VTB reduces loan portfolio by 2.8% in Q1 as bad loans grow to 6.4%
MOSCOW. May 19 (Interfax) - VTB , Russia's second largest bank by assets, reduced its loan portfolio before provisions by 2.8% to 8.899 trillion rubles in the first quarter of 2015, the state lender said in a press release.
Retail loans decreased by 2.3% to 1.901 trillion rubles, and corporate loans fell by 2.9% to 6.997 trillion rubles in the quarter.
"On the back of high interest rates and low economic activity, the Russian banking sector saw a continued slowdown in demand for loans in Q1 2015. This trend, combined with the seasonality factor, as well as tight lending policies and approval criteria for loan applications, contributed to the contraction of the Group's loan book since the start of the year," the bank said.
Loan book quality continued to develop in line with macroeconomic and banking sector trends in Q1 2015. The NPL ratio was 6.4% of gross customer loans, including those pledged under repurchase agreements (the 'total loan book'), as of March 31, 2015, versus 5.8% as of December 31, 2014."
The allowance for loan impairments reached 7.2% of the total loan book as of March 31, 2015, compared to 6.7% at the start of the year. The NPL coverage ratio remained at a conservative level of 112.0% as of March 31, 2015, versus 114.8% as of December 31, 2014."
A 13.8% growth in deposits during Q1 2015 was mainly attributable to an increase in deposits from legal entities. This drove the share of customer deposits in the Group's total liabilities up to 57.0% as of March 31, 2015, from 51.3% at the start of the year. With capital markets remaining effectively closed for Russian banks, the Group continued to reduce its reliance on wholesale funding, with the share of debt securities issued in total liabilities falling to 7.0% as of March 31, 2015, from 8.3% as of December 31, 2014. During Q1 2015, VTB and its subsidiaries made repayments on their international public debt in the total amount of $2 billion."
As of March 31, 2015, the Group's total and Tier 1 capital adequacy ratios were 11.9% and 9.7% respectively, versus 12.0% and 9.8% as of December 31, 2014.