VTB Profit Drops Less Than Expected as Lending Grows

VTB Group said profit fell 4 percent last year, a smaller drop than analysts estimated, as Russia’s second-biggest bank boosted lending.

Net income attributable to shareholders declined to 85.8 billion rubles ($2.7 billion) from 89.4 billion rubles a year earlier, the Moscow-based bank said in a statement today. That beat an average forecast of 78.9 billion rubles from eight analysts surveyed by Bloomberg.

“We made considerable progress in strengthening capital and optimizing risk in our asset base,” Chief Executive Officer Andrey Kostin said in the statement.

While Russia’s economy grew at its slowest pace in the fourth quarter since a recession in 2009, loans to households continued to increase as unemployment declined to a record. Consumer lending grew 1.7 percent in February from a month earlier, central bank data showed.

VTB shares jumped as much as 4 percent and rose 0.2 percent to 4.56 kopeks by the close in Moscow, valuing the bank at 477 billion rubles. The global depositary receipts increased 0.2 percent to $2.85. The Micex Index climbed 2.8 percent.

The bank said its core Tier 1 capital ratio, a measure of financial strength, rose to 10.3 percent at the end of March from 9 percent at the start of the year.

Lending Expansion

Gross loans increased 10.8 percent to 5.1 trillion rubles last year, VTB said. The share of non-performing loans to total loans was unchanged at 5.4 percent compared to a year earlier, it said. The net interest margin, which measures the profit margin on lending, was 4.2 percent in 2012, it said.

Chief Financial Officer Herbert Moos forecast that retail lending will grow by 25 percent this year and corporate lending by 15 percent.

Moscow-based VTB, in which the state owns almost 76 percent, plans to raise as much as $3 billion selling new shares in the first half of 2013 to boost capital adequacy levels after acquisitions of domestic lenders.

The share sale will take place on the Moscow Exchange, according to Moos. It will be “very hard” for VTB to place the entire amount in Moscow due to low liquidity, he told reporters today.

The Russian government said in December that VTB was in talks with sovereign-wealth funds from China and Kuwait to sell shares in separate placements. The government plans to sell its entire stake in the bank by 2016.

“It’s very hard to find investors in one country,” Moos said. “We’re talking to investors across the globe.”

Russia’s central bank sold a minority stake in OAO Sberbank, the country’s biggest lender, in September. The bank raised about $5.2 billion from a secondary public offering of shares in London and Moscow.

VTB’s management has recommended paying 15 billion rubles in dividends for 2012, Moos said. This would bring VTB’s dividend yield to 3 percent, he said.

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