JSCVL JSC VTB Bank (CE)

   By Andrey Ostroukh 
 

MOSCOW--VTB, Russia's second-largest lender, reported a first-quarter profit far below a market consensus.

VTB said it earned 0.6 billion rubles ($9.25 million) in net profit in the first three months of 2016 versus a net loss of 18.3 billion rubles in the same period a year ago. Analysts polled by Interfax news agency had on average expected VTB to report a net profit of 5.8 billion rubles.

"VTB Group's results for the first quarter reflect the continued stabilization of business activity in the Russian economy as a whole, and more predictable macroeconomic conditions following the volatility seen in the same period a year ago," Andrey Kostin, head of VTB, said in the earnings report.

A year ago, VTB and other banks suffered from the central bank's decision to jack up the key interest rate to 17% from 10.5% in mid-December of 2014 to limit the ruble's depreciation. Since then the key rate has been lowered to 11% and the rate of inflation has fallen to 7% from nearly 17%. Analysts predict the economy may return to growth within a year.

VTB said its net interest income under international financial reporting standards rose to 98.3 billion rubles in the first quarter of this year from 44.4 billion rubles in the same period of 2015 because of a 19% drop in interest expenses.

The monetary policy easing during 2015 along with re-pricing of assets and liabilities helped VTB to bring the net interest margin to 3.4% in the first-quarter of 2016, up from 1.6% in the first quarter of 2015 and 3.2% in the fourth quarter of 2015.

Provision charge, or the amount of hedge money against bad loans, slid 17% over the year to 40.6 billion rubles in the first three months of 2016, VTB Group said.

Write to Andrey Ostroukh at andrey.ostroukh@wsj.com

(END) Dow Jones Newswires

May 16, 2016 03:16 ET (07:16 GMT)

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