Russia’s second-largest state-controlled bank VTB Bank posted a net profit decline of 37% quarter on quarter under IFRS in 3Q24 and a 13% year-on-year increase to RUB98bn, making a return on equity of 16%. In 9M24 overall net profit remained flat y/y at RUB375bn, with a ROE of 21%. 

As followed by bne IntelliNews, the core capital adequacy ratio (N1.1) of VTB fell to 5.31% at the beginning of September 2024, close to the regulatory minimum of 4.5% excluding surcharges. Analysts suggested that the bank would have to reorganise to address the capital problem.

VTB’s IFRS report showed a stabilisation of its capital adequacy ratios, with N1.0 and N1.1 rations at 9.1% and 6.5% respectively as of the end of 3Q24 (10.6% and 7.3% at end-2023) on a group level.

Capital adequacy will be supported through capital reallocations (primarily from Otkritie Bank and RNKB), but Renaissance Capital analysts argue that it retains an insufficient margin to the minimum regulatory values (8.25% now and 9.% from July 2025 under N1.0) to return to dividend payments in 2024. 

Thus the analysts only expect a return to dividends only at the end of 2025.

Still, given the better than expected 3Q24 dynamics of fee and commission income and provisioning expenses, RenCap analysts raised the 2024 net profit forecast of VTB to RUB520bn (up from RUB503bn previously), which corresponds to a ROE of 22%. 

VTB itself reiterated its 2024 profit forecast at RUB550bn, while noting that work with sanctioned assets will continue in 2025.