Russia's VTB says quarterly net profit down 93%, could slash dividends
Russia's VTB says quarterly net profit down 93%, could slash dividends
Russia's secondlargest lender VTB said on Friday its secondquarter net profit fell 93% as provisions against bad loans mounted amid the coronavirus crisis, prompting management of the staterun bank to recommend slashing dividends.   

MOSCOW Russia’s second-largest lender VTB said on Friday its second-quarter net profit fell 93% as provisions against bad loans mounted amid the coronavirus crisis, prompting management of the state-run bank to recommend slashing dividends.   

The Russian banking sector has taken a hit from the coronavirus and related lockdowns, which are expected to have pushed the economy into recession and pressured prices for oil, its key export, while weakening the rouble.   

VTB said its net profit shrank to 2.1 billion roubles ($28.5 million) in April-June from 30.3 billion roubles in the same period of 2019.

VTB’s management will recommend cutting dividends to 10% of 2019 net profit, VTB board member Dmitry Pyanov said.

    State-controlled VTB had planned in February to spend 50% of its 2019 profit on dividends but said in May the figure could be revised due to the coronavirus crisis.    

VTB shares fell 1.2% by 0824 GMT, underperforming the benchmark MOEX index that was down 0.3%.    

In the second quarter, provision charges against bad loans rose to 68.8 billion roubles from 30.2 billion roubles a year earlier, the bank’s results under International Financial Reporting Standards showed.   

The non-performing loans ratio rose to 5.1% as of June 30, up from 4.7% as of early 2020.   

Return on equity (ROE) from continuing operations – an indicator of how much profit the bank generates from money invested by its shareholders – was 0.5% in the second quarter, down from 7.9% in the same period of 2019.

The bank has slightly increased its 2020 net interest margin forecast to 3.5% from 3.4%, Pyanov said, declining to provide net profit guidance.   

“The current recovery in economic and business activity gives grounds for cautious optimism,” Andrey Kostin, VTB President and Chairman of the Management Board, said in the earnings statement.   

($1 = 73.6550 roubles)

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