VTB Group announces IFRS financial results for May and 5M 2021

VTB Bank, the parent company of VTB Group (the "Group"), today publishes its unaudited consolidated financial results in accordance with IFRS for May and the first five months of 2021.

Dmitry Pianov, a member of the Management Board and Chief Financial Officer of VTB Bank, said:

"In the first five months of 2021, VTB Group delivered both strong profitability and robust organic business growth.

"Net profit for January to May amounted to RUB 137.4 billion, including RUB 22.8 billion in May, reflecting healthy growth in core banking revenues. Net interest income rose by 20.3% year-on-year, while net fee and commission income increased 42.8% year-on-year. We also achieved efficiency improvements.

"Overall, our May performance bodes well for the Group's second quarter results and gives us confidence that we will achieve our strategic profitability targets for the full year."

Total loan book remains stable amid an increase in the share of retail lending

As of 31 May 2021, the total gross loan portfolio before provisions amounted to RUB 13.7 trillion, an increase of 4.4% since the beginning of the year (adjusted for currency revaluation, the increase was 4.6%).

Since the beginning of the year, loans to individuals have increased by 9.2% to RUB 4.2 trillion. Loans to legal entities have increased by 2.4% since the beginning of the year to RUB 9.5 trillion (adjusted for currency revaluation, the increase was 2.7%).

As a result of faster growth in retail lending, the share of loans to individuals in the Group's total loan book increased to 31%, up from 29% at the end of 2020.

As of 31 May 2021, total customer funding had increased by 14.1% to RUB 14.6 trillion (adjusted for currency revaluation, the increase was 14.3%).

Since the beginning of the year, customer funding from legal entities has increased by 24.4% to RUB 8.8 trillion on the back of strong growth in current account balances (adjusted for currency revaluation, the increase was 24.7%). Customer funding from individuals has increased by 1.2% to RUB 5.8 trillion since the beginning of the year as a result of a significant increase in savings account balances along with a decrease in funds invested in term deposits (adjusted for currency revaluation, individual customer funding decreased by 1.4%).

The share of customer funding in the Group's total liabilities increased to 83.2% at the end of May 2021 (up from 78.1% as of 31 December 2020).

The Group's loans-to-deposits ratio (LDR) decreased to 87.6% as of 31 May 2021 (down from 95.6% as of 31 December 2020).

The Group significantly improved profitability amid strong growth in core banking revenues and stable loan portfolio quality

VTB Group's net profit amounted to RUB 137.4 billion in the first five months of 2021 and RUB 22.8 billion in May, increases of 3.3x and 45.6x year-on-year, respectively. ROE was 18.0% in 5M 2021 and 14.0% in May 2021, compared with 5.8% and 0.3%, respectively, in the same periods last year.

Net interest income amounted to RUB 251.4 billion in 5M 2021 and RUB 55.4 billion in May 2021, increases of 20.3% and 17.1%, respectively, year-on-year. Net interest margin showed resilience to changes in the key rate, amounting to 3.8% in May and for 5M 2021.

Net fee and commission income amounted to RUB 69.1 billion in 5M 2021 (an increase of 42.8% year-on-year) and RUB 14.6 billion in May 2021 (an increase of 80.2% year-on-year). The strong growth in net fee and commission income was driven by the Group's growing transactional business and the steady rise in commissions from the sale of insurance products and brokerage commissions.

The Group's cost of risk was 0.8% in the first five months of 2021 and in May, down from 1.5% and 1.2%, respectively, for the same periods last year. At the same time, the provision charge amounted to RUB 43.7 billion for the first five months of 2021 and RUB 9.9 billion in May, decreases of 41.6% and 20.2% year-on-year, respectively.

The Group's NPL ratio was 5.0% as of 31 May 2021, down 70 b.p. since the beginning of the year. As of 31 May 2021, the NPL coverage ratio remained high at 134.9% (compared with 120.6% as of 31 December 2020).

Staff costs and administrative expenses amounted to RUB 111.7 billion for the first five months of 2021 (up 1.5% year-on-year) and RUB 22.6 billion in May (down 4.6% year-on-year).

The growth in profitability supported a considerable improvement in operating efficiency: the costs to pre-provision operating income ratio decreased 11.9 p.p. in the first five months of 2021 and amounted to 34.0%.