Expert Samiev: VTB Bank has shown impressive abilities to restore profits in the shortest possible time

Despite the sanction pressure on VTB Bank in 2022, it was able to demonstrate its ability to recover in the shortest possible time, says Pavel Samiev, general director of the analytical agency Business Drome, chairman of the OPORA Russia committee on financial markets. “In the first 10 months of 2023 alone, two-thirds of the losses were actually returned,” the expert said in an interview with RIA Novosti and added that according to the plan for 2024, VTB Group’s profit will be more than 300 billion rubles, “it should be noted that this is quite realistic forecast”.

Deputy Chairman of the Holding Board Dmitry Pyanov told reporters that according to forecasts, the net profit of the VTB Group for 2024 will be from 300 to 400 billion rubles. And I noticed that in 10 months of 2023, two-thirds of the losses of 2022, amounting to 613 billion rubles, were de facto “recovered”; the remaining losses will be covered in less than two years at the expense of profits.

In 2022, after the introduction of sanctions, VTB, which was actively operating throughout the world, lost 613 billion rubles. 400 billion rubles of them have already been closed, in fact, 10 months. “We will cover more than 430 billion throughout the year. The difference means that we only need to earn less than 200 billion rubles in 2024 in order to cover the loss of 2022 in two incomplete years; we will definitely make 200 billion rubles,” said Pyanov.

Managing Director of the NKR rating agency Mikhail Doronkin believes that VTB’s profit for October corresponds to the results of August-September. And indeed, at the end of the year, most likely it will be higher than forecasts – maybe in the range of 430-450 billion rubles. And this is after the bank suffered after the imposition of sanctions in 2022, because VTB operated both in Russia and abroad. But the bank quickly reconfigured itself and not only survived, but also earned a profit.

The increase in VTB’s average monthly net interest income in 2023 was made possible mainly due to the growth of mortgage and consumer lending, says Yuri Belikov, Managing Director for Validation at Expert RA. “A powerful interest flow with an adequate cost of risk for the 10 months of 2023 provided the bank with greater profits than for the full pre-crisis year 2021,” he told Izvestia.

At the same time, according to experts, in the near future conditions in the macroeconomics will not contribute to repeating the records of 2023.

According to Pavel Samiev, in the near future, less favorable macroeconomic conditions will not contribute to repeating the records of 2023. Expert Samiev named the dynamics of the interest margin as the main obstacle why the bank will not be able to “make” more than 400 billion rubles in profit. For example, in October 2023, the “cost” of interest rate risk was 1.6%. This was a very high risk with simultaneous serious contributions to reserves. So, financial organizations are in a situation of uncertainty and do not know how long the Central Bank will keep the key rate at 15%.

In addition, the expert explained that we should not expect an improvement in the quality of loan portfolios and the release of reserves, as was the case at the beginning of the year. In total, all this “eats” the interest margin, but this is not critical in general.

All this is reflected in the level of return on capital for VTB Bank – it decreased slightly to 14.7% – which is now lower than the level of the key rate. However, the accumulated effect over 10 months gave a quite good 25.3% per annum, and the dynamics of both the interest margin and the financial result of the bank are better than those of other major players,” the expert recalled.

The economic situation next year will depend on the measures taken by the Central Bank to level out pro-inflationary factors. “Accordingly, if the Central Bank fails to cope with the task, then the ceiling of the inflation forecast will be revised upward, which will become a new challenge for the market,” Samiev believes.