VTB expects interest rate margin to be squeezed in 2015
MOSCOW. Dec 17 (Interfax) - The management of VTB , Russia's second largest bank, expects its net interest rate margin to come under strong pressure and possibly narrow to 3.5% in 2015 from more than 4% in 2014 amid the higher cost of funding and temporary gap in the revaluation of assets compared to liabilities, analysts at Sberbank CIB said, citing a meeting VTB's chief financial officer held with analysts.
The price of risk, VTB forecasts, will be "lower than 3%," compared to 3% in 2014. Expenditures are expected to generally grow in line with inflation.
VTB is due to pay down $4.2 billion of debt in 2015 and less than $3 billion in 2016 and 2017.
The weakening of the ruble will continue to put pressure on VTB's capital, but the bank still expects its Tier 1 capital adequacy ratio to be above 10% at the end of 2014. All this means that the bank's profit in 2015 will be very small, Sberbank CIB said.
Judging by the comments of VTB management, the whole impact of the ruble's depreciation on the business of companies has not been felt yet, but the situation will be painful, the analysts believe.
VTB representatives also said that a decision was recently made to merge the Bank of Moscow into VTB in 2015, but the details and potential long-term synergies have not been disclosed.
