Increase in VTB's net profit by 1.2% reported
VTB Revises Profit Forecast and Outlines Growth Strategy
Russian banking giant VTB has announced a significant revision to its 2025 profit forecast, with expectations to reach 500 billion rubles, marking a 17% increase from the previously expected 15%.
The improved outlook is primarily attributed to Russia's broader economic resilience amid sanctions, strong government fiscal support, increased military spending boosting defense-related sectors, and stable domestic revenue streams that have helped maintain banking sector profitability.
In a recent statement, VTB's First Deputy Chairman, Dmitry Pyanov, highlighted the bank's commitment to regular dividend payments, with plans for dividend payments in 2024. He also emphasized the bank's strengthened capital base, a result of the easing monetary policy and the beginning of interest rate reduction.
According to Pyanov, the net interest margin and net interest income of VTB are expected to expand due to these factors. He urged not to view the modest dynamics of the credit portfolio as negative, stating that slower growth during a period of increased capital requirements is beneficial for VTB and the banking sector as a whole.
The bank's credit portfolio growth forecast has been revised, with an overall growth expected to be less than 5%. Corporate loans are expected to increase by less than 10%, while retail loans are expected to decrease by more than 10%.
In addition to this, VTB plans to complete the merger of three banks (RNCB, Post Bank, and BM Bank) within the next three years. After the merger and related integration, reorganization, and corporate actions, the VTB Group structure may be completed.
Following dividend payments, VTB's capital adequacy ratios will be higher than at the beginning of the year. Pyanov also noted an increase in activity in VTB shares trading after the announcement of dividends.
The Kremlin's strategy emphasizes a "war economy" with fiscal measures, such as tax increases on the wealthy and successful businesses, providing the government—and by extension the banks—with stable revenue inflows, supporting positive profit outlooks.
The banking sector overall has seen asset growth, and while there are concerns about rising non-performing loans and overdue debts (including at VTB), the bank’s management projects controlled increases in bad loans without severe impacts on profitability.
References:
- VTB Improves 2025 Profit Forecast
- Russia's Economy Resilience Amid Sanctions
- Kremlin's War Economy Strategy
- VTB's Management on Rising Non-Performing Loans
- Despite concerns about rising non-performing loans, VTB's management projects controlled increases in bad loans, without severe impacts on profitability, hinting at the bank's resilience in the business sector and its continuous growth in finance.
- The Kremlin's "war economy" strategy, with fiscal measures like tax increases on the wealthy and successful businesses, is providing the government and by extension banks like VTB, with stable revenue inflows, contributing to positive profit outlooks in the finance industry and business sector.
