In 2024, VTB Bank, Russia's second-largest lender, reported record profits of 551.4 billion roubles ($6.3 billion), as stated by its chief financial officer. However, due to high interest rates and new regulations impacting this year's earnings outlook, the bank will not be recommending a high dividend payout.
Following a loss of 667.5 billion roubles in 2022 amid sanctions and being cut off from the SWIFT system, VTB has now marked consecutive years of record profits. Although high interest rates have increased net interest margins, the lending growth is slowing down as businesses reduce investments and individuals opt to keep funds in deposits, given the Russian central bank's key rate standing at 21%.
Despite a 27.6% increase in net profit compared to the previous year, VTB's management, including CFO Dmitry Pyanov, is advising against distributing dividends for the 2024 results. Pyanov cited several negative factors affecting capital adequacy, such as the high key rate, tax policy changes, and stricter regulations.
Projected profits for this year are expected to decline to around 430 billion roubles before rebounding to approximately 650 billion roubles in the subsequent year. The bank's forecasts do not factor in a resolution to the Ukraine conflict.
Looking ahead, Pyanov anticipates a slower loan portfolio growth of 5% to 6% this year, emphasizing a strategic shift towards more profitable corporate loans. He explained, "This will be a year of credit manoeuvre for us," indicating a deliberate reduction in individual loans.
The article concludes by noting that amid efforts by the U.S. President to resolve the conflict, there is speculation that sanctions against Russia might be eased.
(Exchange rate: $1 = 87.7455 roubles)