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JSC VTB Bank (VTBR)
VTB Group announces IFRS results for 3Q 2021
VTB Bank ("VTB" or "the Bank"), the parent company of VTB Group ("the Group"), today publishes its Interim Condensed Consolidated Financial Statements for the three months and nine months ended 30 September 2021, along with the independent auditor's report on these statements.
Dmitry Pianov, a member of the Management Board and Chief Financial Officer of VTB Bank, said:
"The impressive growth in key banking revenues that the Group has achieved in the course of this year contributed to our strong financial results while also setting new records for profitability in absolute terms. In 9M 2021, VTB Group earned a net profit of RUB 258 billion, which represents a more than fourfold increase year-on-year and is equal to a return on equity of 18%.
"Our sturdy performance in 9M 2021 leads us to revise and upgrade our net profit guidance for the second time this year. We expect to be able to exceed the target set in our strategy for 2022 already this year and to be able to provide an extremely attractive dividend yield at the end of the year as well."
Business volumes grow accompanied by an increase in the share of retail lending
As of 30 September 2021, the total loan book before loan loss provisions amounted to RUB 14.3 trillion, an increase of 8.9% since the beginning of the year.
Loans to individuals increased by 15.9% from the beginning of the year to RUB 4.5 trillion amid a recovery in demand for consumer lending and continued growth in the mortgage portfolio. Lending to legal entities increased by 6.0% from the beginning of the year to RUB 9.9 trillion. As a result of higher growth in lending to individuals, the share of retail in the Group's total loan book increased to 31%, up from to 29% at the end of 2020.
Since the beginning of 2021, customer funding has grown by 17.9% to RUB 15.1 trillion. Customer funding from legal entities increased by 29.1% in 9M 2021, while the current-account balances of legal entities increased by 48.2%. Customer funding from individuals increased by RUB 231.4 billion, or 4.0%, in 9M 2021 to RUB 6.0 trillion. An increase in current- and savings-account balances was offset by the lack of growth in investments in term deposits. At the same time, investments in term deposits on the by individuals increased by 9.2% in 3Q 2021, after decreasing by 6.1% and 2.6% in 1Q and 2Q, respectively.
The total volume of VTB Capital Investments' customer assets increased in 9M 2021 by RUB 744 billion, or 21.9%, to RUB 4.1 trillion. Retail assets increased by RUB 643.3 billion, or 35.8%, from the beginning of the year, reaching RUB 2.4 trillion as of 30 September 2021. Corporate assets increased by 6.3% to RUB 1.7 trillion.
As a result of faster growth in customer funding, the loans-to-deposits ratio (LDR) decreased to 88.7% as of 30 September 2021, down from 95.6% as of 31 December 2020. The share of customer funding in the Group's total liabilities increased in 9M 2021 to 81.8%, up from 78.1% as of 31 December 2020. The structure of customer funding continues to change in line with the Group's strategic targets: the share of current accounts increased to 43%, up from 40% at the beginning of the year.
(1) Includes provision charge for credit losses on debt financial assets, provision charge for credit losses on credit-related commitments and other financial assets, and provision charge for legal claims and other commitments.
Substantial improvement in profitability amid a strong increase in key banking revenues and stabilisation of the loan book quality
VTB Group's net profit in 9M 2021 increased 4.4x year-on-year to RUB 257.6 billion, which represents a return on equity of 17.9%, up from 4.6% for the same period last year.
Net interest income amounted to RUB 475.7 billion in 9M 2021 and RUB 169.7 billion in 3Q 2021, increasing by 22.8% and 25.2% year-on-year, respectively. Net interest margin was 3.8% in 9M 2021 and 3.9% in 3Q 2021, compared with 3.8% in the same periods last year. The net interest margin remained stabled thanks to further optimisation of the funding structure and an increase in the share of higher-margin loans to individuals in the total loan book.
Net fee and commission income amounted to RUB 123.5 billion in 9M 2021 and RUB 39.4 billion in 3Q 2021, increases of 28.8% and 12.3% year-on-year, respectively. The considerable 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 9M 2021 and 0.5% in 3Q 2021, having decreased by 120 bp and 180 bp year-on-year, respectively. Provision charge amounted to RUB 78.4 billion in 9M 2021 and RUB 24.1 billion in 3Q 2021, decreasing by 57.8% and 66.5% year-on-year, respectively.
The Group's NPL ratio decreased by 110 bp from the beginning of the year, amounting to 4.6% as of 30 September 2021. The Group decreased its allowance for loan impairments to 6.4%, down from 6.8% as of 31 December 2020. The NPL coverage ratio was 140.2%, up from 120.6% at the beginning of the year.
Staff costs and administrative expenses amounted to RUB 205.9 billion in 9M 2021 and RUB 70.3 billion in 3Q 2021, increases of 7.2% and 11.6% year-on-year, respectively. Growth in key income lines contributed to considerable improvements in operating efficiency, with the ratio of costs to net operating income before provisions decreasing by 8.8 pp year-on-year to 33.9%.
Investment banking leadership
Continued growth of the investment platform VTB Capital Investments
VTB Capital Investments became the first company in the market to enable customers with individual investment accounts to register online, in just a few clicks, to deduct taxes using the Bank's online channels.
MEDIUM AND SMALL BUSINESS
BUSINESS DIGITALISATION AND THE DEVELOPMENT OF A DIGITAL ECOSYSTEM
In the context of its business development, VTB Group implemented the following digital initiatives:
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End of Announcement
EQS News Service