Retail banking pre-tax income at Russia’s
second largest bank by assets, VTB, has risen by more than a fifth
year-on-year in the three months to 31 March to RUB8.2bn
(290m).
Net interest income at the retail banking
division rose by 18% in the first quarter over the year-ago period
to RUB15.1bn.
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Net fee and commission income soared by 45.5%
to RUB3.2bn.
Provisions for impairments from retail banking
declined by 37.9% year-on-year to RUB1.8bn.
Retail loans & deposits
up
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By GlobalDataRetail banking loans for the whole group rose
by 2% year-on-year to RUB555bn, while deposits rose by 4% to
RUB781bn.
Consumer loans and credit cards accounted for
51% of overall retail banking loans and generated RUB285bn in the
first quarter – an increase of 50% over the year-ago period.
Mortgage loans the second largest contributor
to overall retail banking loans, accounting for 38.4% of the
portfolio and rising by 18.9% year-on-year to RUB213bn.
In Russia, retail banking loans rose by 5% to
RUB508bn over the year-ago quarter, while deposits increased by 3%
to RUB749bn in the three months to end-March.
The rise both in loans and deposits resulted
in an increased market share for the bank:
VTB’s market share in retail loans in Russia
was 12.5% at the end of March, up from 10.5% in Q110; its market
share in deposits in the first quarter stood at 7.4% , up from 5.9%
in the corresponding period a year ago.
VTB’s non-performing loans ratio for loans to
individuals declined from 9.8% in the first quarter of 2010 to 7.7%
by end-March this year.
Group results
At group level, the bank recorded a 70.6%
year-on-year increase in first quarter net income of RUB26.1bn.
Net interest income (before provisions) rose
by 9.5% to RUB46bn. Net fee and commission income soared by 57% to
RUB8bn.
VTB had total assets of RUB4.45tr at the end
of March, an increase of 3.7% from year-end 2010.
VTB’s strong results are no exception:
Russia’s largest bank by assets, Sberbank, reported a 94.3%
year-on-year increase in first quarter net income to RUB83.8bn.
The bank has already published its half year
earnings, this time reporting a 182.4% year-on-year increase in net
income to RUB171.3bn.
Strategic deal to buy
TransCreditBank
On 15 July, VTB signed a strategic deal with
Russian Railways to acquire its shares in TransCreditBank
(TCB).
The deal will boost VTB’s market penetration
in mortgage lending and ATM distribution network:
TCB current ranks the 14th biggest
bank by assets in Russia, but fourth by mortgage lending and fifth
by number of ATMs.
VTB has already bought a 43.18% stake in TCB
in October 2010, for RUB21 per share.
VTB is now paying RUB24.4 per share for a
29.4% stake in TCB and will also pay an as of yet undisclosed
amount to buy a further 25% stake between 1 July 2012 and 31
December 2013.
VTB said that the deal gives the bank access
to 2m retail banking customers, a majority of whom are employed by
Russian Railways.
Citing Andrey Kostin, VTB Bank president and
chairman of the management board said the deal would create
“significant synergies”.
Key metrics for TCB
include:
- 290 offices in 197 cities in Russia;
- 2,400 ATMs;
- 1.5% market share in retail loans;
- 0.6% market share in retail deposits;
- Total assets of RUB390.9bn as of end-2010 (up by 51.2% from
end-2009); - Net profit for FY10 of RUB7.5bn (FY09: 4.1bn);
- Net customer loans of RUB203.9bn as of end-2010 (up by 42.3%
from FY09).
