JSC VTB Bank: VTB Group announces IFRS financial results for November and 11M 2020

VTB Group announces IFRS financial results for November and 11M 2020

VTB Bank, the parent company of VTB Group (the "Group"), today publishes its unaudited consolidated IFRS financial results for November and the first 11 months of 2020.

Andrey Kostin, VTB President and Chairman of the Management Board, said: "Our performance in November and 11 months of the year is in line with our updated forecasts for 2020, which includes the negative economic impact of the coronavirus pandemic on our profitability.

"VTB's net profit in November amounted to RUB 5.4 billion. In 11M 2020, the Group earned RUB 69.9 billion, which corresponds to ROE of 4.5%. Even taking into account the drop in transactional activities in spring, we have achieved excellent operating performance and robust growth of business volumes and our customer base. I am confident that the considerable provisions created this year will enable VTB Group to return to our strategic track to profitability going forward."

In 11M 2020, the Group demonstrated excellent operating performance and strong business growth

• As of 30 November 2020, loans and advances to customers (hereinafter before provisions) amounted to RUB 13.1 trillion, up 14.3% since the beginning of the year (8.5% adjusted for the effect of currency revaluation). In November 2020, the total loan portfolio remained unchanged (adjusted for the effect of foreign exchange revaluation, it grew 0.8%).
• Loans to individuals increased by 0.6% in November to RUB 3.8 trillion; growth since the beginning of the year was 13.4%. Mortgage lending, which continues to increase at a faster pace, was up 1.8% in November and 21.3% for 11M 2020.
• In November, loans to legal entities decreased by 0.2% (adjusted for the effect of currency revaluation, however, an increase of 0.8% was recorded). Loans to legal entities increased by 14.6% in 11M 2020 and amounted to RUB 9.3 trillion as of 30 November 2020 (adjusted for the effect of currency revaluation, the increase was 6.7%).
• As of 30 November 2020, customer funding amounted to RUB 12.9 trillion. In November 2020, total customer funding increased by 0.7% (excluding the effect of currency revaluation, customer funding increased by 2.0%). Since the beginning of the year, customer funding has grown by 17.9% (excluding the effect of currency revaluation, the increase is 10.6%).
• Customer funding from legal entities increased by 1.3% in November (excluding the effect of currency revaluation, the increase was 2.6%). Since the beginning of the year, customer funding from legal entities has grown by 24.7% and amounted to RUB 7.4 trillion as of 30 November 2020 (excluding the effect of currency revaluation, the increase was 18.1%).
• Customer funding from individuals decreased by 0.1% in November (excluding the effect of currency revaluation, it increased by 1.3%). Since the beginning of the year, funding from individuals has increased by 9.9%, amounting to RUB 5.5 trillion as of 30 November 2020 (excluding the effect of currency revaluation, funding from individuals increased by 1.8%).
• The share of customer funding in the Group's total liabilities increased in 11M 2020 to 80.0% (compared with 79.2% as of 31 December 2019).
• As a result of the faster growth in customer funding, the loans-to-deposits (LDR) ratio decreased to 94.3% as of 30 November 2020 (compared with 98.2% as of 31 December 2019).

Profitability metrics were under pressure in the context of the COVID-19 pandemic against a backdrop of higher provisions and a revaluation of investment properties, while core banking income has demonstrated robust growth

• VTB Group's net profit amounted to RUB 69.9 billion in 11M 2020 and RUB 5.4 billion in November 2020, down 57.7% and 69.7% year-on-year, respectively.
• Net interest income was RUB 482.3 billion for 11M 2020 and RUB 47.4 billion in November 2020, up 20.8% and 25.4% year-on-year, respectively.
• Net interest margin was 3.7% for 11M 2020 and in November 2020 (an increase of 40 bps and 30 bps year-on-year, respectively). The net interest margin has risen amid the easing of monetary policy and the fast-paced revaluation of liabilities.
• Net fee and commission income showed organic growth year-on-year and amounted to RUB 108.0 billion for 11M 2020 (up 22.2% year-on-year) and RUB 12.1 billion in November 2020 (up 61.3% year-on-year). The strong growth in fee and commission income was supported by the fast pace of growth in the Group's transaction business and by steadily increasing commissions from the sale of insurance products.
• The cost of risk was 1.9% for 11M 2020 and 2.8% in November 2020, up from 0.9% and 0.6% year-on-year, respectively. The provision charge amounted to RUB 224.7 billion for 11M 2020 and RUB 29.5 billion in November 2020, an increase of 2.4x and 4.3x year-on-year, respectively.
• The allowance for loan impairment was 6.9% of the total loan book (before provisions) as of 30 November 2020, an increase of 10 bps in November and 90 bps since the beginning of the year.
• The non-performing loans (NPL) ratio was 5.3% as of 30 November 2020 (up 60 bps since the beginning of the year). The NPL coverage ratio was 128.6% as of 30 November 2020 (compared with 128.7% as of 31 December 2019).
• Staff costs and administrative expenses amounted to RUB 234.6 billion for 11M 2020 and RUB 21.3 billion in November 2020, up 3.6% and 8.1% year-on-year, respectively. The cost-to-income (CIR) ratio was 43.1% in 11M 2020, up from 42.6% a year earlier.