After three months of operating at a profit, VTB moved into the red as it reported 3.8bn roubles in losses before consolidation eliminations in December, prompting the bank to boost its reserves.
VTB President Andrei Kostin informed Vladimir Putin of the parent bank's net income three days ago: the bank posted profits of 28bn roubles in 2009 under Russian Accounting Standards. Another 15bn roubles of net income came from VTB's subsidiaries: VTB24, VTB Capital, and VTB North-West, 6bn of which was generated from investment banking operations, Kostin said.
Yesterday, investors studied other data released by the parent bank. In December, it created a reserve that showed record performance for a month, according to the trial balance posted on VTB's website. That was taken down after a few hours, however, and VTB's press service refused to give any official comments on the situation.
"From September to November, the bank reduced its monthly loan loss provision by a total of 19.6bn roubles," Renaissance Capital's analyst Maxim Raskosnov stated. "In December, the bank drastically changed its policy: increasing its loan loss provision by 23.7bn roubles." VTB is the only bank on the market to follow this course, with most banks opting instead to foster the stable growth of their reserves. Their reserve growth rates seem more logical and are closer to the management's expectations regarding accounting figures under international standards.
VTB's loan loss provision was 6.4% of the loan portfolio, Andrei Kostin said. This is three times as much as a year ago, "but this poses no threat to the bank's stable development," RIA Novosti said, quoting Kostin's words to Vladimir Putin. He also said that bad debts do not threaten the bank's stability, even though they might grow this year. The parent company, VTB bank, had 6.4% of its bad debts accounted for by corporate borrowers as of January 1, following a 12% increase in December.
VTB's loan portfolio grew by 11% in 2009, Kostin noted, adding that this year the bank plans to increase its portfolio by a quarter and return to 2007 profitability levels.
Anna Baraulina; Vasily Kudinov