Net profit of VTB in the second quarter were worse than consensus expectations, accounting for only 2.1 billion. Second quarter may be the most severe in the year primarily due to increased provisions for the loan portfolio. However, according to the Bank’s management, operating performance is only slightly below the business plan, which was expected to receive 230 billion rubles in net profit for the year. However, before the end of the year the Bank against the backdrop of deteriorating quality of the corporate portfolio would be required to credit additionally reserves.VTB group received during the second quarter of 2.1 bln RUB net profit, which is 14.4 times less than a year ago, to the report according to IFRS. In the previous quarter, the group earned 39,8 billion rubles. However, as pointed out by a member of the Board of VTB Dmitry Pyanov, none of the months of the second quarter was not unprofitable. The consensus forecast of “Interfax” although I assumed that VTB in the second quarter will earn the minimum quarterly result since the beginning of 2016, but was estimated at 6.7 billion rubles. the Net profit of VTB for the first six months of 2020 amounted to 41.9 billion rubles, down by 45.4%. However, according to Dmitry Pianova, while the Bank goes through operating result “of only a few percent worse than the original business plan”. The Bank had previously expected net profit for the year in the amount of 230 billion rubles., but in may withdrew this forecast.The main reason for low profitability in the second quarter, the Bank called a reserve, the amount of which was increased to 68.8 billion rubles, and for the six months 2.5% 113,9 billion rubles in Aggregate on loans 42% of the volume of reserves was aimed at the reservation of the deterioration in the quality of customer debt, not having taken a “vacation”, 36% of the reservations have taken a “vacation credit”, the remaining 22% on macroporous. Net interest and Commission income increased in the first six months by 18% to 252 billion and RUB 52.9 billion rubles. respectively. Sberbank dynamics of growth in interest and Commission income for six months amounted to 11.6% and 12.2%, respectively. Administrative expenses increased by 2.8%.The portfolio of credits to legal entities for the half year increased by 3.1%, the retail portfolio over the same period rose by 7.0%. The savings Bank for the half year the portfolio of credits to population grew by 4.9%, companies — 5.2%. The aggregate portfolio of VTB amounted to 11.9 trillion rubles customer Funds increased by 8.0%, to 11.8 trillion rubles “In retail, the main driver is the mortgage, especially the preferential program. The demand for corporate loans was small, now it is even more subsided. Thus, on the one hand, the demand for loans slipped, on the other hand, to lend in such conditions someone pretty hard, this applies to unsecured retail and corporate customers,” says S&P analyst Dmitry Nazarov.In the future, the Bank may to recognize possible additional losses on the corporate portfolio. According to Mr. Pianova, and reporting of corporate customer arrives at the Bank by mid-August, in this regard, risks remain. Only after that in the future the Bank will be able to assess “who from them has not suffered, in terms of revenue, those affected, but has now been restored who have suffered and will never recover.” This assessment will lead to various changes in the rating of the Bank’s internal methodology, and consequently, potential growth in reserves in the third quarter of 2020. “Loss recognition will be gradual, especially in the corporate portfolio, and stretched for several blocks. This will put pressure on the profitability of the business before the end of the year definitely. In turn, retail customers, the Bank can obtain information more quickly”,— said Mr. Nazarov.In respect of foreign currency loan for the purchase of diamond earner “AGD diamonds” VTB was preparing for restructuring, but subsequently the case went to trial. Provisions for loan until now were not charged due to the presence of collateral. “We continue to believe that a significant event to increase reserves for this asset can only be the loss of the asset. For this asset there is a slight increase reserves associated with the fall in revenue, the stock exchange of Antwerp was closed and did not conduct operations on purchase and sale of diamonds, and in this situation, in fact, our borrower there is a fall in revenue with an increase in debt to EBITDA,” said Mr Pyanov.Olga Cherenkova
