20 Sep 2012 07:00
VTB Group announces IFRS results for the first six months of 2012
20 September 2012
VTB Group today publishes its Interim Condensed Consolidated Financial Statements as at 30 June 2012 with the Independent Auditors' Report on Review of these Statements.
Andrey Kostin, VTB President and Chairman of the Management Board, said: "Our core CIB and Retail Banking businesses delivered solid results during the first half of 2012, underscoring the strength of our business model. While market volatility continues to affect the Group's business, we have stayed focused on improving efficiency, maintaining good asset quality and strengthening our capital base".
FINANCIAL AND OPERATING HIGHLIGHTS
Income statement
RUB billion | 1H 2012 | 1H 2011 | Change, % or pps |
Net interest income | 112.4 | 95.1 | 18.2% |
Net fee and commission income | 21.8 | 17.9 | 21.8% |
Operating income before provisions | 162.3 | 153.0 | 6.1% |
Provision charge for impairment of debt financial instruments | (32.3) | (17.3) | 86.7% |
Net profit | 33.6 | 53.6 | (37.3%) |
ROE | 10.7% | 18.1% | (7.4 pps) |
§ The Group's core business segments, Retail Banking and Corporate and Investment Banking (CIB), posted a profit before tax of RUB 21.5 billion and RUB 26.8 billion, versus RUB 17.8 billion and RUB 56.8 billion in 1H 2011, respectively.
§ The expansion of the Group's loan book, along with management's focus on optimisation of funding costs, contributed to stronger net interest income during the period. On a quarter-on-quarter basis the Group saw margins increase, with 2Q 2012 net interest margin (NIM) reaching 4.1%, up 30 bps versus 3.8% in 1Q 2012. In 1H 2012 NIM was 4.0% versus 4.8% in 1H 2011.
§ Retail Banking and Transaction Banking continued to be key drivers of the strong growth in fees and commissions income, contributing RUB 13.8 billion and RUB 8.0 billion (up 68.3% and 29.0% from RUB 8.2 billion and RUB 6.2 billion in 1H 2011), respectively, to the Group's total net fee and commission income.
§ The provision charge for impairment of loans and advances to customers reached 1.4% of the average loan portfolio in the first half of 2012, up from 1.1% in the same period last year. In 2Q 2012, the provision charge for impairment of customer loans was 1.0%, reflecting the Group's stable asset quality.
§ The Group's net loss from financial instruments was RUB 1.2 billion in 1H 2012, reflecting substantial volatility and a challenging market environment. In 1H 2011 the net gain from financial instruments was RUB 9.5 billion. The net result arising from foreign currencies was RUB 7.1 billion in 1H 2012 versus RUB 11.4 billion in 1H 2011.
§ Staff costs and administrative expenses amounted to RUB 87.1 billion in 1H 2012, up 29.4% from RUB 67.3 billion in 1H 2011, primarily due to the consolidation of Bank of Moscow from 3Q 2011 and expansion of the Group's key businesses.
Statement of financial position
RUB billion or % | 30 June 2012 | 31 Dec 2011 | Change, % or bps |
Total assets | 6,858.0 | 6,789.6 | 1.0% |
Total gross loans | 4,645.2 | 4, 590.1 | 1.2% |
Corporate gross loans | 3,695.5 | 3,766.0 | (1.9%) |
Retail gross loans | 949.7 | 824.1 | 15.2% |
Customer deposits | 3,438.3 | 3,596.7 | (4.4%) |
Corporate deposits | 2,123.3 | 2,435.3 | (12.8%) |
Retail deposits | 1,315.0 | 1,161.4 | 13.2% |
NPL ratio | 5.6% | 5.4% | 20 bps |
Tier 1 ratio, adjusted for issuance of Perpetual Eurobond* | 9.5% | 9.0% | 50 bps |
Tier 1 ratio | 8.9% | 9.0% | (10 bps) |
* pro-forma management estimate
§ The Group's loan book growth was mostly driven by strong credit demand in the retail segment and US dollar revaluation against the rouble (c. 12% during 2Q 2012and c. 2% during 1H 2012) as approximately one third of the Group's loan portfolio is denominated in US dollars.
§ Loan book quality was stable with an NPL ratio of 5.6% of the total gross loan book (including financial assets classified as customer loans pledged under repurchase agreements) as of 30 June 2012 versus 5.4% as of 31 December 2011. The Group's NPL coverage ratio at 30 June 2012 was 117.0%, up from 111.3% as of 31 December 2011.
§ While retail deposits grew at a rate outperforming the market, total corporate deposits declined in 1H 2012 and 2Q 2012 due to the Group's focus on optimising cost of funds to support its net interest margin.
§ In 2Q and 3Q 2012, the Group reaffirmed its ability to effectively diversify funding sources across geographies, currencies and investor bases. In July 2012, VTB successfully placed an SGD 400 million, 4% Eurobond due in 2015. In August 2012, VTB priced its fourth Swiss Franc Eurobond, for CHF 600 million, due in 2016 at 3.15%. The Group also successfully tapped its US$1.5 billion 6% Eurobond issued in April 2012 and due 2017, with an additional issuance in August 2012 of US$ 500 million at 6%.
§ In 3Q 2012 the Group's capital levels and ratios were supported by a US$ 1 billion Tier 1 Perpetual bondissued in July 2012. The transaction, which was the first Tier 1 public issuance coming out of Russia, confirmed the strength of VTB's credit, and investors' confidence in VTB Group. The Group's Tier 1 capital adequacy ratio as adjusted to reflect the issuance was 9.5% as of 30 June 2012. The Group's reported total and Tier 1 capital adequacy ratios as of 30 June 2012 were 12.8% and 8.9%, respectively.
KEY BUSINESS SEGMENT HIGHLIGHTS
Corporate and Investment Banking
RUB billion | 1H 2012 | 1H 2011 | Change, % |
Segment profit before tax | 26.8 | 56.8 | (52.8%) |
Loans and deposits subsegment | 15.5 | 27.4 | (43.4%) |
Investment banking subsegment | 3.2 | 24.0 | (86.7%) |
Transaction banking subsegment | 8.6 | 5.8 | 48.3% |
§ The Group's Global Transaction Banking (GTB) business continued to make an important contribution to fee and commission income growth during the period. In 2Q 2012, the GTB team expanded its client coverage by customising and selling complex cash management solutions to 80 large corporate holdings (encompassing over 300 legal entities).
§ VTB Capital remained Russia's leading investment banking operation, maintaining the top spot in DCM according to Dealogic with a market share of 20.3%, raising close to US$ 7 billion in debt financing during 1H 2012. In 1H 2012 VTB Capital completed several noteworthy M&A transactions, acting as advisor to Rusenergo Fund in InterRAO's sale of its minority stake of Enel OGK-5 to a private equity investor group, to Globaltrans Investment on its acquisition of Metalloinvesttrans, and to Polyus Gold in the sale of shares and GDRs of Jenington Internationalto China Investment Corporation.
Retail Banking
RUB billion | 1H 2012 | 1H 2011 | Change, % |
Segment profit before tax | 21.5 | 17.8 | 20.8% |
VTB Group retail loan book
RUB billion | 30 June 2012 | 31 Dec 2011 | Change, % |
Gross retail loans | 949.7 | 824.1 | 15.2% |
Consumer loans | 525.2 | 436.2 | 20.4% |
Car loans | 87.4 | 75.5 | 15.8% |
Mortgage loans | 334.4 | 309.0 | 8.2% |
§ The Retail Banking segment's performance was supported by strong growth in consumption and an increase in real salaries in 1H 2012.
§ In retail lending, the Group maintained its focus on higher-margin products, which resulted in the share of consumer and car loans in the Group's retail loan portfolio increasing to 64.5% at 30 June 2012 from 62.1% at the start of the year. The share of mortgage loans in the same period declined to 35.2% from 37.5%.
§ VTB24's private banking deposits remained an important driver of the retail deposit base, as the Group continued to successfully expand its business with affluent and high net worth customers. Funds from VTB24's VIP clients increased to RUB 197.4 billion, representing 15% of the Group's retail deposits.
§ During 1H 2012, the Group continued successful integration of Bank of Moscow's and TransCreditBank's retail operations led by the Group's core retail bank VTB24. In particular, the Group has optimised its retail branch network (primarily comprised of VTB24, TransCreditBank and Bank of Moscow outlets) by increasing the number of VTB24 offices in Russia and closing down selected Bank of Moscow offices. The total number of the Group's retail offices in Russia was 1,234 as of 30 June 2012, versus 1,242 as of 31 December 2011. The combined number of VTB24, TCB and BoM ATMs exceeded 10,300 as of 30 June 2012.
§ In 3Q 2012, VTB24 resumed its asset securitization projects, which further contributed to effective optimization of the Group's funding costs. In August 2012, it successfully closed the first securitization of retail assets by a Russian bank since the financial crisis, raising a US$ 275 million loan backed by a car loan portfolio. The Co-Arrangers of the transaction were The Bank of Tokyo-Mitsubishi UFJ and VTB Capital.
Contacts:
Investor Relations:
Tel.: +7 495 775 71 39
Email: investorrelations@vtb.ru
About VTB:
JSC VTB Bank and its subsidiaries (VTB Group or the Group) is a leading Russian financial group, offering a wide range of banking services and products in Russia, CIS, in the selected countries of Europe, Asia, Middle East, and Africa, and in the USA. The Group conducts its banking business in Russia through VTB Bank as a parent and 6 subsidiary banks. The Group's largest subsidiary banks in Russia are VTB24, Bank of Moscow, and TransCreditBank.
The Group operates outside Russia through 15 bank subsidiaries, located in the Commonwealth of Independent States (Armenia, Ukraine (2 banks), Belarus (2 banks), Kazakhstan and Azerbaijan), Europe (Austria, Cyprus, Germany, France, Great Britain and Serbia), Georgia and Africa (Angola); through 2 representative offices located in Italy and China; through 2 VTB branches in China and India and 2 branches of VTB Capital, Plc in Singapore and Dubai. The Group investment banking division also performs broker/dealer operations in the United States of America, securities dealing and financial advisory in Hong Kong and investment banking operations in Bulgaria.
The Group's business franchise spans Corporate and Investment banking (CIB) and Retail Banking. In CIB, the Group provides a broad range of services and products including corporate lending, foreign trade transactions, syndicated loans, deposit and settlement services, equity and debt capital markets underwriting, project financing, merger and acquisition financing, advisory services, custody services, asset management and venture funds. In Retail Banking, VTB offers financial services, including deposit accounts, lending, debit and credit cards and transaction services to individuals and small-sized corporations.
The number of employees of the Group as of 30 June 2012 was 71,602.
In February 2011, the Russian Federation state reduced its share from 85.5% to 75.5% of VTB Bank's shares as a result of an offering in the form of shares and global depositary receipts.
VTB Bank
Interim Consolidated Statement of Financial Position as at 30 June 2012
(in billions of Russian Roubles)
30 June2012 (unaudited) | 31 December2011 | |
Assets | ||
Cash and short-term funds | 356.0 | 407.0 |
Mandatory cash balances with central banks | 60.5 | 71.9 |
Financial assets at fair value through profit or loss | 570.8 | 571.5 |
Financial assets pledged under repurchase agreements and loaned financial assets | 242.5 | 198.6 |
Due from other banks | 411.2 | 424.6 |
Loans and advances to customers | 4,327.8 | 4,301.6 |
Assets of disposal group held for sale | 9.6 | 10.3 |
Financial assets available-for-sale | 184.1 | 167.7 |
Investments in associates and joint ventures | 36.0 | 32.5 |
Investment securities held-to-maturity | 32.3 | 32.4 |
Premises and equipment | 120.4 | 116.8 |
Investment property | 137.6 | 122.5 |
Intangible assets and goodwill | 139.9 | 141.2 |
Deferred tax asset | 45.4 | 42.7 |
Other assets | 183.9 | 148.3 |
Total assets | 6,858.0 | 6,789.6 |
Liabilities | ||
Due to other banks | 630.7 | 699.7 |
Customer deposits | 3,438.3 | 3,596.7 |
Liabilities of disposal group held for sale | 8.4 | 8.5 |
Other borrowed funds | 781.2 | 734.6 |
Debt securities issued | 892.8 | 664.5 |
Deferred tax liability | 10.3 | 10.0 |
Other liabilities | 223.4 | 209.4 |
Total liabilities before subordinated debt | 5,985.1 | 5,923.4 |
Subordinated debt | 243.5 | 241.1 |
Total liabilities | 6,228.6 | 6,164.5 |
Equity | ||
Share capital | 113.1 | 113.1 |
Share premium | 358.5 | 358.5 |
Treasury shares | (13.9) | (0.6) |
Unrealised gain on financial assets available-for-sale and cash flow hedge | 3.2 | 7.9 |
Premises revaluation reserve | 9.8 | 11.4 |
Currency translation difference | 11.3 | 11.0 |
Retained earnings | 127.2 | 102.2 |
Equity attributable to shareholders of the parent | 609.2 | 603.5 |
Non-controlling interests | 20.2 | 21.6 |
Total equity | 629.4 | 625.1 |
Total liabilities and equity | 6,858.0 | 6,789.6 |
VTB Bank
Interim Consolidated Income Statement for the Three Months and the Six MonthsEnded 30 June 2012 (unaudited)
(in billions of Russian Roubles)
For the three-monthperiod ended | For the six-monthperiod ended | |||
30 June | 30 June | |||
2012 | 2011 | 2012 | 2011 | |
Interest income | 132.0 | 90.4 | 259.0 | 176.6 |
Interest expense | (73.6) | (41.3) | (146.6) | (81.5) |
Net interest income | 58.4 | 49.1 | 112.4 | 95.1 |
Provision charge for impairment of debt financial assets | (11.9) | (9.6) | (32.3) | (17.3) |
Net interest income after provision for impairment | 46.5 | 39.5 | 80.1 | 77.8 |
Net fee and commission income | 11.5 | 9.9 | 21.8 | 17.9 |
(Losses net of gains) / gains less losses arising from financial instruments at fair value through profit or loss | (5.0) | (0.6) | (4.0) | 9.1 |
Gains less losses / (losses net of gains) from available-for-sale financial assets | (0.9) | 0.4 | 2.8 | 0.4 |
Losses net of gains arising from extinguishment of liability | (0.2) | - | (0.9) | - |
Gains on initial recognition of financial instruments, restructuring and other gains on loans and advances to customers | 9.3 | 10.3 | 9.4 | 9.9 |
Gains less losses / (losses net of gains) arising from dealing in foreign currencies | (0.4) | 14.3 | 25.0 | 26.0 |
Foreign exchange translation losses net of gains | (11.3) | (8.8) | (17.9) | (14.6) |
Share in income of associates and joint ventures | 0.4 | 0.2 | 0.5 | 1.5 |
(Provision charge) / reversal of provision for impairment of other assets, credit related commitments and legal claims | 0.1 | (1.4) | (0.1) | (1.5) |
Income arising from non-banking activities | 11.7 | 5.1 | 20.4 | 8.8 |
Expenses arising from non-banking activities | (7.7) | (2.4) | (11.7) | (4.5) |
Other operating income | 1.1 | 2.6 | 4.5 | 3.4 |
Net non-interest income | 8.6 | 29.6 | 49.8 | 56.4 |
Operating income | 55.1 | 69.1 | 129.9 | 134.2 |
Staff costs and administrative expenses | (44.6) | (34.3) | (87.1) | (67.3) |
Gain from disposal of subsidiaries and associates | 1.4 | 0.6 | 1.0 | 1.5 |
Profit before taxation | 11.9 | 35.4 | 43.8 | 68.4 |
Income tax expense | (1.6) | (7.9) | (10.2) | (14.8) |
Net profit | 10.3 | 27.5 | 33.6 | 53.6 |
Net profit attributable to: | ||||
Shareholders of the parent | 10.1 | 27.4 | 32.8 | 53.4 |
Non-controlling interests | 0.2 | 0.1 | 0.8 | 0.2 |
Basic and diluted earnings per share(expressed in Russian Roubles per share) | 0.0010 | 0.0026 | 0.0032 | 0.0051 |