| JSC VTB Bank (VTBR) VTB Group announces IFRS results for 3Q 2018 08-Nov-2018 / 07:07 CET/CEST Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
VTB Group announces IFRS results for 3Q 2018 VTB Bank ("VTB" or "the Bank"), the parent company of VTB Group ("the Group"), today publishes its Interim Condensed Consolidated Financial Statements for the three months and nine months ended 30 September 2018, with the Independent Auditor's Report on Review of these Statements. Andrey Kostin, VTB President and Chairman of the Management Board, said: "VTB Group delivered solid results in nine months of the year, with net profit rising by 86% to RUB 139.7 billion. With sufficient visibility through the end of the year, we are therefore confirming our FY 2018 guidance. This also means we remain well on track to achieve targets laid out in our three-year strategy. We remain focused on efficiency, keeping costs growth well below core income lines. At the same time, VTB continues to forge a technological transformation across the Bank's business lines. The robust business growth and enhanced performance in 9M 2018 has further strengthened VTB Group's position as Russia's top universal bank, offering clients large and small a full range of high-quality and high-tech services." FINANCIAL AND OPERATING HIGHLIGHTS Income Statement | RUB billion | 9M 2018 | 9M 2017 | Change, % | 3Q 2018 | 3Q 2017 | Change, % | | Net interest income | 358.6 | 343.7 | 4.3% | 120.5 | 116.6 | 3.3% | | Net fee and commission income | 69.4 | 67.0 | 3.6% | 23.3 | 23.9 | (2.5%) | | Operating income before provisions | 478.9 | 404.2 | 18.5% | 162.6 | 127.8 | 27.2% | | Provision charge* | (111.4) | (118.2) | (5.8%) | (42.4) | (42.2) | 0.5% | | Staff costs and administrative expenses | (187.3) | (185.0) | 1.2% | (62.6) | (62.4) | 0.3% | | Net profit | 139.7 | 75.3 | 85.5% | 41.2 | 17.4 | 136.8% | *Includes provision charge for impairment of debt financial assets and provision charge for impairment of other assets, credit related commitments and legal claims. - Net profit for 9M 2018 increased by 85.5% year-on-year to RUB 139.7 billion, supported by growth in core income lines, lower provision charges year-to-date and enhanced cost efficiency.
- Net interest income rose by 4.3% year-on-year to RUB 358.6 billion in 9M 2018, with the third quarter seeing an acceleration in both corporate and retail lending. The net interest margin declined by 10 bp year-on-year to 4.0% for 9M 2018, compared to 4.2% in Q2 2018 and 4.1% for FY 2017.
- Net fee and commission income rose by 3.6% year-on-year to RUB 69.4 billion in 9M 2018 as the Group's transaction banking and retail banking franchises continued to grow.
- The cost of risk was 1.5% in 9M 2018, down slightly from 1.6% in 9M and FY 2017. The provision charge for 9M 2018 amounted to RUB 111.4 billion, down by 5.8% year-on-year.
- The Group improved its cost efficiency in 9M 2018: the ratio of costs to operating income before provisions declined to 39.1%, compared to 45.8% for the same period a year earlier. Staff costs and administrative expenses increased by just 1.2% year-on-year in 9M 2018, to RUB 187.3 billion.
Statement of financial position In September 2018, VTB Group and the Russian Post signed an amended shareholder agreement with respect to PJSC Post Bank, which turned the latter into a joint venture. As at 30 September 2018, VTB Group accounted for its shareholding in PJSC Post Bank as an investment into a joint venture accounted under the equity method. | RUB billion | 30-Sep-18 | 30-Jun-18 | 1-Jan-18 | Change in 9M 2018, % or bp | Change in 3Q 2018, % or bp | | Total assets | 14,068.0 | 13,683.3 | 12,947.4 | 8.7% | 2.8% | | Loans and advances to customers, including pledged under repurchase agreements (gross), as reported | 10,968.8 | 10,206.2 | 9,841.1 | 11.5% | 7.5% | | Loans and advances to customers adjusted for change in accounting treatment of Post Bank | 10,968.8 | 9,950.4 | 9,629.8 | 13.9% | 10.2% | | Gross loans to legal entities | 8,305.7 | 7,457.6 | 7,307.4 | 13.7% | 11.4% | | Gross loans to individuals | 2,663.1 | 2,748.6 | 2,533.7 | 5.1% | (3.1%) | | Gross loans to individuals adjusted for change in accounting treatment of Post Bank | 2,663.1 | 2,492.8 | 2,322.4 | 14.7% | 6.8% | | Customer deposits | 9,740.1 | 9,839.2 | 9,144.7 | 6.5% | (1.0%) | | Customer deposits adjusted for change in accounting treatment of Post Bank | 9,740.1 | 9,609.8 | 8,974.5 | 8.5% | 1.4% | | Deposits from legal entities | 5,819.8 | 5,775.3 | 5,523.1 | 5.4% | 0.8% | | Deposits from individuals | 3,920.3 | 4,063.9 | 3,621.6 | 8.2% | (3.5%) | | Deposits from individuals adjusted for change in accounting treatment of Post Bank | 3,920.3 | 3,834.5 | 3,451.4 | 13.6% | 2.2% | | NPL ratio | 6.9% | 7.6% | 6.9% | 0 bp | (70 bp) | | NPL ratio adjusted for change in accounting treatment of Post Bank | 6.9% | 7.5% | 6.8% | 10 bp | (60 bp) | | LDR ratio | 104.7% | 95.7% | 99.6% | 510 bp | 900 bp | | LDR ratio adjusted for change in accounting treatment of Post Bank | 104.7% | 95.7% | 99.6% | 510 bp | 900 bp | | Tier 1 CAR | 12.0% | 12.2% | 12.6% | (60 bp) | (20 bp) | | Total CAR | 13.4% | 13.9% | 14.4% | (100 bp) | (50 bp) | - In 9M 2018 the Group's loan book adjusted for the change in accounting treatment of Post Bank grew by 13.9% to RUB 10,968.8 billion as gross loans to individuals and legal entities rose by 14.7% and 13.7% in the first nine months of the year, respectively.
- The Group's NPL ratio was 6.9% of gross customer loans as of 30 September 2018, at the same level of 6.9% as on 1 January 2018 and below the 7.6% recorded on 30 June 2018. The allowance for loan impairments declined to 7.0% of the total loan book as of 30 September 2018, compared to 7.5% on 1 January 2018 and 7.7% on 30 June 2018. The NPL coverage ratio was 102.5% at 30 September 2018, versus 107.9% as of 1 January 2018 and 102.3% on 30 June 2018.
- Customer deposits adjusted for the change in accounting treatment of Post Bank were up by 8.5% year-to-date, bringing deposit funding to 77% of the Group's liabilities as of 30 September 2018, while the loans-to-deposit ratio was 104.7% at the end of 9M 2018, compared to 99.6% as of 1 January 2018 and 95.7% as of 30 June 2018.
- The Group's market share in Russia in corporate and retail funding (excluding Post Bank) stood at 21.5% and 13.2%, respectively. Customer deposits amounted to RUB 9,740.1 billion as of 30 September 2018.
- The Group continued to maintain a low reliance on wholesale funding, with the share of debt securities issued in total liabilities decreasing to 2.1% as of 30 September 2018, compared to 2.8% as of 1 January 2018.
- VTB Capital remains Russia's go-to investment banking franchise, leading the DCM, ECM and M&A league tables in 9M 2018.
- Solid profitability helped maintain sound capital adequacy ratios even as corporate lending growth accelerated: as of 30 September 2018, the Group's total and Tier 1 capital adequacy ratios were 13.4% and 12.0%, respectively, versus 14.4% and 12.6% as of 1 January 2018.
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