VTB Bank

Earnings Release • May 17, 2018

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JSC VTB Bank (VTBR)

VTB Group announces IFRS results for 1Q 2018

17-May-2018 / 11:18 CET/CEST

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VTB Group announces IFRS results for 1Q 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 ended 31 March 2018, with the Independent Auditor's Report on Review of these Statements.

Andrey Kostin, President and Chairman of the Management Board, said: "VTB delivered an exceptional performance in the first quarter, thanks to strong core revenue generation, effective cost controls and stable asset quality. Our ROE for the quarter was 16%, and all key performance metrics are at or better than the target levels set out in our three-year strategy.

"In line with our strategic drive to prioritise the growth of our retail business, VTB Group saw a strong inflow of consumer deposits, which rose by 5.5% during 1Q 2018. Retail lending also drove growth of the overall loan portfolio, up by 2.6% during the quarter. On the Corporate and Investment Banking side, VTB Capital continues to lead the way, maintaining its positions at the top of the league tables.

"We are very proud of the seamlessly executed merger of VTB24 into VTB Bank that was completed at the beginning of the year, unifying our operations under the renewed VTB brand. This has already started to generate costs benefits and achieve new synergies between our business lines.

"VTB Group's first-quarter performance gives us full confidence that we are well on track to meet our targets for the year, and to deliver on our three-year strategy. We will continue to make improvements to the customer experience, as well as to the quality of products and services we provide to VTB's 39 million customers across Russia."

FINANCIAL AND OPERATING HIGHLIGHTS

Income Statement

RUB billion	1Q 2018	1Q 2017	Change, %
Net interest income	116.3	113.0	2.9%
Net fee and commission income	21.9	19.7	11.2%
Operating income before provisions	152.6	145.2	5.1%
Provision charge*	(20.7)	(45.9)	(54.9%)
Staff costs and administrative expenses	(63.1)	(61.6)	2.4%
Net profit	55.5	27.6	101.1%

*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 1Q 2018 increased by 101.1% year-on-year to RUB 55.5 billion , driven by growth of net interest income and net fee and commission income, continued improvement of cost efficiency, and supported by stable asset quality.
• Higher lending volumes drove net interest income growth of 2.9% year-on-year to RUB 116.3 billion in 1Q 2018. The net interest margin remained unchanged for a fifth quarter in a row, and stood at 4.1% in 1Q 2018.
• Net fee and commission income increased by 11.2% year-on-year to RUB 21.9 billion in 1Q 2018, supported by strong performance in core fee-generating business lines and a growing share of insurance products and other agency services.
• The cost of risk was 0.9% in 1Q 2018, compared to 1.9% in 1Q 2017 and 1.6% in FY 2017. The provision charge for 1Q 2018 amounted to RUB 20.7 billion, down by 54.9% year-on-year.
• The Group's demonstrated good cost efficiency in 1Q 2018: the ratio of costs to operating income before provisions decreased to 41.3%, versus 42.4% for 1Q 2017. Staff costs and administrative expenses increased by just 2.4% year-on-year in 1Q 2018, to RUB 63.1 billion.

Statement of financial position

All numbers and ratios as of 31 March 2018 below are compared with corresponding numbers and ratios as of 1 January 2018, and have been compiled in accordance with IFRS 9 and IFRS 15. All changes shown for comparative numbers and ratios also reflect the transition to IFRS 9 and IFRS 15.

RUB billion	31-Mar-18	1-Jan-18	Change in 1Q 2017, % or p.p.
Total assets	13,109.4	12,947.4	1.3%
Loans and advances to customers, including pledged under repurchase agreements (gross)	9,952.8	9,841.1	1.1%
Gross loans to legal entities	7,353.5	7,307.4	0.6%
Gross loans to individuals	2,599.3	2,533.7	2.6%
Customer deposits	9,333.3	9,144.7	2.1%
Deposits from legal entities	5,513.9	5,523.1	(0.2%)
Deposits from individuals	3,819.4	3,621.6	5.5%
NPL ratio	7.1%	6.9%	0.2 p.p.
LDR ratio	98.7%	99.6%	(0.9 p.p.)
Tier 1 CAR	12.7%	12.6%	+0.1 p.p.
Total CAR	14.5%	14.4%	+0.1 p.p.

• In 1Q 2018 the Group's loan book grew by 1.1% to RUB 9,952.8 billion. Gross loans to individuals were up by 2.6% in the quarter, while gross loans to legal entities rose by 0.6% during the period.
• The Group's NPL ratio was 7.1% of gross customer loans including those pledged under repurchase agreements (the "total loan book") as of 31 March 2018, compared to 6.9% as of 1 January 2018. The allowance for loan impairments remained flat at 7.9% of the total loan book as of 31 March 2018, compared to 1 January 2018. The NPL coverage ratio was 105.8% as of 31 March 2018, versus 107.9% as of 1 January 2018.
• Customer deposits continued to grow and reached 80% of the Group's liabilities as of 31 March 2018, while the loans-to-deposit ratio was 98.7%, compared to 99.6% as of 1 January 2018.
• The Group's market share in Russia in corporate and retail funding stood at 22.4% and 13.4%, respectively. Customer deposits grew by 2.1% in the first quarter to RUB 9,333.3 billion as of 31 March 2018. Deposits from legal entities decreased slightly by 0.2%, while deposits from individuals grew by 5.5% in 1Q 2018.
• Post Bank continued to expand as an important part of the Group's retail banking operations: In 1Q 2018 Post Bank acquired 1 million new clients, growing the total client base to over 7 million. The regional network grew to over 13,100 outlets in more than 4,500 localities.
• The Group continued to maintain a low reliance on wholesale funding, with the share of debt securities issued in total liabilities falling to 2.4% as of 31 March 2018, compared to 2.8% as of 1 January 2018.
• VTB Capital delivered strong performance during the quarter, and once again led the DCM, ECM and M&A league tables in 1Q 2018. VTB Capital was also named the Best Local Investment Bank in Russia by EMEA Finance in April 2018, and won The Banker's "Deals of the Year 2018" award in May 2018.
• Capital adequacy ratios remained sound, backed by solid profitability during 1Q 2018: as of 31 March 2018, the Group's total and Tier 1 capital adequacy ratios were 14.5% and 12.7%, respectively, versus 14.4% and 12.6% as of 1 January 2018.

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Attachment

Document title: VTB Group IFRS Consolidated Financial Statements as of March 31, 2018

Document: http://n.eqs.com/c/fncls.ssp?u=ROGIMSKFHM

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ISIN:	US46630Q2021
Category Code:	MSCM
TIDM:	VTBR
LEI Code:	253400V1H6ART1UQ0N98
Sequence No.:	5556
EQS News ID:	687101

End of Announcement	EQS News Service

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