VTB BANK
JSC VTB Bank (VTBR)
VTB Group announces IFRS results for 6M 2021
30-Jul-2021 / 08:59 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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VTB Group announces IFRS results for 2Q 2021
VTB Bank ("VTB" or "the Bank"), the parent company of VTB Group ("the Group"), today publishes its Interim Condensed
Consolidated Financial Statements for the three months and six months ended 30 June 2021, along with the independent
auditor's report on these statements.
Dmitry Pianov, a member of the Management Board and Chief Financial Officer of VTB Bank, said:
"In 1H 2021, VTB Group achieved a record net profit of RUB 170.6 billion, delivering a return on equity of 18.5%. Key
banking revenues - net interest income and net fee and commission income - demonstrated remarkable year-on-year growth
of 21% and 38%, respectively.
"On the back of improved performance and owing to a successful programme to raise hybrid equity, VTB expanded its
business in targeted segments and improved its capital position: its total capital adequacy ratio grew by 60 bp since
the beginning of the year to 12.4%.
"Our successful performance in 1H 2021 has enabled us to increase our full-year net profit guidance to RUB 295 billion.
Achieving this bottom line will lay a solid basis for the sustainable growth of VTB's shareholder value."
Financial highlights
31 Change Change
30 June 31 March December over 1H over 2Q
(RUB billion) 2021 2021 2020
2021 2021
Assets 19,649.3 18,588.4 18,142.2 8.3% 5.7%
Loans and advances to customers, including pledged under repurchase 13,782.2 13,145.6 13,162.6 4.7% 4.8%
agreements (before loan loss provisions), as reported
Loans to legal entities 9,506.8 9,118.8 9,305.4 2.2% 4.3%
Loans to individuals 4,275.4 4,026.8 3,857.2 10.8% 6.2%
Customer funding 14,360.2 13,690.8 12,831.0 11.9% 4.9%
Funding from legal entities 8,448.1 7,969.0 7,095.1 19.1% 6.0%
Funding from individuals 5,912.1 5,721.8 5,735.9 3.1% 3.3%
NPL ratio 4.8% 5.5% 5.7% -90 bp -70 bp
LDR ratio 89.6% 89.4% 95.6% -6.0 pp 0.2 pp Business volumes grow accompanied by an increase in the share of retail lending ? As of 30 June 2021, the total loan book before loan loss provisions amounted to RUB 13.8 trillion, an increase of
4.7% from the beginning of the year. ? Loans to individuals increased by 10.8% from the beginning of the year to RUB 4.3 trillion amid a recovery in
demand for consumer lending, as well as continued growth in the mortgage portfolio thanks to the Group's
participation in the state-supported mortgage programme. In 1H 2021, VTB Group issued mortgage loans worth RUB
515.9 billion, an increase of 27.6% year-on-year. Lending to legal entities increased by 2.2% from the beginning of
the year to RUB 9.5 trillion. As a result of higher growth in lending to individuals, the share of retail in the
Group's total loan book increased to 31%, up from 29% at the end of 2020. ? Since the beginning of 2021, customer funding has increased by 11.9% to RUB 14.4 trillion. Customer funding from
legal entities increased by 19.1% in 1H 2021, while the current-account balances of legal entities increased by
23.0%. Customer funding from individuals increased by 3.1% to RUB 5.9 trillion: while there was a considerable
increase in balances in savings accounts, this was offset by a decrease in term deposits. ? In 2Q 2021, VTB offered investors, for the first time ever, bonds secured by a portfolio of consumer loans as part
of a securitisation transaction in the amount of RUB 45 billion. The volume of bonds issued with pledged collateral
amounted to RUB 35 billion. Structured entirely in accordance with Russian laws, this is the first transaction of
its kind in the Russian market. The bonds are available to a wide range of retail investors; applications will be
accepted until 20 September 2021. ? As a result of faster growth in customer funding, the loans-to-deposits (LDR) ratio decreased to 89.6% as of 30
June 2021, down from 95.6% as of 31 December 2020. The share of customer funding in the Group's total liabilities
increased in 1H 2021 to 81.3%, up from 78.1% as of 31 December 2020. The structure of customer funding continues to
change in line with the Group's strategic targets: the share of current accounts increased to 43%, up from 40% at
the beginning of the year.
Income statement
(RUB billion) 1H 2021 1H 2020 Change 2Q 2021 2Q 2020 Change Net interest income 306.0 252.0 21.4% 160.4 132.3 21.2% Net fee and commission income 84.1 60.8 38.3% 45.5 28.4 60.2% Operating income before provisions 405.1 290.5 39.4% 211.1 127.3 65.8% Provision charge(1) -54.3 -113.9 -52.3% -31.7 -68.8 -53.9% Staff costs and administrative expenses -135.6 -129.1 5.0% -70.7 -65.0 8.8% Net profit 170.6 41.9 307.2% 85.5 2.1 41x
(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.
Substantial improvement in profitability amid a strong increase in key banking revenues and stabilisation of the loan book quality ? VTB Group's net profit in 1H 2021 increased by 307.2% year-on-year to RUB 170.6 billion, which represents a return
on equity of 18.5%, up from 4.9% in 1H 2020. ? Net interest income amounted to RUB 306.0 billion in 1H 2021 and RUB 160.4 billion in 2Q 2021, increasing 21.4% and
21.2% year-on-year, respectively. Net interest margin was 3.8% in 1H 2021 and 3.9% in 2Q 2021, up from 3.7% and
3.9% year-on-year, respectively. The increase in net interest margin was the result of further optimisation of the
funding structure and an increase in the share of more profitable loans to individuals in the total loan book. ? Net fee and commission income amounted to RUB 84.1 billion in 1H 2021 and RUB 45.5 billion in 2Q 2021, increases of
38.3% and 60.2% year-on-year, respectively. The considerable increase in net fee and commission income was driven
by the expansion of the Group's transactional business and a steadily increasing volume of commissions from the
sale of insurance products and commissions from the brokerage business. ? The Group's cost of risk was 0.8% in 1H 2021 and 1.0% in 2Q 2021, having decreased by 90 bp year-on-year for both
periods as the Russian economy continued to recover from the acute phase of the COVID-19 pandemic. Provision charge
amounted to RUB 54.3 billion for 1H 2021 and RUB 31.7 billion for 2Q 2021, decreases of 52.3% and 53.9%
year-on-year, respectively. ? The Group's NPL ratio decreased by 90 bp to 4.8% as of 30 June 2021. The Group decreased its allowance for loan
impairments to 6.6%, down from 6.8% as of 31 December 2020. The NPL coverage ratio was 136.9%, up from 120.6% at
the beginning of the year. ? Staff costs and administrative expenses amounted to RUB 135.6 billion in 1H 2021 and RUB 70.7 billion in 2Q 2021,
increases of 5.0% and 8.8% year-on-year, respectively. Growth in key income lines contributed to considerable
improvements in operating efficiency, with the ratio of costs to net operating income before provisions decreasing
by 10.9 p.p. year-on-year to 33.5%
CORPORATE-INVESTMENT BUSINESS
Investment banking leadership ? As of the end of 1H 2021, VTB Capital retained its leading positions in the rankings of lead managers from Russia
in both domestic and international capital markets, according to Dealogic, Refinitiv, Bloomberg and Mergermarket.
In the equity capital markets, VTB Capital organised the largest number of transactions, including landmark IPOs
for FixPrice, which was the largest Russian IPO in the past 10 years, and for Segezha Group, the world's largest
IPO in the wood processing industry in the past 10 years. ? According to Bloomberg and Dealogic, VTB Capital was the top lead manager in 1H 2021 for bond placements in
domestic and international markets for issuers from Russia, as well as in the markets of the CIS and Eastern
Europe. Mergermarket also named VTB Capital the leader among financial advisors in terms of the volume of M&A
transactions in Russia (six transactions worth a total of USD 2.8 billion).
Continued growth of the investment platform VTB Capital Investments ? In 1H 2021, VTB Capital Investments increased customer assets by 18% to RUB 4 trillion. Assets under management -
both retail and corporate - reached RUB 2.3 trillion and RUB 1.7 trillion, respectively, increases of 28% and 7%
since the beginning of the year. VTB Capital Investments' customer base exceeded 1.6 million as of 30 June 2021, an
increase of 36% since the beginning of the year. VTB Capital Investments' income in 1H 2021 grew by 78%
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