VTB posts 59.6 bln rubles net loss for 2009, worse than forecast
MOSCOW. March 30 (Interfax) - VTB closed 2009 with net losses of 59.6 billion rubles to International Financial Reporting Standards (IFRS) due to higher loan provision charges, compared with profit of 4.6 billion rubles in 2009.
Provision charges grew to 154.7 billion rubles in or 5.7% of the average loan portfolio compared to 63.2 billion rubles or 3.2% of the average loan portfolio in 2008.
Analysts said in a consensus forecast that they thought Russia's second biggest bank would post losses of 59 billion rubles for 2009.
VTB closed the nine months ended September 30, 2009 with net losses of 45.5 billion rubles, so it must have made profit of 14.1 billion rubles in Q4 2009.
VTB said provision charges increased significantly in 2009 to 154.7 billion rubles or 5.7% of the average loan portfolio compared to 63.2 billion rubles or 3.2% of the average loan portfolio in 2008. However, the rate of growth of provision charges started to slow down during the course of the year from a 7.1% annualized rate in the first quarter of 2009 to 4.3% in the fourth quarter, as a result of the improving economic conditions. The allowance for loan impairment increased to 9.2% of total gross loans in 2009 from 3.6% at the end of last year. Non-performing loans were at 9.8% of total loans at the end of 2009 as compared to 1.9% at the end of 2008. The Group maintains a conservative provisioning policy with a coverage rate of 95% of non-performing loans.
The cost/core income ratio fell to 44.1% in 2009 from 51.9% in 2008. Core income, defined as net interest income before provisions and net fee and commission income, was up 33.3% to 173.2 billion rubles in 2009, compared to 129.9 billion rubles in 2008. Net interest income before provisions increased 34% year-on-year to 152.2 billion rubles, while net fee and commission income grew 28.8% year-on-year to 21 billion rubles.
"The Group's focus on the development of its three businesses - corporate banking, investment banking and retail banking - is reflected in the bank's solid underlying performance in 2009," VTB said.
The net interest margin before provisions stood at 4.6% in 2009 compared to 4.8% in 2008. Net interest margin continued to gradually recover during the course of 2009. In the fourth quarter of 2009 alone, net interest margin increased by 90 basis points to 5.3%, the highest level in VTB's public history, from 4.4% in the third quarter and 4.2% in the first half of the year.
Loan quality deterioration slowed down - the NPL ratio was 9.8% at the end of 2009, and prudent coverage was 95%.
Restructured loans amounted to 300.5 billion rubles of 11.8% of the loan portfolio at the end of 2009, VTB said in a presentation. The loan portfolio before reserves fell 4% to 2.545 trillion rubles during 2009.
Restructured loans came to 16.3 billion rubles or 0.6% of the loan book in 2008, so these rose 18-fold in 2009.
Restructured corporate loans totaled 283.7 billion rubles or 13.4% of the loan book at the end of 2009, restructured retail loans totaled 16.8 billion rubles or 9.3%.
Losses from loan restructuring were 19.7 billion rubles in 2009, compared with zero in 2008.
The bank restructured 74.8 billion rubles in loans during Q4 2009 and 146.9 billion rubles in Q3, 2009, when it restructured almost all loans issued to the corporate sector. .
VTB said in the earnings report that the capital increase completed in the third quarter of 2009 significantly strengthened VTB's capital base, raising 180.1 billion rubles of additional Tier 1 capital. As a result, VTB Group now has a total BIS ratio of 20.7% and a Tier 1 ratio of 14.8%.
Group assets decreased by 2.3% in 2009 to 3.611 trillion rubles from 3.697 trillion rubles.
Total customer deposits increased 42.4% to 1.6 trillion rubles at the end of 2009 from 1.1 trillion rubles at the end of 2008. Retail deposits increased 34.6% to 476.5 million at the end of 2009 compared to 354.1 million rubles at the end of 2008. Corporate and government bodies' deposits also grew significantly to 1.1 trillion rubles or 46.1% compared to 747.8 billion rubles at the end of 2008. The bank increased its market share in the Russian deposit market both in retail (from 5.7% to 6%) and corporate (from 10.2% to 12.7%) compared with the end of last year.
"VTB has made significant progress over the past year on its strategic objective of creating a leading retail operation and a top tier investment bank both of which are already contributing significantly to revenue and operating profits. We have also been able to take advantage of our secure funding base to widen and deepen our corporate franchise. While this year has been difficult for us and the industry generally, these achievements will stand us in good stead as the economy recovers in 2010," said VTB President and Chairman of the Management Board Andrei Kostin, commenting on the 2009 results.