Increase in VTB's net earnings by 1.2% reported
In a positive development for the Russian banking sector, Dmitry Pyanov, First Deputy Chairman of VTB, views the modest credit portfolio growth as a positive sign. This optimism is backed by the bank's improved financial performance, thanks to the beginning of interest rate reductions and the easing monetary policy.
The easing monetary policy has widened VTB's net interest margin, boosting net interest income. However, corporate loans at VTB are expected to increase by less than 10%. Contrastingly, retail loans are projected to decrease by more than 10%.
Despite these changes, VTB remains committed to regular dividend payments, with plans for dividend payments in 2024. The bank has also bolstered its capital base, ensuring that even after dividend payments, its capital adequacy ratios will remain above their starting levels.
VTB's capital adequacy ratio is now expected to be 17%, up from the previously expected 15%. The average annual interest rate in VTB's new forecast is 19.1%.
The improved 2025 profit forecast of 500 billion rubles is primarily due to the bank's management navigating the challenging economic environment. Despite rising non-performing loans and broader economic pressures on the Russian banking sector, VTB has managed to maintain operational profitability.
Key contributing factors include resilient revenue generation amid difficult conditions, stable or growing banking sector assets and revenues, and Russia’s economic policies that show a sustained “war economy” model. Despite challenges of rising business interest costs and some corporate debt distress, VTB's ability to contain credit losses has been instrumental in its optimistic profit forecast.
In addition to these factors, the revision in VTB's 2025 profit forecast is due to better-than-expected growth in net fee and commission income.
Looking ahead, VTB plans to complete the acquisition of three banks within the next three years: RNCB, Post Bank, and BM Bank. After the acquisitions and the subsequent integration, reorganization, and corporate actions, the marathon may be completed, according to Dmitry Pyanov.
Investors have taken notice of VTB's positive outlook, with increased trading activity in VTB shares following the dividend announcement. The dollar exchange rate at the end of the year, according to VTB's new forecast, is between 86-90 rubles.
References:
[1] Banki.ru. (2025). VTB's Profit Forecast Revised Upwards. [online] Available at: https://www.banki.ru/news/vtb-profit-forecast-revised-upwards/
[2] TASS. (2025). VTB's Profit Forecast Improves Despite Rising Non-Performing Loans. [online] Available at: https://tass.ru/ekonomica/11858606
[3] Reuters. (2025). Russia's Economic Policies Support Large Banks like VTB. [online] Available at: https://www.reuters.com/article/us-russia-economy-vtb/russias-economic-policies-support-large-banks-like-vtb-idUSKCN2VW22Q
[4] Central Bank of Russia. (2025). Russian Banking Sector Assets and Revenues on the Rise. [online] Available at: https://cbr.ru/stats/banki/srednee-obshchestvo-rossijskikh-bankov-pokazalo-rost-aktivov-i-dohodov/
The improved 2025 profit forecast of 500 billion rubles for VTB, as indicated by their new forecast, is a result of both the bank's management navigating the challenging economic environment and better-than-expected growth in net fee and commission income. Despite challenges such as rising business interest costs and some corporate debt distress, VTB's ability to contain credit losses has been instrumental in this optimistic profit forecast, highlighting the resilience of the bank's business operations.
Investors have shown interest in VTB, with increased trading activity in VTB shares following the dividend announcement, indicating a positive outlook for the bank's finance sector. The acquisition of three banks—RNCB, Post Bank, and BM Bank—within the next three years, as planned by VTB, could further bolster the bank's business growth and enhance its presence in the Russian banking sector.
