VTB expecting profit of 430 bln rubles in 2025, credit austerity in retail

MOSCOW. Feb 25 (Interfax) - VTB forecasts a net profit of approximately 430 billion rubles, a reduction in retail loans and the normalization of risk costs in 2025, VTB First Deputy Chairman Dmitry Pyanov told journalists.

The group initially projected a net profit of 435 billion rubles for 2024 and 520 billion rubles for 2025 in its development strategy, totaling 955 billion rubles over two years. Later, VTB raised its profit forecast for 2024 to 550 billion rubles and achieved this target, earning 551.4 billion rubles.

This year's profit is expected to be lower than the strategic target - 430 billion rubles, which corresponds to a 15% return on equity, but the total for the two years will align with VTB's previously approved plans.

"In terms of loans, we will likely see a different trend compared to previous years. This will be a year of credit maneuvering for us, as we will purposefully reduce retail loans. We expect retail loans to decline by more than 10%," he said.

VTB expects corporate lending to grow by more than 10%.

"We conducted an evaluation of return rates on new loan issuances, and under current regulations, large corporate and medium-sized businesses have proven to be the most sustainable borrowers. In retail lending, we will only issue loans to borrowers with a debt burden ratio (DBR) of no more than 50%," Pyanov said.

VTB's total loan portfolio is expected to grow by 5%-6%.

The bank does not anticipate major reserve recoveries in 2025, so it forecasts risk cost normalization at around 1%.

Due to the high key interest rate throughout the year and continued competition for liquidity, the net interest margin will decline to 1% from 1.7% in 2024.

Administrative and managerial expenses will grow below inflation this year - by 7% (or 13% including Pochta Bank).

VTB plans to increase net fee and commission income to the same 24% growth rate seen in 2024. The cost-to-income ratio is expected to be 40%-45%.

The capital adequacy ratio (N20) is forecast at 9.5% by the end of 2025, up from 9.1% at the end of 2024.

"Given our credit fasting strategy, we do not expect the Central Bank to implement a second increase in the countercyclical buffer in 2025, and we anticipate it will remain at 0.25%. However, even if we are mistaken, our 9.5% capital level will allow us to withstand a second buffer increase. The year will be challenging for traditional banking income streams, primarily due to capital adequacy constraints," Pyanov said.