'VTB Group has achieved good performance against key operating metrics in 9M 2020. While we delivered sizeable growth in net interest and commission income, expenses rose at a modest pace. Against the backdrop of a recovery in business and consumer activity following the spring decline caused by the pandemic, we achieved strong growth in our loan portfolio and client base.
'Following the inevitable deterioration of the financial condition of some types of borrowers due to the restrictive measures, we have significantly increased loan loss provisions, which put strong pressure on the bottom line.
'The unprecedented circumstances that have impacted the entire world have confirmed we have been pursuing the right strategy of accelerated digitalisation and transformation of the business and processes. Over the past several months,
FINANCIAL HIGHLIGHTS
RUB billion
Change in 9M 2020, % or bps
Change in 3Q 2020, % or bps
Total assets
17,425.7
16,346.9
15,516.1
12.3%
6.6%
Loans and advances to customers, including pledged under repurchase agreements (gross), as reported
12,936.6
11,947.2
11,461.5
12.9%
8.3%
Legal entities
9,188.5
8,347.0
8,096.2
13.5%
10.1%
Individuals
3,748.1
3,600.2
3,365.3
11.4%
4.1%
Customer funding
12,369.1
11,852.4
10,974.2
12.7%
4.4%
Legal entities
6,824.1
6,583.5
5,932.6
15.0%
3.7%
Individuals
5,545.0
5,268.9
5,041.6
10.0%
5.2%
NPL ratio
5.7%
5.1%
4.7%
100 bps
60 bps
LDR ratio
97.5%
94.1%
98.2%
70 bps
340 bps
The total loan book grew by 12.9% in 9M 2020
For 9M and 3Q 2020, the Group's total loan book increased by 12.9% and 8.3%, respectively, to
Loans to legal entities have increased by 13.5% since the beginning of the year (4.2% adjusted for the effect of currency revaluation), mainly due to the expansion of corporate lending in 3Q 2020 amid a general recovery in economic activity.
Loans to individuals have increased by 11.4% since the beginning of the year, mainly due to a 16.8% increase in mortgage lending, which was partially offset by a decrease in the volume of car loans. In 3Q 2020 the Group's mortgage portfolio grew by a record
As of
The Group's market share in retail lending in
Customer funding increased by 12.7% in 9M 2020
Customer funding for 9M and 3Q 2020 grew by 12.7% and 4.4%, respectively, to
Customer funding from legal entities increased by 15.0% and 3.7% in 9M and 3Q 2020 (excluding the effect of currency revaluation, 6.7% and --0.5%), respectively. Customer funding from individuals increased by 10.0% and 5.2% (excluding the effect of currency revaluation, 0.2% and 0.2%), respectively.
As of the end of 9M 2020, the share of current accounts in the total amount of customer funding had increased considerably, from 25.2% as of
As of
The Group's market share in
Income statement
RUB billion
9M 2020
9M 2019
Change, %
3Q 2020
3Q 2019
Change, %
Net interest income
387.5
323.8
19.7%
135.5
110.2
23.0%
Net fee and commission income
84.7
67.3
25.9%
31.8
22.4
42.0%
Operating income before provisions
450.4
425.0
6.0%
159.9
155.2
3.0%
Provision charge(1)
185.9
77.8
138.9%
72.0
32.4
122.2%
Staff costs and administrative expenses
192.1
184.3
4.2%
63.0
58.7
7.3%
Net profit
59.1
128.0
53.8%
17.2
51.2
66.4%
(1) Includes provision charge for credit losses on debt financial assets, provision charge for credit losses on credit-related commitments and other financial assets, and provision charge for legal claims and other commitments.
In 9M 2020, net operating income before provisions increased 6.0% amid strong growth in net interest and net fee and commission income
The Group's net profit amounted to
Net interest income for 9M 2020 increased by 19.7% year-on-year as a result of growth in interest-bearing assets and an increase in net interest margin. Net interest margin was 3.8% for 9M and 3Q 2020, up from 3.3% in 9M and 3Q 2019. Net interest margin has benefited during the year from the easing of monetary policy and the revaluation of liabilities, which outstripped the revaluation of assets.
Funding costs stood at 3.8% in 9M 2020, a decrease of 150 bps year-on-year, which helped drive interest expenses down by 20.7%, while interest income declined at a slower pace of 4.9%. At the same time, the return on interest-generating assets decreased by 80 bps year-on-year to 7.6%.
Net fee and commission income increased by 25.9% year-on-year in 9M 2020 to
External factors, including declining oil prices and the COVID-19 pandemic, led to an increase in provision charges in 9M 2020
Cost of risk increased by 100 bps in 9M 2020 to 1.9%. Provision charges amounted to
The NPL ratio stood at 5.7% of gross customer loans as of
Personnel and administrative expenses for 9M 2020 amounted to
Implementing cost-saving initiatives and improving operational efficiency are key long-term priorities for the Group. As of the end of 9M 2020, the costs-to-income (CIR) ratio had decreased to 42.7% from 43.4% a year earlier.
OTHER RESULTS
Leader in investment banking
During 3Q 2020,
Continued growth of the investment products sales platform VTB Capital Investments
VTB Capital Investments' assets under management increased by 49.4%, or
VTB Capital Investments remains focused on the development of the digital investment platform VTB My Investments. The number of users of the VTB My Investments mobile application has doubled since the beginning of 2020 to 465 thousand; more than 200 thousand customers use the mobile application every day. The volume of monthly transactions made through the application exceeds
VTB My Investments won an Investfunds Award in the category Best Brokerage Company Mobile Application 2019.
In 2020, VTB Capital Investments launched
Key projects and initiatives of
Medium and Small Business global business line
Projects to increase transaction activity:
A new version of VTB Business Lite mobile banking for entrepreneurs was launched with new functionality and an updated design.
As part of the development of the Universal Business Card, an automated top-up service was launched that allows clients to set a minimum balance for their card account; once that balance is reached, the Bank will automatically transfer the required amount from the client's current account to their card account.
Product and customer experience digitalisation projects:
In Q3 2020, a new mobile application was launched called VTB Business QR, which enables businesses to accept payments from individuals through the Faster Payments System using only a smartphone and a QR code.
The business registration service at www.start.vtb.ru has been updated. Medium and Small Business clients now have access to completely free online business registration without paying state fees and without going through the
A new conveyor is being piloted for corporate clients that will make it possible to start offering new pre-approved loans, express loans and guarantees for small and medium-sized enterprises in 4Q 2020.
Retail Business global business line
A number of initiatives were implemented in 3Q 2020 to drive customer base growth and expand customer reach in the market. As a result, as of
As part of efforts to improve the efficiency of customer service, a new office format was launched in 3Q 2020 that will reduce customer waiting times by a third and increase work efficiency by 40%. Beginning in 2021,
Projects to increase transaction activity:
In
Funding cost reduction projects:
In
Product digitalisation projects:
A pilot project was started to enable digital car purchases. Customers can access a catalogue on the Bank's website, where they can choose the vehicle they like, get online approval for a loan in a few minutes and reserve a car from the dealer's showroom. During the first phase, the pilot will be carried out in
Customer experience improvement projects:
Robots have been set up to make payments to customers. Now the robots not only make decisions on applications but also process payments independently, which enables
A
Remote restructuring of car loans was launched.
In Q3 2020,
As part of efforts to improve the efficiency of intra-bank processes, a consolidated automated personnel management system is being piloted.
The first stage in upgrading the data processing centre in Perovo has been completed. The functions of the data processing centre include improving the disaster recovery and reliability of
The Bank continues to systematically improve the reliability of its IT services and systems. The reliability index from the beginning through the end of
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