VTB Bank announces RAS financial results (standalone) for November and 11M 2021

VTB Bank (PJSC) (hereinafter referred to as the Bank) publishes its standalone key RAS financial results for November and eleven months of 2021.

Mikhail Kovalenko, Senior Vice-President, Head of Accounting and Reporting Department, noted:

"VTB Bank demonstrated a solid growth of operational indicators following the results of 11 months 2021. Loan portfolio before provisions increased by 11% since the beginning of the year with retail lending being the key driver of this growth. VTB Bank increased lending to individuals by more than a quarter.

"Customer funding showed even stronger dynamics, increasing by 22% year-to-date thanks to both individuals and legal entities.

"Business profitability remains at a high level. Starting from January and up to November 2021, VTB Bank earned RUB 238.5 billion, which corresponds to a ROE of 17.5%. High efficiency is supported by key income lines - net interest income and net fee and commission income together demonstrate double digit growth of 26% year-on-year, as well as effective cost management and a profound asset quality."

Revenues and profitability

In 11M 2021, the Bank showed significant growth in profitability metrics. Net profit was RUB 238.5 billion in 11M 2021, including RUB 1.0 billion in November 2021, 4.5 times and 87% up year-on-year, respectively.

Net interest income amounted to RUB 544.3 billion in eleven months of 2021 and RUB 51.0 billion in November 2021, up by 26.9% and 20.6%, respectively, compared to the same periods of the previous year.

The key driver for the net interest income growth was increased loan portfolio of the Bank on the backdrop of stable marginal business thanks to further optimisation of the funding structure and an increase in the share of higher-margin loans to individuals in the total loan book.

Net fee and commission income amounted to RUB 137.4 billion in 11M 2021 and RUB 10.4 billion in November 2021, an increase of 22.7% and of 26.8% respectively, from the same periods of the previous year. Key growth drivers of net fee and commission income in November were income from settlement and cash services, as well as brokerage services.

Provision charge amounted to RUB 86.3 billion in 11M 2021 (down by 67.0% year-on-year) and RUB 6.4 billion for November 2021 (down by 50.4% year-on-year). As of 1 December 2021, the ratio of allowance for loan impairment to total loan portfolio was 5.4% (5.3% as of 1 November and as of 1 January 2021).

Staff costs and administrative expenses amounted to RUB 182.2 billion in 11M 2021, up by 6.5% year-on-year due to the increased costs of digital transformation. In November 2021, staff costs and administrative expenses amounted to RUB 16.4 billion, a decrease of 33.3% from the same period of the previous year due to costs calendarisation.

Balance sheet

Total assets amounted to RUB 19.1 trillion as of 1 December 2021, an increase of 16.7% in 11M 2021 and 1.4% in November 2021.

Total loan portfolio reached RUB 13.2 trillion, an increase of 11.4% in 11M 2021 and a decrease of 1.0% in November 2021. Loans to individuals increased by 25.8% since the beginning of the year.

Loans to legal entities were RUB 9.1 trillion, an increase of 5.9% since the beginning of the year and a decrease of 0.6% in November 2021. Several large repayments and issuances of loans were carried out in November resulting in slight changes of the overall loan portfolio to legal entities.

In 11M 2021 VTB Bank showed robust dynamics of loan portfolio of Medium and Small Business clients, the increase was 1.1% in November, since the beginning of 2021 the growth was 14%.

The issuance of loans to individuals grew by 41% in 11M 2021 compared to the relevant period of the previous year, including almost 61% increase in the issuance of the consumer loans. The growth rate of loan issuance is steadily decreasing due to overall market trend of interest rates growth.

In line with VTB Bank strategy the share of retail in total loan portfolio of the Bank continues to grow reaching 31.2% compared with 27.6% at the beginning of the year.

Securities portfolio grew by 44.9% year-to-date to RUB 3.1 trillion, increasing by 0.4% in November 2021.

Total customer funding was RUB 16.5 trillion as of 1 December 2021, an increase of 21.6% in 11M 2021 and 1.9% in November 2021.

Customer funding from legal entities was RUB 10.9 trillion, an increase of 28.3% from the beginning of 2021 and 1.5% in November 2021. The growth of funding from large business clients was contributed by, among other things, the funding from clients of the oil and gas, and nuclear industries.

Сustomer funding from Medium and Small Business clients in term and settlement accounts (including escrow accounts) grew at a faster pace by 19% since the beginning of 2021. Compared to September with neutral growth dynamics, November showed a renewed positive growth of 3.4% (compared to 2.5% in October 2021). On the backdrop of clients funding growth in November, the share of term deposits in total funding from Medium and Small Business clients increased. As Bank of Russia key rate is increasing followed by market rates growth, clients demonstrate high level of interest to term deposits.

Customer funding from individuals was RUB 5.6 trillion, an increase of 2.8% and 10.3% in November 2021 and in 11M 2021 respectively.

Customer funding structure remained stable: 66.2% was the funding from legal entities and 33.8% was the funding from individuals.

Capital and capital adequacy ratios

As of 1 December 2021, total regulatory capital was RUB 1.8 trillion, down by 1.2% in November 2021 and up by 10.7% since the beginning of the year mainly due to the earned profit and issued subordinated bonds.

In 11M 2021, the total amount of RUB 172.4 billion of subordinated bonds issued by the Bank in Ruble equivalent was included in the tier 1 regulatory capital.

As of 1 December 2021, total regulatory capital generally included base capital (CET 1) of RUB 1.3 trillion and main capital (tier 1) of RUB 1.6 trillion.

Capital adequacy ratios are well above the minimum regulatory requirements. As of 1 December 2021, the N1.0 (total capital) ratio equals to 11.36% (minimum regulatory threshold 8.0%), N1.1 (common equity) - 8.00% (minimum regulatory threshold 4.5%) and N1.2 (tier 1 capital) - 10.00% (minimum regulatory threshold 6.0%).

Total capital adequacy ratio (N1.0) increased by 8 b.p. in 11M 2021 mainly due to the growth of total equity and transition to the Standardised Measurement Approach (SMA) in accordance with Regulation of the Bank of Russia #744-P.

The unaudited financial performance indicators of VTB Bank presented above are collated based on the following forms 0409101 "Turnover balance sheet of credit organization" and 0409102 "Report on financial results of credit organization" as well as operational management reports as part of adjustments to the published forms. Capital adequacy ratios were calculated based on the operational financial data. The reported financial indicators are preliminary; hence, they can be supplemented and changed in the process of preparation of publishable financial reports of VTB Bank. As a result of such changes, final values may differ from the preliminary financial indicators presented above.