Page 72 - RusRPTDec19

8.1.7 ​Bank news
Russia's second-largest state-controlled ​VTB Bank​ reported 65% quarter-on-quarter and 26% year-on-year net IFRS profit of RUB51bn ($0.8bn)​ in 3Q19, making a return on equity (ROE) of 13% and beating consensus expectations by 11%. As reported by ​bne IntelliNews​, most recently VTB pledged to pay 50% of IFRS net profit in dividends​ and said it aims to bridge the digital development gap with Sberbank. Most recently the CEO of the bank Andrei Kostin said that VTB will be looking to ​recapitalise in 2020​ to keep up with the promises. The bump to the bottom line in 3Q19 was attributed to stronger other operating incomes (including trading), lower provision charge, and better operating expenses. BCS Global Markets on November 8 commented that the result as neutral, while reiterating a Buy recommendation for VTB at a target price of RUB0.052 per share. The banks interest margin remained weak at 3.2%, with net interest income of RUB110bn, but he bank expects it to improve in the 4Q19 following the key interest rate cuts by the central bank. Net fees and commissions also missed the consensus coming in 4% q/q lower to RUB22.4bn, lowered by loyalty programme expenses. VTB maintained the net profit guidance of RUB200bn and improved the cost of risk guidance from 1.2% to 1%, while lowering the NIM guidance to 3.4% from previous 3.5%.
Russia's second-largest bank VTB Bank will lend RUB1 trillion ($15.6bn) to finance Arctic infrastructure projects in 2020-2021, ​doubling the previously planned amount, the deputy chair of the bank Valery Lukyanenko told RBC business portal. As reported by ​bne IntelliNews​, most recently ​VTB pledged to pay 50% of IFRS net profit in dividends​ and said it aims to bridge the digital development gap with Sberbank. But the bank admitted its capital reserves were thin, and ​could recapitalise in 2020​. Despite possible capital problems that bank plans to finance 10% of the total estimated amount of Arctic investment of RUB10 trillion, according to Lukyanenko. This would add to the Arctic risk portfolio of RUB400bn already extended by the bank (RUB100bn of loans and RUB300bn of guarantees). One of the bank’s largest borrowers is the atomic power agency Rosatom, which borrowed RUB150bn for the construction of the four Leader atomic icebreakers it currently operates and RUB45bn for another two icebreakers that have recently been commissioned. Rosatom recently said it ​plans to become a major global maritime shipment major​, thanks to the utilisation of the Northern Sea Route, a shortcut between Europe and Asia that goes around the top of Russia. Apart
72​ RUSSIA Country Report​ December 2019 ​ ​www.intellinews.com