Net profit of VTB group in the first quarter amounted to less than RUB 40 billion, a decrease compared with the period last year by 14.4%. This happened due to a threefold increase in allocations to reserves and impairment of non-core assets, mainly in “VTB arena”, because of restrictive measures to prevent the spread of COVID-19. The analysts note that the effect of the epidemic in the first quarter until a had massive influence.VTB group in the first quarter of 2020 decreased net profit yoy by 14.4%, to 39.8 billion rubles, follows from the IFRS financial statements. The consensus forecast of “Interfax” has assumed a lower net profit of VTB in the first quarter by 37% yoy to RUB 30 billion On quarterly financial results is mainly due to two factors, but both are associated with the impact of the pandemic. It transfers to reserves and the negative revaluation of non-core assets, said a member of the Board of VTB Dmitry Pyanov. So, the reserves were increased by 45.1 billion rubles— three times more than a year ago. Thus, according to reporting VTB, 38% of the increase went to cover the retail loan portfolio, 62% for the reservation of the corporate portfolio. The increase of accruals in the Bank account for “the influence of the pandemic COVID-19 on the quality of the loan portfolio.” Informed about increase of reserves eight times in the first quarter of 2020, reported by the savings Bank. As said Dmitry Pyanov, only 3% of the loan portfolio granted to companies that operate in the sectors approved by the government of the list of sectors of the Russian economy most affected by coronavirus infection.So, revaluation of the sports complex “VTB arena Park” on a broad background of restrictive measures in connection with COVID-19 amounted to 27 billion rubles. “This reflects our assessment that the whole 2020 and a portion of 2021 will be unable to sports, concert events with the audience in our sports arena. And this naturally leads to a drop in revenues, primarily of a stadium, which is reflected in cash flows is reflected in the cost of the asset,” explained Mr Pyanov.Loans for legal entities in the first quarter increased by 5.8 per cent to 8.6 trillion rubles In this case, “excluding the effect of revaluation of foreign currency portion” of the portfolio decreased by 1.3%. Lending to individuals grew by 3.8%, to 3.5 trillion rubles, mainly due to mortgages, consumer loans and credit card portfolio. Net interest income grew by 14.9%, up to 119.7 billion rubles, net fee and Commission income — by 48.1%, to 28 billion rubles. the Net interest margin was 3.6%. The share of non-performing loans (NPL) increased from the end of 2019 from 4.7% to 4.9%. Assets of VTB group amounted to nearly 16.6 trillion Negative impact of the epidemic coronavirus will affect the banking system and beyond. Basically��, banks will incur losses from participation in government programs. “The most unprofitable for us program is a restructuring program under the conditional name “vacation credit” is a 106-FZ from retail, which essentially leads to loss of interest income during the life of the loans, primarily on mortgages,” said Mr Pyanov. According to him, the volume of such losses “may constitute tens of billions of rubles”. “Fundamentally the situation in the first quarter did not deteriorate for any of the banks,” he said. The question of how to calculate reserves, which significantly impact on profit, largely depends on the opinion of management, the expert said. VTB less conservative policy, the savings Bank historically faster accrues reserves, explains the analyst of the gap in the dynamics of these indices in the two largest banks. “In difficult times, the savings Bank can afford to increase reserves faster and without sacrificing profits. If you experience risk, the Bank tries to reserve them, then to go faster on the recovery curve,” said Andrew Klapko. In addition, the profitability of VTB and its capital cushion and lower than that of Sberbank, so an equally aggressive policy of reservation would lead to deterioration in the financial condition of VTB, the analyst emphasizes. Thus the effect of an increase in reserve Bank’s quarterly performance strong, especially the increased expectations of higher Commission income and positive result, but the “paper” brought income from currency revaluation, added Mr. Klapko. According to VTB, the structural revaluation of open currency position the group earned RUB 36 billion Olga Cherenkova
