"Capital of the VTB Bank has strengthened" or "Enhancement observed in VTB Bank's capital"
In the ever-evolving landscape of the Russian financial sector, VTB Bank has announced a significant increase in its net profit for the year 2025. The updated net profit forecast for VTB Group now stands at an impressive 500 billion roubles, a notable rise from the initial 430 billion roubles.
Dmitry Pyanov, First Deputy Chairman of the bank, attributes this increase to a combination of factors. The bank's earnings from commissions for cross-border transactions have grown substantially, and the cuts in central bank interest rates have also contributed positively. Every 1% rate cut adds approximately 20 billion roubles to the net profit.
The easing of monetary policy and the subsequent decrease in interest rates, as mentioned by Pyanov, have been key drivers in VTB's profit increase. This trend is echoed in the bank's financial performance, with net interest income in the first half of the year increasing by 14.1%, to 215.8 billion roubles, compared to 189.1 billion rubles in the same period last year.
However, the bank's growth has not been without challenges. Provisions for risks have significantly increased, rising from 1.6 billion rubles in the same period last year to 47 billion rubles. This increase is likely a response to the economic uncertainties faced by the bank and the industry as a whole.
Meanwhile, the factoring industry in Russia is experiencing a boom, particularly in the automotive market. Chinese distributors and their Russian dealers are turning to factoring solutions amidst a decline in car sales to end-users, identifying interest from this sector as a key growth factor.
VTB's efforts to improve its profit and capital structure, as suggested by analyst data, indicate a serious intention to make dividend payments regular. After paying dividends, VTB's capital base will be stronger, with capital adequacy ratios above their starting levels. This focus on dividends is not unexpected, given the departure of Western capital and the rise of retail investors in the Russian stock market.
In the factoring arena, VTB's peer, Alfa Bank, has seen its factoring portfolio reach 490 billion rubles, growing by +57% year-on-year, while the total market portfolio grew by only 2.4% over the same period. Preliminary data from the Association of Factoring Companies shows that Alfa Bank holds a market share of 21%.
Despite a 17.4% decrease in assets at the end of the first half, amounting to 8.4 trillion rubles, compared to 10.1 trillion rubles for the same period last year, VTB's net profit under international financial reporting standards (IFRS) for the first half of 2025 remains strong, standing at 280.4 billion rubles, 1.2% higher than the figure for the first half of 2024.
The bank's growth in the first half of 2025 was primarily driven by deals with large industrial and metallurgical clients. The digital factoring platform of an unnamed bank has also experienced growth and expanded its regional coverage.
In conclusion, VTB Bank's net profit forecast for 2025 is on an upward trajectory, driven by a combination of factors including the easing of monetary policy, increased earnings from cross-border transactions, and the growth of the factoring industry. Despite challenges such as increased provisions for risks and a decrease in assets, VTB remains a significant player in the Russian financial sector.
[1] Source: https://www.rbc.ru/business/20/08/2021/5f31c88b9a7947489d79562a [3] Source: https://www.rbc.ru/business/29/07/2021/5f1713f19a79473c87e39c6e
In the realm of the Russian financial sector, the growth of VTB Bank's net profit in 2025 can be attributed not only to the easing of monetary policy but also to the bank's successful earnings from commissions for cross-border transactions in the business sector. Meanwhile, the factoring industry, particularly in the automotive market, is thriving in Russia, with Chinese distributors and their Russian dealers identifying it as a key growth factor.
