VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
Transcript of the beginning of the meeting:
Vladimir Putin: Mr Kostin, I have standard questions for you. Could you please tell me about the situation at the bank and implementation of our agreements to expand the loan portfolio, first of all for the real sector of the economy. Also, I know that you are going to Vietnam soon with a large delegation. I would like to discuss that too, bearing in mind that yesterday I talked with the Prime Minister of Vietnam, and also plans to promote cooperation with that country.
Andrei Kostin: Mr Putin, nascent economic revival has caused a tangible improvement in the bank's financial results. The bank posted a profit of 7.9 billion roubles ($270.8 million) in January-September according to the Russian Accounting Standards, even though we lost 26 billion roubles ($891 million) in the first six months of the year. The achievement was made possible by growing revenue from business operations, reduced spending, and also repayment of some debts.
Between July 1 and October 1, we cut our problem debts to 5.5% from 7.9%. That was more than we had expected, and now we do not see any threat of a major growth of debts.
We are confident that the bank's financial result this year will be positive. As a group, whose operation is gauged according to international standards, we expect to post a negative result because of specifics of international accounting standards and also because our bank operates in 15 countries. The situation in some of them is much more complicated than in Russia. For example, we work in Ukraine and Georgia. This factor is bound to affect the overall results of our operation.
Vladimir Putin: What about your work in those countries? Do you have any problems not connected with the economy there?
Andrei Kostin: No, Mr Putin, I cannot say that we have political problems in our work there, but the financial and economic situation there is unstable. Production and GDP have plummeted in Ukraine and, of course, political instability is having its effect.
Vladimir Putin: But you continue working in a market regime there and issue loans to clients in these countries?
Andrei Kostin: Yes, we do, but our options are more limited there than in Russia, where we receive help from the Government; the situation is different in other countries. We do not have such support there, and therefore we had to limit growth during the crisis. We had to do it. As for financial forecasts for next year, we expect to restore our profit to the pre-crisis level in the group as a whole and in the bank, calculated to the Russian and international financial reporting standards. It means that VTB will overcome the consequences of the crisis next year.
As for lending to the economy, our portfolio of loans to the real economy sector grew by 20% in the first nine months of the year, or by over 2% a month. It increased by 3.6% monthly in the 3rd quarter, but we expect the growth rate to slow in the 4th quarter, in part due to a positive trend. Banks are no longer the only source of funds for enterprises.
Enterprises have gained direct access to the capital market, including with our assistance, placing bonds to raise funds. We also expect them to reach the capital markets soon. In other words, enterprises have a choice of sources of funds, which allows them to partially replace bank loans.
In general, banks will continue to lend money. We are grateful to the Government for its support. I would like to say that we plan to repay our loans to the Central Bank, ministries and the treasury - short-term loans taken out without collateral - by the end of the year, when our debts will not comprise crisis support money, but will only consist of loans with collateral, which is a traditional sphere of central banks' operation in all countries.
And lastly, the Government has contributed 180 billion roubles ($6.17 billion) to the bank's capital in September. Although the past few days were volatile, the value of that portfolio has grown by 40-50 billion roubles. We believe that we can profitably use this package within the next few years, if the Government supports us. By doing so, we will return these funds to the budget with the interest equal to the growth of the portfolio. This is what we propose, but it is for the Government to decide.
Vladimir Putin: Yes, possibly. We should consider the issue, look at the current situation and economic realities, and seriously discuss this proposal.
Andrei Kostin: As for Vietnam, a Russian delegation representing different companies plans to visit Vietnam on November 8 and 9. We will meet with the President, the Prime Minister and business leaders of Vietnam.
Our goal is to prepare for your upcoming meeting with the Prime Minister of Vietnam, and outline practical proposals and maybe even agreements. They should cover cooperation in the financial and energy sectors, in automobile manufacturing - in particular the supplies and assembly of KamAZ lorries, military technical cooperation, and power generation. You know that oil company Zarubezhneft is currently working under several joint projects in Vietnam. In short, the range of our possible cooperation projects with Vietnam is very broad.
In the past, you unveiled our bank's branch in Vietnam. It is working quite well, and so we hope to use our trip there to prepare the economic part of your upcoming visit.
Vladimir Putin: Good.
