UPDATE 2-Russia's VTB reports income drop on FX losses
* Net income fell 31 pct, missing analyst forecasts
* VTB not revising previous full-year guidance
* Foreign currency loss hit results (Adds comments from conference call, analysts)
By Megan Davies and Oksana Kobzeva
MOSCOW, Dec 5 (Reuters) - VTB, Russia's second-biggest bank, missed analyst forecasts with a sharp fall in third-quarter profits because of currency losses, but held off from revising its full-year forecast as some had anticipated.
VTB previously forecast it would make a net profit of more than 100 billion roubles ($3 billion) - the same forecast it made but did not meet in 2012 and 2011.
It said on Thursday that it expected an improvement in profits in the fourth quarter coming from core income, and that its current outlook "does not warrant us to revise any of the guidance as previously announced".
State-controlled VTB said a 8.9 billion rouble forex loss - which reversed a gain a year ago - was mostly due to a revaluation arising from a position it had in U.S. dollars which it swapped into Russian roubles.
"Foreign currency... (gains and losses) are very volatile," said Andrey Klapko, analyst at Gazprombank. "It is a black box in terms of (knowing) the roots of the loss, but the situation on the currency market has been volatile and unpredictable."
VTB, privatised in 2007, has a history of wrong-way market bets and poor earnings visibility that has inflicted heavy losses on equity investors.
The bank took a hit from its takeover in 2011 of Bank of Moscow, which revealed a balance-sheet hole at the acquired bank and triggered Russia's largest-ever financial bailout.
Shares are up 10 percent from a secondary share offering it completed earlier in the year to raise $3.3 billion at 4.1 kopeks each, which diluted the government's share in the bank. In 2015, a further stake is due to be sold.
Klapko said VTB might have some "trumps" up its sleeves in terms of deals which could boost its full-year result. VTB said an October deal to sell its 50 percent stake in Tele2 Russia was valued at 40.4 billion roubles ($1.2 billion).
For the last two years, VTB has forecast annual profits of more than 100 billion roubles. Last year it reported 90.6 billion and in 2011 it made 90.5 billion.
"We have realised we have provided ... guidance on balance sheet growth, loan growth... profitability etc," said CFO Herbert Moos. "We do not see reasons to revise those forecasts at this stage given the uncertainty of the macro environment."
Klapko noted in an earlier research note that the market "seems to seriously doubt" the full year net income commitment.
VTB said third quarter net profit fell 31 percent to 18.4 billion roubles, below analysts' forecasts of 24 billion roubles. Provisions to cover possible bad loans rose to 22.1 billion roubles, in line with forecasts.
Russian banks increased consumer lending as demand for corporate credit waned, but a slowing economy has raised fears that people will struggle to pay the debts, prompting lenders to set aside more money to cover risks on high-interest loans.
"We have seen a ... macro economic slowdown in Russia and have continued our prudent provisioning policy," said Moos.
VTB's shares trade at 0.63 times book value - the value of its assets on its balance sheet. Market leader Sberbank trades at 1.16 times, Gazprombank estimates.
Sberbank last month announced a leap in third-quarter loan-loss provisions, suggesting that rising retail lending could leave it vulnerable to the slowing economy.
VTB said it has exposure to Ukraine - which has been in turmoil since President Viktor Yanukovich pulled out of a deal with the European Union - of 20 billion roubles, consisting of a bilateral loan and purchases of market instruments, but has made adequate provisions against its risks there.
"So far, we feel comfortable with that exposure and feel comfortable with how it is priced," said Moos. ($1 = 33.1752 Russian roubles) (Reporting by Megan Davies; editing by Douglas Busvine and Mark Heinrich)
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