VTB Bank, the parent company of VTB Group (“the Group”), today publishes its unaudited consolidated financial results in accordance with IFRS for July and the seven months of 2024.

Dmitry Pianov, First Deputy Chairman of the Management Board and Chief Financial Officer of VTB Bank, said:

“VTB Group's financial performance in July and 7M 2024 demonstrates vigorous business growth, particularly in the corporate segment. This growth is driven by a relatively low cost of risk, controlled spending, and strong margins, despite the pressure on net interest margin from a tight monetary policy environment.

These results are in line with our expectations and confirm our guidance for record earnings in 2024.”

The Group has exhibited steady business growth

As at 31 July 2024, the total loan book before loan loss provisions amounted to RUB 23.4 trillion, up 1.3% in July and 11.2% since the start of the year.

Loans to legal entities increased by 11.8% to RUB 15.7 trillion in 7M 2024. Loans to Medium and Small business clients stood at RUB 3.7 trillion or 16% of the Group’s total loan book, up 2.4% in July and 14.0% in seven months 2024 respectively. The growth of lending to individuals amounted to 0.5% in July and 10.0% in 7M 2024, with the retail loan portfolio reaching RUB 7.7 trillion as at 31 July 2024. The proportion of loans to individuals in the Group's total loan book was 33% as at 31 July 2024 (33% as at 31 December 2023).

As at 31 July 2024, the Group's total customer funding increased by 7.8% since the start of the year to RUB 24.1 trillion, with the funding from legal entities going up by 3.8% to RUB 13.2 trillion. Funding from individuals saw a 13.1% rise during the first seven months to RUB 10.9 trillion. It accounted for 45.1% of total customer funding for the period (43.0% as at 31 December 2023). The share of customer funding in the Group's total liabilities in 7M 2024 came in at 80.6% (82.1% as at 31 December 2023).

The loan-to-deposit ratio (LDR) remained at a conservative level and amounted to 91.9% as at 31 July 2024 (88.9% at the end of 2023).

VTB Group maintained robust profitability in spite of mounting pressures on net interest margin

VTB Group posted a net profit of RUB 20.8 and 297.9 billion in July and 7M 2024, having decreased by 41.6% and by 8.5% year-on-year compared to the same periods last year. The decrease compared to last year was caused by the presence of a significant one-off component in the results of the 1st half of 2023 in the form of a positive revaluation of the structural foreign exchange position. The Group's RoE in July and 7M 2024 came in at 10.0% and 22.1%, in contrast to 20.4% and 31.0% respectively.

Net operating income before provisions was RUB 72.5 and 593.9 billion in July and 7M 2024, down 17.7% and 16.6% year-on-year respectively. Net interest income faced a drop of 34.2% in July and 24.4% in 7M 2024 year-on-year to RUB 43.4 and 331.7 billion under pressure on net interest margin. Net interest margin, affected by tightening monetary policies since the middle of last year, settled at 1.8%, down from 3.1% in July 2023 and 2.0% in 7M 2024, down from 3.2% in 7M 2023. Net fee and commission income increased by 14.4% in July 2024 compared to the same period last year and amounted to RUB 22.2 billion. In 7M 2024, net fee and commission income saw a year-on-year ascent of 15.0% to RUB 134.6 billion.

The cost of risk was 0.9% in July 2024 (1.0% in July 2023). The cost of risk was 0.6% in 7M 2024, a decrease of 40 bp year-on-year. Provision charge was RUB 15.2 billion in July 2024 and RUB 78.0 billion in 7M 2024 increased by 14.3% and decreased by 27.4% year-on-year respectively.

As at 31 July 2024, the share of NPLs in the total loan book remained at historically low level of 3.2% (3.2% as at 31 December 2023). The NPL provision coverage stood at 161.9% (169.8% as at 31 December 2023).

July and 7M 2024 saw staff costs and administrative expenses reach RUB 37.2 and 249.4 billion, a 11.7% and 20.4% rise year-on-year, driven by strategic investments in technology and transformation, further expansion of the retail segment as per the Group's new development strategy. The growth was also affected by RNCB bank acquisition, which was consolidated in VTB Group financial results starting from 2Q 2023. The ratio of costs to net operating income before provisions was 51.2% in July 2024 (a rise from 37.9% in July 2023) and 42.0% in 7M 2024 (a rise from 29.1% in 7M 2023), while the ratio of costs to assets was consistently low at 1.4% (1.4% in 7M 2023).

The Bank’s capital adequacy ratios are at levels exceeding the regulatory minimums. As at 1 August 2024, the N20.0 ratio (total capital) was 9.1% (minimum allowable value, including buffers, – 8.25%), N20.1 (CET 1 capital) was 6.5% (minimum allowable value, including buffers, – 4.75%) and N20.2 (Tier 1 capital) was 8.3% (minimum allowable value, including buffers, – 6.25%).