Russia's VTB reports drop in quarterly profit, raises full-year outlook

VTB, Russia's second largest lender, reported on Thursday a 10% drop year-on-year in its second quarter net profit of 139.2 billion Russian roubles (1.72 billion dollars), due to high interest rates that squeezed net commission income.

VTB increased its profit forecast for the full year to 500 billion Russian roubles. This is up from 430 billion. The bank noted that it has begun earning more commissions on cross-border transactions despite the sweeping Western sanctions.

VTB's quarterly net interest income fell by 30% on an annual basis to 94.2 billion rubles. However, banks will benefit from lower borrowing costs as the central bank cut its key rate by 200 base points to 18%.

Lower rates are a possibility

allaying concerns

About a rise of the percentage of consumer debt that is past due. Dmitry Pyanov, VTB's CFO, spoke to the media earlier this month.

VTB Bank in Russia has an additional 20 billion roubles of net profit for every 1% reduction in interest rates.

VTB was cut off from SWIFT, the global financial messaging system, as the West imposed economic sanctions against Russia for the conflict in Ukraine. In 2022 the company suffered a loss due to sanctions, but it has recovered since then.

The bank now expects its net fee and commission revenue in 2025 will increase by about 10%. Previously, it had expected the same level as 2024.

Pyanov attributes this improvement to the improved trade across borders and the conversion of payments.

VTB will be transferring capital from its retail lending portfolio to its corporate and investments business throughout 2025.

VTB's Moscow listed shares rose after VTB reported results. However, they dropped after VTB announced a new share issue where it hopes to raise 80-90 bn roubles.

VTB shares had fallen 2.5% on the day by 0812 GMT.

(source: Reuters)