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24 Sep 2008 07:24
VTB Announces Results for the First Half 2008
Unaudited financial results for the six months ended June 30, 2008
Moscow, 24 September, 2008 - VTB Group today announces its unaudited IFRS results for the six months ending 30 June 2008.
1H 2008 FINANCIAL HIGHLIGHTS
Net profit up 34.7% to US$679 million y-o-y due to strong growth in both interest income and fees and commissions
Core income up 101.3% to US$2.4 billion y-o-y
Total loans up 29.3% to US$77.6 billion from year end 2007, with strong growth in both retail and corporate lending
Net interest margin at 4.8%, up from 4.4% in 2007
Total assets up 17.4% to US$108.8 billion in the first six months of 2008. Overall asset mix improved
Around US$3.4 billion in EMTN Notes and US$1.4 billion in syndicated loan facility raised during first half of 2008
VTB backed by solid capital with BIS ratio at 15%
OPERATING AND FINANCIAL REVIEW
VTB Group's net profit for the first six months of 2008 increased by 34.7% to US$679 million from US$504 million in the first six months of 2007. The major contributor to this growth was the Group's core income reflecting the fundamental strength of VTB's business and significant growth in its lending activities. In the reporting period, core income defined as net interest income before provisions and net fee and commission income excluding one-off item, was up 101.3% year-on-year to US$2.4 billion. Net interest income of the Group grew by 112.5% to US$2.1 billion. Net fee and commission income excluding one-off item increased by 48% to US$311 million in the first six months of 2008 year-on-year in line with VTB's policy of improving the quality of earnings.
At a time when the cost of funding is rising for many financial institutions, VTB was able to report an increase of net interest margin to 4.8% from 4.4% in 2007.
Total customer loans increased by 29.3% to US$77.6 billion in the first half of 2008 from year end 2007. Corporate loans grew by 25.0% to US$65.4 billion, raising market share to 11% from 10.7% at year end 2007. Loans to individuals went up 58.5% to US$12.2 billion, significantly lifting VTB's overall market share in individual loans to 7.5% in 1H 2008 from 5.9% at year-end 2007. The share of loans to individuals in VTB's total loans increased to 16% by the end of June 2008 from 13% at the end of 2007.
Total assets grew 17.4% to US$ 108.8 billion in the first six months of 2008, and the overall asset mix has improved. The proportion of customer loans in VTB's overall asset mix has increased further to 69.4% from 63.2% at year end 2007, while the securities portfolio represents 10.2% compared with 14.6% at year end 2007. VTB's securities portfolio now stands at US$ 11.1 billion, down 18% from US$ 13.5 billion at year-end 2007.
VTB's securities exposure continues to decrease as a result of a prudent risk management strategy. Proprietary book and risk limits have been revised, with the aim of reducing the overall earnings volatility and improving the quality of earnings. The 10.63% stake in Alrosa was sold in the second quarter of 2008 with a pre-tax gain of US$51 million.
In the first half of 2008, total customer deposits increased by 20.2% to US$44.6 billion from US$37.1 billion at the end of 2007. Corporate deposits increased by 22% to US$32.2 billion, whereas retail deposits increased by 15.8% to $US12.4 billion. The share of customer deposits in total liabilities remained stable at 48.7%. During the first half of 2008, VTB retained its position as second biggest deposit-taker in Russia.
Despite challenging market conditions, VTB Group successfully raised around US$5 billion in public debt instruments in the first half of 2008, including over US$ 3.4 billion in EMTN Notes and US$1.4 billion in syndicated loan facility.
VTB Group's capital base remained strong, with a total BIS ratio of 15%. This proves to be one of the key fundamental strengths for VTB in a period of market turbulence.
In 1H 2008 VTB made further progress in its chosen strategy, expanding its core business areas and developing its high-quality customer base across Russia and the CIS. In retail banking, a new deposit sales model with competitive pricing has been introduced. VTB's ambitious branch expansion programme has been essentially completed, with 90 new VTB24 branches opened - bringing the total number of branches to 418. The total number of VTB Group branches across Russia, CIS and Europe now totals 1001.
In corporate banking, VTB is putting particular focus on profitability and effective cross-selling with investment banking products.
VTB has essentially completed building its investment banking team, and the division is on track to be fully operational from October 2008.
VTB's international expansion is progressing well. The bank has been awarded a banking license in Kazakhstan. An application for approval of the acquisition of AF-Bank is currently reviewed by the Azerbaijan regulator.
VTB Group remains confident in the continued profitable growth of its business. Going forward, VTB expects an increasing contribution to net profit from its retail business, significant revenue generation in investment banking and enhanced effectiveness in corporate banking. Although market conditions are more challenging and VTB is taking a more prudent stance in its lending, VTB intends to continue developing innovative products and services to match the evolving needs of its clients, and will maintain the ROE and capital ratios at appropriate levels.
VTB Chief Financial Officer and Member of the Management Board Nikolai Tsekhomsky said: "We are delighted to report a strong set of first half 2008 results. Given the challenging environment, we are focussing on developing further the fundamental strengths of our business and maintaining resilience in difficult market conditions. However, longer term we continue to have confidence in our ability to deliver our strategic objectives."
Contacts
Investor Relations:
Tel.: +7 495 775 71 39
Email: investorrelations@vtb.ru
Media Relations:
Tel.: +7 495 783 1717
Email: pr1@vtb.ru
About VTB Bank:
JSC VTB Bank and its subsidiaries (the VTB Group or the Group) is a leading Russian banking group, offering a wide range of banking services and products across Russia, certain CIS countries and in selected countries of Western Europe, Asia and Africa.
As of June 30, 2008 the Group had a network of 1,001 branches located across Russia, CIS and Europe, of which VTB24 retail branches amounted to 418. Outside of Russia, the Group operates through four subsidiary banks located in the CIS (Armenia, Georgia, Ukraine and Belarus), six subsidiary banks located in Europe (UK, France, Germany, Austria, Switzerland and Cyprus), one subsidiary bank and one financial company in Africa (Angola, Namibia), and an associated bank in Vietnam. VTB also has a presence in Singapore through a branch of its UK subsidiary. VTB has operated under a full banking license, №1,000, from the Central Bank of the Russian Federation since 1990.
The Group's business franchise is in the areas of corporate, retail and investment banking. In corporate banking, the Group provides a broad range of commercial banking services and products including corporate lending, foreign trade transactions, syndicated loans, deposit and settlement services, as well as custody services, leasing and treasury services to large- and medium-sized corporations and financial institutions. In retail banking, VTB offers financial services, including deposit accounts, lending and certain ancillary services, to individuals and small-sized corporations. In investment banking it provides debt capital markets underwriting, project financing, merger and acquisition financing, advisory services, asset management and venture funds.
The Group had 40,704 employees as of June 30, 2008. The Government of the Russian Federation is VTB's main shareholder and owns, through the Federal Property Management Agency, 77.5 % of its registered share capital. For more information please visit
Disclaimer
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of VTB. You can identify forward-looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might," or the negative of such terms or other similar expressions. These statements are only predictions and actual events or results may differ materially. VTB does not intend to or undertake any obligation to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in VTB's projections or forward-looking statements, including, among others, general economic and market conditions, VTB's competitive environment, risks associated with operating in Russia, rapid technological and market change, and other factors specifically related to VTB and its operations.
This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of VTB or any of its subsidiaries, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of VTB or any of its subsidiaries.
Information contained in this document is not an offer, or an invitation to make offers, sell, purchase, exchange or transfer any securities in Russia or to or for the benefit of any Russian person or any person in Russia, and does not constitute an advertisement of any securities in Russia.
Consolidated Balance Sheet
Unaudited financial results for the six months ended June 30, 2008
|
US$, million |
30 June 2008 (unaudited) |
31 December 2007 |
|
Assets |
||
|
Cash and short-term funds |
4 377 |
5 160 |
|
Mandatory cash balances with central banks |
1 428 |
825 |
|
Financial assets at fair value through profit or loss |
8 523 |
10 436 |
|
Financial assets pledged under repurchase agreements and loaned financial assets |
1 408 |
2 212 |
|
Due from other banks |
10 560 |
9 733 |
|
Loans and advances to customers |
75 482 |
58 549 |
|
Financial assets available-for-sale |
875 |
858 |
|
Investments in associates |
193 |
167 |
|
Investment securities held-to-maturity |
272 |
5 |
|
Premises and equipment |
2 159 |
1 997 |
|
Investment property |
176 |
168 |
|
Intangible assets |
489 |
480 |
|
Deferred tax asset |
296 |
215 |
|
Other assets |
2 516 |
1 804 |
|
Total assets |
108 754 |
92 609 |
Consolidated Balance Sheet
Unaudited financial results for the six months ended June 30, 2008
|
US$, million |
30 June 2008 (unaudited) |
31 December 2007 |
|
Liabilities |
||
|
Due to other banks |
11 730 |
14 794 |
|
Customer deposits |
44 609 |
37 098 |
|
Other borrowed funds |
7 027 |
5 176 |
|
Debt securities issued |
24 508 |
16 489 |
|
Deferred tax liability |
143 |
149 |
|
Other liabilities |
2 383 |
1 231 |
|
Total liabilities before subordinated debt |
90 400 |
74 937 |
|
Subordinated debt |
1 173 |
1 171 |
|
Total liabilities |
91 573 |
76 108 |
|
Equity |
||
|
Share capital |
3 084 |
3 084 |
|
Share premium |
8 792 |
8 792 |
|
Treasury shares |
(16) |
(21) |
|
Unrealized gain on financial assets available-for-sale and cash flow hedge |
16 |
109 |
|
Currency translation difference |
1 403 |
663 |
|
Premises revaluation reserve |
581 |
587 |
|
Retained earnings |
3 142 |
2 993 |
|
Equity attributable to shareholders of the parent |
17 002 |
16 207 |
|
Minority interest |
179 |
294 |
|
Total equity |
17 181 |
16 501 |
|
Total liabilities and equity |
108 754 |
92 609 |
Statement of income
Unaudited financial results for the six months ended June 30, 2008
|
US$, million |
30 June 2008 (unaudited) |
30 June 2007 (unaudited) |
|
|
Interest income |
4 316 |
2 235 |
|
|
Interest expense |
(2 183) |
(1 231) |
|
|
Net interest income |
2 133 |
1 004 |
|
|
Provision charge for impairment |
(592) |
(140) |
|
|
Net interest income after provision for impairment |
1 541 |
864 |
|
|
Gains less losses / (losses net of gains) arising from financial assets at fair value through profit or loss |
(228) |
86 |
|
|
Gains less losses from available-for-sale financial assets |
51 |
1 |
|
|
Gains less losses arising from dealing in foreign currencies |
906 |
141 |
|
|
Foreign exchange translation (losses net of gains) / gains less losses |
(493) |
27 |
|
|
Fee and commission income |
363 |
300 |
|
|
Fee and commission expense |
(52) |
(33) |
|
|
Share in income of associates |
7 |
7 |
|
|
Income arising from non-banking activities |
61 |
43 |
|
|
Other operating income |
82 |
41 |
|
|
Net non-interest income |
697 |
613 |
|
|
Operating income |
2 238 |
1 477 |
|
|
Staff costs and administrative expenses |
(1 242) |
(809) |
|
|
Expenses arising from non-banking activities |
(39) |
(27) |
|
|
Profit from disposal of subsidiaries and associates |
- |
18 |
|
|
Profit before taxation |
957 |
659 |
|
|
Income tax expense |
(278) |
(155) |
|
|
Net profit |
679 |
504 |
|
|
Net profit attributable to: |
|||
|
Shareholders of the parent |
666 |
474 |
|
|
Minority interest |
13 |
30 |
|
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