VTB plans to allocate 2024 profits for capital recovery, possibly return to dividend payments based on 2025 results

MOSCOW. Dec 8 (Interfax) - VTB plans to allocate profits from 2024 for capital recovery, taking into account Basel capital buffers, and the bank could possibly return to dividend payments based on the results of 2025, VTB Deputy Executive Board Chairman and CFO Dmitry Pyanov told reporters on the sidelines of the "Russia Calling!" investment forum.

VTB plans to generate profits over 430 billion rubles this year, of which the Otkritie group's contribution to the financial result should be 100 billion rubles, and profits could be within the range of 300-400 billion rubles in 2024.

Andrei Kostin, VTB President and Board Chairman, told reporters that all of this year's profits would go toward restoring the bank's capital base. "As soon as we restore capital, then we will be able to pay dividends. I believe that the 50% principle is correct. I think that it will be restored, but not this year," he noted.

Pyanov explained that the plan for capital recovery refers to the standard plan for restoring the Basel capital buffers as approved by the board of directors of the Central Bank of Russia (CBR).

The CBR has relaxed the calculation for the capital adequacy of lending institutions as of January 1, 2023, reducing the Basel buffers to the standards to zero and establishing a five-year schedule for the gradual recovery.

The CBR has established a limit on distributing profits depending on compliance with the established buffer value as a measure to protect against a substantial reduction in the capital of banks. Thus, if a systemically important bank maintains buffers of at least 3.5%, and a bank with a universal license maintains buffers of at least 2.5%, then they respectively may distribute 100% of all profits, provided that the buffer level remains after distribution. Reducing the buffers below 3.5% and 2.5%, respectively, limits the distribution of profits to no more than 50% of the current year's profits and 0% of the retained profits of previous years.

"We understand that given the losses we suffered owing to sanctions in 2022 [at 612 billion rubles] and the financial result that we have at the end of 2023 that we will require another [year in] 2024 without dividends in order to restore capital fully. Accordingly, 2025 may be the year, when in 2026 for 2025, if everything goes as we plan, we return to the idea of dividends," Pyanov said.