24 Apr 2013 07:51
VTB Group announces audited IFRS results for 2012
24 April 2013
VTB Group today publishes its Consolidated Financial Statements with the Independent Auditors' Report for the year ended 31 December 2012.
Andrey Kostin, VTB President and Chairman of the Management Board, said: "These full year results demonstrate the strength of our core businesses, and in the fourth quarter we delivered record high net profit in VTB's history. In 2012, we made considerable progress in strengthening capital and optimising risk in our asset base, thus positioning us well for further profitable growth. We also continue focusing on expanding our retail business, including developing the new Leto Bank mass market bankingproject."
FINANCIAL AND OPERATING HIGHLIGHTS
Income statement
RUB billion | FY2012 | FY2011 | Change, % or pps | 4Q2012 | 4Q2011 | Change, % or pps |
Net interest income | 246.0 | 227.0 | 8.4% | 71.7 | 77.9 | (8.0%) |
Net fee and commission income | 48.3 | 39.2 | 23.2% | 14.1 | 12.1 | 16.5% |
Operating income before provisions | 369.5 | 286.6 | 28.9% | 110.4 | 76.7 | 43.9% |
Provision charge for impairment of debt financial assets | (59.4) | (31.6) | 88.0% | (14.4) | (6.3) | 128.6% |
Net profit | 90.6 | 90.5 | 0.1% | 30.4 | 17.9 | 69.8% |
ROE, % | 13.7% | 15.0% | (1.3 pp) | 16.8% | 11.5% | 5.3 pp |
§ VTB Group's 2012 net profit was RUB 90.6 billion, corresponding to earnings per share of 0.817 Russian kopecks and an ROE of 13.7%. In 4Q 2012, the Group posted a record quarterly net profit of RUB 30.4billion, corresponding to an annualised quarterly ROE of 16.8%.
§ The Group's core business segments, Retail Banking and Corporate and Investment Banking (CIB), posted a profit before tax of RUB 66.0 billion and RUB 52.4billion in 2012, contributing 57.8% and 45.9% respectively to the Group total pre-tax profit before intersegment eliminations.
§ The expansion of the Group's loan book, stronger yields on loans in 4Q 2012 and releases of provisions booked on the balance sheet of Bank of Moscow (BoM) prior to its consolidation into the Group contributed to year-on-year and quarter-on-quarter net interest income growth. Net interest margin (NIM) was 4.6% in 4Q 2012 (vs. 4.1% in 3Q 2012 and 2Q 2012 and 3.8% in 1Q 2012) resulting in a NIM of 4.2 % for 2012. The 4Q 2012 NIM adjusted for the BoM provision releases amounted to 4.3%.
§ Retail Banking and Transaction Banking continued to drive solid growth in fee and commission income, contributing RUB 32.2 billion and RUB 15.6 billion or 58.3% and 28.3%, respectively, to the Group's total net fee and commission income before intersegment eliminations.
§ The provision charge for impairment of loans and advances to customers reached 1.2% of the average loan portfolio in 2012, up from 1.0% in 2011. In 4Q 2012, the provision charge for impairment of loans and advances to customers remained stable on a quarter-on-quarter basis at 1.1%. For 2012, the provision charge for impairment of debt financial assets was RUB 59.4 billion (versus RUB 31.6 billion in 2011), approximately 34% of which was booked counter-cyclically in 1Q 2012.
§ The Group's net result from financial instruments was RUB 15.0 billion in 2012. In 2011, the Group recorded net loss from financial instruments of RUB 26.7 billion. The net result from foreign currencies was RUB 6.8 billion in 2012 versus a net loss of RUB 0.4 billion in 2011.
§ Staff costs and administrative expenses amounted to RUB 191.6billion in 2012, up 35.4% from RUB 141.5 billion in 2011, largely due to the consolidation of Bank of Moscow and continued expansion of the Group's key businesses.
Statement of financial position
RUB billion or % | 31 Dec 2012 | 31 Dec 2011 | Change, % or bps |
Total assets | 7,415.7 | 6,789.6 | 9.2% |
Total gross loans | 5,084.8 | 4,590.1 | 10.8% |
Corporate gross loans | 3,964.6 | 3,766.0 | 5.3% |
Retail gross loans | 1,120.2 | 824.1 | 35.9% |
Customer deposits | 3,672.8 | 3,596.7 | 2.1% |
Corporate deposits | 2,238.7 | 2,435.3 | (8.1%) |
Retail deposits | 1,434.1 | 1,161.4 | 23.5% |
NPL ratio | 5.4% | 5.4% | 0 bps |
Tier 1 ratio | 10.3% | 9.0% | 130 bps |
Total CAR | 14.6% | 13.0% | 160 bps |
§ In 4Q 2012, the Group continued the expansion of its corporate loan book that startedin 3Q 2012. Corporate gross loans excluding federal loan bonds purchased by Bank of Moscow in September 2011 and accounted for as customer loans, amounted to RUB 3,929.9 billion as of 31 December 2012, up 7.7% from RUB 3,650.6billion at 31 December 2011 and up 4.8% in 4Q 2012 from RUB 3,748.2 billion at 30 September 2012. Retail gross loans increased by 35.9%, from RUB 824.1 billion to RUB 1,120.2 billion during 2012, reaching 22.0% of the Group's total gross loans.
§ Loan quality was stable, with the NPL ratio unchanged for 2012 at 5.4% of total gross loans (including financial assets classified as loans and advances to customers pledged under repurchase agreements) as of 31 December 2012. The Group's NPL coverage ratio at 31 December 2012 was 112.4%, versus 111.3% as of 31 December 2011.
§ Changes in customer deposits during 2012 were primarily driven by the Group's focus on optimising the cost of funding and improving net interest margin.
§ The Group substantially reduced its equity securities portfolio, which contracted by RUB 167.8 billion, or 61.7%, during 2012 (4Q 2012 decline of RUB 97.3 billion or 48.3%) to RUB 104.0 billion.
§ Throughout 2012 and into 2013, the Group reaffirmed its ability to effectively diversify funding sources across instruments, geographies, currencies and investor bases, issuing debt in US dollars, Singapore dollars, Swiss francs, Chinese yuan renminbi, and Australian dollars. In December 2012 VTB successfully issued an AUD 500 million 7.5% Eurobond due in 2017, the first ever Australian dollar offering from a Central and Eastern European issuer. In March 2013, VTB raised a US$ 2.0 billion, 3-year syndicated loan facility with a margin of 150 bps p.a. over LIBOR, the largest syndicated facility by a financial institution in Russia since 2011.
§ The Group continued to prioritise strengthening its capital base in 2H 2012. In August 2012, VTB successfully issued a US$ 1 billion Tier 1 perpetual bond, which provided the Group with a cost effective, non-dilutive means of raising capital. The bond was designed to achieve capital treatment under Basel I and II, as well as to accommodate anticipated changes to the Russian regulatory system in light of the transition to Basel III. In November 2012, VTB increased the total issue size by US$ 1.25 billion to US$2.25 billion. In October 2012, the Group also issued a US$ 1.5 billion Subordinated Lower Tier 2 6.95% Eurobond, due in 2022.
§ The Group's total and Tier 1 capital adequacy ratios (CAR) as of 31 December 2012 were 14.6% and 10.3%, respectively, versus 13.0% and 9.0% as of 31 December 2011. The Group will continue to seek to strengthen its capital ratios in order to support further growth.
KEY BUSINESS SEGMENT HIGHLIGHTS
RUB billion | Corporate and Investment Banking | Retail Banking | |||
Loans and deposits | Investment banking | Transaction banking | Total CIB* | ||
Net interest income | 93.3 | 15.0 | 22.3 | 130.6 | 133.7 |
Net fee and commission income | 1.9 | 4.6 | 15.6 | 22.1 | 32.2 |
Operating income | 72.0 | 34.6 | 38.7 | 145.4 | 143.1 |
Profit before taxation | 26.2 | 10.5 | 15.6 | 52.4 | 66.0 |
*Including Inter-CIB Eliminations
Corporate and Investment Banking
Yuri Soloviev, First Deputy President and Chairman of the VTB Management Board, said: "We continue to focus on perfecting our unique product offering and further improving efficiency in the Group's CIB business. Our Transaction Banking team is successfully expanding its client coverage, while VTB Capital is transforming itself into a strong regional investment banking player, having secured the #1 position in Russia and the CIS."
§ In 2012, the Group's Global Transaction Banking Business (GTB) sold complex and customised cash management solutions to 165 large corporate groups (comprising over 1,300 legal entities). Throughout the year the GTB team was focusing on improving client service and establishing dedicated sales teams in the Russian regions for small and medium-sized clients.
§ The CIB team has successfully delivered on its strategic project aimed at transforming VTB's corporate branch network in the Russian regions to further enhance its performance and efficiency. During 2012 and 1Q 2013, more than 40 VTB Bank branches were converted into operational offices, which will allow further cost optimisation and unlock new growth opportunities in the regional corporate banking business.
§ In 2012, VTB Capital started operations in a number of new geographies, with its clients gaining access to South African, Turkish, Polish, Czech, Hungarian, Israeli and other Middle Eastern markets. VTB Capital also began offering direct market access (DMA) services for institutional clients in 2012 via VTB Capital Broker.
§ VTB Capital is the #1 investment banking franchise in Russia. In November 2012, it became the first Russian bank to place sovereign Eurobonds in CEE (Serbia's US$ 750 million Eurobond), and in March 2013 it was the first Russian bank to participate in a domestic bond offering in the United States (Bank of America Corporation's US$ 4 billion offering). For 2012, VTB Capital's DCM team took the top spot in the Dealogic ranking for Central and Eastern Europe, with 103 local and international debt placements worth a total of US$ 18.7 billion. VTB Capital also holds top positions in the 2012 Russia and CIS Eurobond Bookrunner ranking, with 35 transactions worth US$ 10.7 billion (market share: 18.2%) and in the Russia domestic bonds bookrunners ranking, with 63 placements worth US$ 7.4 billion (market share: 21.4%).
§ Key highlights of VTB Capital's capital markets operations in 2012 included: joint bookrunner for the US$ 1.8 billion IPO of Megafon, Russia's largest equity market transaction of 2012, and a sole advisor and co-investor in exchangeable bonds issue by Uralkali, one of the world's largest potash producers.
§ VTB Capital placed second in Dealogic's M&A financial advisor league tables focusing on Russia and CIS. In 2012, VTB Capital has advised on 21 deals worth a total of US$ 68.3 billion, which is a 50.8% market share in Russia and a 46.1% share in the CIS.
Retail Banking
Mikhail Zadornov, VTB24 President and Chairman of the Management Board, said: "Our retail business saw strong growth both through the expansion of our client base and by successfully selling new products to existing clients. We further enhanced our retail franchise by launching the mass segment project, Leto Bank, which is growing rapidly and starting to outperform all relevant peers. We also continue to integrate the retail operations of banks we have acquired. In 2013 TransCreditBank's clients will be offered the full product range of VTB24, our core retail bank with the most advanced product offering."
VTB Group Retail Loan Book
RUB billion or % | 31 Dec 2012 | 31 Dec 2011 | Change, % |
Gross retail loans | 1,120.2 | 824.1 | 35.9% |
Consumer loans | 624.3 | 436.2 | 43.1% |
Car loans | 102.0 | 75.5 | 35.1% |
Mortgage loans | 390.7 | 309.0 | 26.4% |
§ The Retail Banking segment's performance was supported by a favourable macro environment combined with healthy real wages growth and strong household consumption expenditures in 2012.
§ In April 2013, TransCreditBank (TCB) offices started offering VTB24's products as part of the ongoing integration of the banks' retail operations. VTB24 is the Group's core retail bank with the most advanced product range, and efficient exploration of TCB's client base is expected to further increase the value of the Group's retail business going forward.
§ In 2H 2012 the Group launched Leto Bank, a new strategic project aimed at the mass retail client segment. The bank focuses on highly profitable cash loans and point-of-sale loans. In 1Q 2013 Leto Bank's loan portfolio expanded 4.5x times to RUB 3.2 billion. At 31 March 2013, Leto Bank had already established 106 client centres and was present in over 1,600 shopping centres.
§ 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 64.8% at 31 December 2012 from 62.1% at the start of the year. The share of mortgage loans in the same period decreased to 34.9% from 37.5%.
§ The changes in the portfolio mix contributed to an annualised yield on the Group's retail loans amounting to 17.6% in 4Q 2012, versus16.6% in 3Q 2012, 15.7% in 2Q 2012 and 15.9% in 1Q 2012.
§ VTB24's private banking deposits continued to be an important contributor to the retail deposit base, as the Group continued to successfully expand its business among affluent and high-net-worth customers. Funds from VTB24's private banking clients increased to RUB 214.1 billion, representing 16.1% of the Group's retail deposits.
§ The total number of VTB24, BoM and TCB retail offices in Russia was 1,257 as of 31 December 2012, versus 1,242 as of 31 December 2011. The combined number of VTB24, TCB and BoM ATMs exceeded 12,300 as of 31 December 2012.
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 five 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 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 31 December 2012 was 80,860.
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
Consolidated Statements of Financial Position as at 31 December
(in billions of Russian Roubles)
2012 | 2011 | |
Assets | ||
Cash and short-term funds | 569.0 | 407.0 |
Mandatory cash balances with central banks | 63.8 | 71.9 |
Financial assets at fair value through profit or loss | 528.8 | 571.5 |
Financial assets pledged under repurchase agreements and loaned financial assets | 302.9 | 198.6 |
Due from other banks | 358.6 | 424.6 |
Loans and advances to customers | 4,761.5 | 4,301.6 |
Assets of disposal group held for sale | 15.3 | 10.3 |
Financial assets available-for-sale | 97.4 | 167.7 |
Investments in associates and joint ventures | 48.3 | 32.5 |
Investment securities held-to-maturity | 0.9 | 32.4 |
Land, premises and equipment | 142.5 | 116.8 |
Investment property | 148.0 | 122.5 |
Intangible assets and goodwill | 137.3 | 141.2 |
Deferred tax asset | 42.9 | 42.7 |
Other assets | 198.5 | 148.3 |
Total assets | 7,415.7 | 6,789.6 |
Liabilities | ||
Due to other banks | 759.9 | 699.7 |
Customer deposits | 3,672.8 | 3,596.7 |
Liabilities of disposal group held for sale | 6.1 | 8.5 |
Other borrowed funds | 806.2 | 734.6 |
Debt securities issued | 894.5 | 664.5 |
Deferred tax liability | 12.3 | 10.0 |
Other liabilities | 212.0 | 209.4 |
Total liabilities before subordinated debt | 6,363.8 | 5,923.4 |
Subordinated debt | 285.8 | 241.1 |
Total liabilities | 6,649.6 | 6,164.5 |
Equity | ||
Share capital | 113.1 | 113.1 |
Share premium | 358.5 | 358.5 |
Perpetual loan participation notes | 68.3 | - |
Treasury shares | (13.7) | (0.6) |
Unrealized gain on financial assets available-for-sale and cash flow hedge | 4.3 | 7.9 |
Land and premises revaluation reserve | 20.8 | 11.4 |
Currency translation difference | 8.8 | 11.0 |
Retained earnings | 193.7 | 102.2 |
Equity attributable to shareholders of the parent | 753.8 | 603.5 |
Non-controlling interests | 12.3 | 21.6 |
Total equity | 766.1 | 625.1 |
Total liabilities and equity | 7,415.7 | 6,789.6 |
VTB Bank
Consolidated Income Statements for the Years Ended 31 December
(in billions of Russian Roubles)
2012 | 2011 | |
Interest income | 555.7 | 416.7 |
Interest expense | (309.7) | (189.7) |
Net interest income | 246.0 | 227.0 |
Provision charge for impairment of debt financial assets | (59.4) | (31.6) |
Net interest income after provision for impairment | 186.6 | 195.4 |
Gains less losses / (losses net of gains) arising from financial instruments at fair value through profit or loss | 10.1 | (30.8) |
Gains less losses from available-for-sale financial assets | 4.9 | 4.1 |
Losses net of gains arising from extinguishment of liability | (1.8) | (0.7) |
Net recovery of losses on initial recognition of financial instruments, restructuring and other gains on loans and advances to customers | 17.2 | 20.2 |
Gains less losses arising from dealing in foreign currencies | 14.5 | 6.1 |
Foreign exchange translation losses net of gains | (7.7) | (6.5) |
Fee and commission income | 61.2 | 47.4 |
Fee and commission expense | (12.9) | (8.2) |
Share in income of associates and joint ventures | 1.2 | 7.5 |
Provision charge for impairment of other assets, contingencies and credit related commitments | (2.7) | (1.4) |
Income arising from non-banking activities | 57.9 | 20.4 |
Expenses arising from non-banking activities | (29.2) | (9.1) |
Other operating income | 8.1 | 9.2 |
Net non-interest income | 120.8 | 58.2 |
Operating income | 307.4 | 253.6 |
Staff costs and administrative expenses | (191.6) | (141.5) |
Impairment of goodwill | (1.5) | - |
Profit from disposal of subsidiaries and associates | 1.1 | 3.4 |
Profit before taxation | 115.4 | 115.5 |
Income tax expense | (24.8) | (25.0) |
Net profit | 90.6 | 90.5 |
Net profit attributable to: | ||
Shareholders of the parent | 85.8 | 89.4 |
Non-controlling interests | 4.8 | 1.1 |
Basic and diluted earnings per share(expressed in Russian Roubles per share) | 0.00817 | 0.00855 |