Russia’s VTB Bank posts $4.6bn profit in 2023

By bne IntelliNews February 21, 2024

Russia’s second-largest state-controlled bank VTB Group posted record profit under IFRS of RUB432bn ($4.6bn) for 2023, with net profit of RUB56bn in 4Q23 alone, Tass reports citing the estimates of the First Deputy Chairman of the bank Management Board Dmitry Pianov said.

The group has also revised upwards its record loss for 2022 - from RUB613bn to RUB668bn ($7.2bn), Pianov said. Despite record profit of 2023, VTB’s management still plans to offer shareholders not to pay dividends for last year, he added.

As followed by bne IntelliNews, VTB's losses accounted for three quarters of the aggregate banking sector’s loss in 2022, and contrasts with the RUB271bn profit of country’s largest lender state-controlled Sberbank

VTB attributed the massive losses to foreign currency operations, the loss of its foreign subsidies, creation of large-scale provisions, and higher interest rate risk. VTB is among the most heavily sanctioned Russian banks amid the country’s military invasion of Ukraine, having been put on the SDN list by the US and cut off from SWIFT by the EU.

At the same time, Pianov estimated the volume of sanctioned assets of the VTB at RUB900bn ($9.7bn), but still believes that the bank will be able to generate a profit of RUB100bn on the assets, according to RBC business daily.

The first strategy to achieve that is a scheme by the Ministry of Economic Development established in 2022. Banks are offered to create a new legal entity to which frozen assets will be transferred and at the same time liabilities in the form of liabilities to foreign creditors. After that, all settlements on debts to foreign clients will be performed only at the expense of frozen assets on the balance sheet of the new company.

VTB also hopes to recover assets through the lawsuits filed in Russian courts to redeem funds from its European subsidiaries VTB Europe and VTB Capital, over which it lost shareholder control after the sanctions. 

The bank had a RUB300bn capital injections approved with the state’s stake in the VTB’s capital decreasing from 76.4% to 61.8% as a result of two additional share issues

In addition, VTB is involved in recapitalising troubled state infrastructure assets, such as the United Shipbuilding Corporation (USC or OSK).

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