Russia’s VTB Bank surprises on 1Q24 profit of $1.3bn

By bne IntelliNews April 29, 2024

Russia’s second-largest bank, state-controlled VTB Bank, posted RUB122bn ($1.3bn) net profit in 1Q24, making a return on equity (ROE) of 22%. Despite declining by 17% year on year, net income and ROE for 1Q24 was above the expectations of Renaissance Capital analysts and consensus expectations.

VTB commented that given the good 1Q24 performance, net profit and return on equity in 2024 may be higher than the earlier forecast (RUB435bn and 19%, respectively), without updating the guidance yet.

As followed by bne IntelliNews, VTB Group posted record profit under IFRS of RUB432bn ($4.6bn) for 2023, with net profit of RUB56bn in 4Q23 alone. The group has also revised upwards its record loss for 2022, from RUB613bn to RUB668bn ($7.2bn). Despite record profit of 2023, VTB’s management still has no plans to offer shareholders dividends.

In 1Q24 VTB’s loan portfolio grew by 5.4% year to date, while customer deposits grew by 3%. Its net interest margin declined to 2.2% in 1Q24 after 2.9% in 4Q23. Net interest income stood at RUB154bn in 1Q24 and net fee and commission income was up by 23% y/y to RUB52bn. 

“Given the growth in the loan book and other assets since the beginning of the year, the overall capital adequacy ratio (N20.0) declined by 20 basis points to 10.4%,” RenCap analysts commented.

In March 2024, VTB announced its medium-term strategy with a profitability target of 19%-20% and focus on the retail segment. VTB's net profit target is set at RUB435bn, RUB520bn and RUB650bn in 2024, 2025 and 2026 respectively. 

VTB’s executives also hope to earn proceeds on frozen sanctioned assets

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