VTB Bank announces RAS financial results (standalone) for 2021

VTB Bank (PJSC) (hereinafter referred to as the Bank) publishes its standalone key RAS financial results for December and twelve months of 2021.

Mikhail Kovalenko, Senior Vice-President, Head of Accounting and Reporting Department, noted:

"The past year has been a record year for VTB in many respects, including both profitability and business growth. The major factor behind the improvement in profitability was the impressive growth in core banking revenues and a stable asset quality. VTB Bank earned a record high net profit in 2021 in the amount of RUB 242.6 billion. The Bank's RAS results are highly correlated with VTB Group's IFRS results, and the figures we publish are the indicators of the Group's excellent results for the year under IFRS."

Revenues and profitability

In 2021, the Bank showed significant growth in profitability metrics. Net profit was RUB 242.6 billion in 12M 2021, including RUB 4.0 billion in December 2021, 516 times and 14 times up year-on-year, respectively.

Net interest income amounted to RUB 586.1 billion in 12M 2021 up by 23.8% year-on-year. The key drivers for the net interest income growth in 2021 were an increased loan portfolio of the Bank, as well as the increased volume of debt securities portfolio. On the backdrop of higher key rate net interest income slightly decreased year-on-year in December 2021 and amounted RUB 41.8 billion.

Net fee and commission income amounted to RUB 147.9 billion in 12M 2021, an increase of 12.6% from the same period of the previous year. Key growth drivers of net fee and commission income in 2021 were income from settlement and cash services, as well as brokerage services.

Provision charge amounted to RUB 88.4 billion in 12M 2021 (down by 71.5% year-on-year) and RUB 2.1 billion for December 2021 (down by 95.7% year-on-year). As of 1 January 2022, the ratio of allowance for loan impairment to total loan portfolio was 4.8% (5.4% as of 1 December 2021 and 5.3% as of 1 January 2021).

Staff costs and administrative expenses amounted to RUB 217.1 billion in 12M 2021, up by 1.5% year-on-year due to the increased costs of digital transformation. In December 2021, staff costs and administrative expenses amounted to RUB 34.9 billion, a decrease of 18.5% from the same period of the previous year.

Balance sheet

Total assets amounted to RUB 19.1 trillion as of 1 January 2022, an increase of 17.0% in 2021 and 0.2% in December 2021.

Total loan portfolio reached RUB 13.4 trillion, an increase of 12.7% in 12M 2021 and of 1.2% in December 2021. Loans to individuals increased by 28.1% in 2021.

The issuance of loans to individuals grew by 40% in 2021 compared to 2020, including almost 54% increase in the issuance of the consumer loans. The growth rate of loan issuance is steadily decreasing due to overall market trend of interest rates growth.

In line with VTB Bank strategy the share of retail in total loan portfolio of the Bank continues to grow reaching 31.4% compared with 27.6% at the beginning of the year.

Loans to legal entities were RUB 9.2 trillion, an increase of 6.9% since the beginning of the year and of 0.9% in December 2021.

VTB Bank showed robust dynamics of loan portfolio of Medium and Small Business (MSB) clients, the increase was 13.8% (up by RUB 0.2 trillion) since the beginning of 2021, the total MSB loans amounted to the sum higher than RUB 1.6 trillion. Despite the key rate growth in 2021, the total loan portfolio showed solid growth due to resultative customer relationship management including availability and efficiency of services, client centricity and support to small and medium-sized enterprises (in the first half of 2021 the loan growth was 6.2% and in the second half it was higher than 7%).

Securities portfolio grew by RUB 1.2 trillion year-to-date to RUB 3.3 trillion, increasing by 7.3% in December 2021. The increase was due to the acquisition of large amounts of government bonds and mortgage-backed securities.

Total customer funding was RUB 16.5 trillion as of 1 January 2022, an increase of 22.0% in 12M 2021 and 0.3% in December 2021.

Customer funding from legal entities was RUB 10.7 trillion, an increase of 25.9% from the beginning of 2021 and a decrease of 1.9% in December 2021. The growth of funding from large business clients was contributed by, among other things, the funding from clients of the oil and gas, and nuclear industries.

Сustomer funding from Medium and Small Business clients in term and settlement accounts (including escrow accounts) grew at a faster pace by 13% (up by more than RUB 0.22 trillion) since the beginning of 2021 and amounted to almost RUB 2 trillion. Customer funding dynamics comparable to the loans dynamics additionally confirms model of sustainable self-funding of operations with MSB clients. As Bank of Russia key rate is increasing followed by market rates growth, clients demonstrate high level of interest to term deposits, which was seen in the 2H 2021 and especially in 4Q 2021, when growth of term deposits was much higher than of current accounts.

Customer funding from individuals was RUB 5.8 trillion, an increase of 4.7% and 15.5% in December 2021 and in 12M 2021, respectively.

Growth of customer funding from individuals (without escrow accounts) was 10% since the beginning of the year, including term deposits growth by 17% in 2021. Ruble resource portfolio grew by 15% including Ruble deposits growth by 34%.

Customer funding structure remained stable: 64.7% was the funding from legal entities and 35.3% was the funding from individuals.

Capital and capital adequacy ratios of VTB Bank

As of 1 January 2022, total regulatory capital was RUB 1.8 trillion, down by 1.1% in December 2021 and up by 9.5% since the beginning of the year mainly due to the earned profit and issued subordinated bonds.

In 2021, the total amount of RUB 219.7 billion of subordinated bonds issued by the Bank in Ruble equivalent was included in the tier 1 regulatory capital, including the total amount of RUB 47.9 billion of subordinated bonds issued by the Bank in December 2021.

As of 1 January 2022, total regulatory capital generally included base capital (CET 1) of RUB 1 242.1 billion and main capital (tier 1) of RUB 1 612.2 billion.

In December, base capital (CET 1) decreased by RUB 39.9 billion or by 3.1%.

The main capital (tier 1) for the same period increased by RUB 4.4 billion or by 0.3%.

Capital adequacy ratios are well above the minimum regulatory requirements. As of 1 January 2022, the N1.0 (total capital) ratio equals to 11.06% (minimum regulatory threshold 8.0%), N1.1 (common equity) - 7.60% (minimum regulatory threshold 4.5%) and N1.2 (tier 1 capital) - 9.87% (minimum regulatory threshold 6.0%).

Risk-weighted assets (RWA) (the denominator of the equity (capital) adequacy ratio, H1.0) for 2021 increased by 11.7% reaching RUB 16,299.6 billion, while in December 2021, RWA increased by 0.6% due to an increase in the volume of claims for transactions with individuals and legal entities.

The capital adequacy ratio H1.0 for 12 months decreased by 0.22 p.p. mainly due to the growth of transactions with legal entities and individuals.

The transition to the Standardised Measurement Approach (SMA) in accordance with Regulation of the Bank of Russia #744-P starting from financial results as of 1 April 2021 allowed to the Bank to improve its capital adequacy ratio by 0.4 p.p.

The unaudited financial performance indicators of VTB Bank presented above are collated based on the following forms 0409101 "Turnover balance sheet of credit organization" and 0409102 "Report on financial results of credit organization" as well as operational management reports as part of adjustments to the published forms. Capital adequacy ratios were calculated based on the operational financial data. The reported financial indicators are preliminary; hence, they can be supplemented and changed in the process of preparation of publishable financial reports of VTB Bank. As a result of such changes, final values may differ from the preliminary financial indicators presented above.