Record period tops forecast for VTB bank

City A.M. Reporter
VTB, Russia’s second biggest lender, returned to the black with a record 15.3bn rouble (£335m) profit for the first three months of 2010 after six quarters of losses.

The company beat analysts’ estimate of 10.2bn roubles, but decided not to raise its full-year forecast.

Chief financial officer Herbert Moos said: “We do not expect that from quarter to quarter we will show record profits. I hope that we will reach a profit of 50bn roubles [for 2010], and for me that is enough for now.”

The state-controlled lender yesterday posted the highest quarterly profit in its history as the economy recovers from recession.

“While we have been helped by an improving economic backdrop, I am pleased that the efforts to re-orientate the group towards areas which can drive profitability are bearing fruit,” Andrei Kostin, VTB’s president said. The bank increased net interest margin to 5.2 per cent from 4.1 in the first quarter 2009 and well above the 4.6 per cent it plans for 2010 as a whole.

Moos reiterated the bank’s expectation that the margin would not fall below 4.6 per cent this year.

With banks awash in uninvested capital, a result of nascent economic recovery, VTB said lending rates were under pressure while it was forced to compete for quality borrowers, and it called demand “subdued”. Total loans were flat.

“For now we do not see the need to revise the forecast of 15 per cent [growth in the loan portfolio],” Moos said.

He added: “I have every expectation that the economy will stabilise. Central bank data showed that growth started in April-May, and we expect this growth will continue.”

Its investment banking business, which it started from scratch in 2008, earned 6.1bn roubles before taxes, while corporate banking and retail banking made 9.1bn roubles and 6.7bn roubles of pre-tax profits.