginning of the year (adjusted for currency revaluation, the increase was 12.3%).
Retail loans continued to grow at a faster pace in 11M 2021. Loans to individuals increased by 2.6% in November and by 21.5% since the beginning of the year to RUB 4.7 trillion. Loans to legal entities increased by 1.8% in November (adjusted for currency revaluation, lending was up by 0.6%). The cumulative increase over 11 months of the year was 7.2%, reaching RUB 10.0 trillion (adjusted for currency revaluation, the increase since the beginning of the year was 8.5%). As a result, the share of loans to individuals in the Group's total loan book rose to 32% in 11M 2021, up from 29% at the end of 2020.
As of 30 November 2021, total customer funding had increased by 18.4% to RUB 15.2 trillion (adjusted for currency revaluation, the increase was 18.6%). In November, customer funding from legal entities grew by 0.6% (adjusted for currency revaluation, funding from legal entities decreased by 1.5%). Since the beginning of 2021, customer funding from legal entities rose by 27.6% to RUB 9.1 trillion. Adjusted for currency revaluation, the increase in customer funding from legal entities amounted to 27.7% in 11M 2021. Customer funding from individuals increased by 1.9% in November and by 7.2% since the beginning of the year to RUB 6.1 trillion (adjusted for currency revaluation, customer funding from individuals increased by 7.4%).
The share of customer funding in the Group's total liabilities increased in 11M 2021 to 81.8% (up from 78.1% as of 31 December 2020).
The loans-to-deposits ratio (LDR) decreased to 90.3% as of 30 November 2021, down from 95.6% at the end of 2020.
Substantial improvement in profitability driven by a strong increase in key banking revenues and stabilisation of loan book quality
VTB Group's net profit increased 4.4x year-on-year to RUB 308.8 billion in 11M 2021 and 5.4x year-on-year to RUB 28.9 billion in November 2021. Return on equity was 17.2% in 11M 2021 and 16.4% in November 2021, up from 4.5% and 3.8% year-on-year, respectively.
Net operating income before provisions amounted to RUB 732.9 billion in 11M 2021 and RUB 64.2 billion in November 2021, up 34.7% and 14.0%, respectively, year-on-year.
Net interest income amounted to RUB 589.7 billion in 11M 2021 and RUB 56.8 billion in November 2021, increasing by 22.3% and 19.8%, respectively, year-on-year. Net interest margin showed resilience to changes in the key rate, amounting to 3.8% in November and in 11M 2021.
Net fee and commission income amounted to RUB 146.5 billion in 11M 2021 (up 20.1% year-on-year) and RUB 11.4 billion in November 2021 (down 14.3% year-on-year). The considerable cumulative increase in net fee and commission income was driven by the expansion of the Group's transactional business and a steadily increasing volume of commissions from the sale of insurance products and commissions from the brokerage business.
The Group's cost of risk was 0.7% in 11 months and November 2021, down from 1.9% and 2.8% a year earlier, respectively. At the same time, the provision charge amounted to RUB 91.0 billion in 11M 2021 and RUB 7.1 billion in November 2021, down by 59.5% and 75.9% year-on-year, respectively.
The Group's NPL ratio amounted to 4.3% as of 30 November 2021 (down 140 bp from the beginning of the year). The NPL coverage ratio was 147.3% as of 30 November 2021, up from 120.6% as of the end of 2020.
Staff costs and administrative expenses amounted to RUB 261.6 billion in 11M 2021 and RUB 27.9 billion in November 2021, increasing by 11.5% and 31.0% year-on-year, respectively, driven by a planned increase in digital transformation costs.
Higher profitability supported a considerable improvement in operating efficiency: the ratio of costs to operating income before loan loss provisions decreased 7.4 p.p. in 11M 2021 to 35.7%.
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