* Says expects Crimea situation to normalise
* Does not expect more sanctions on Russian business
* Sees slower lending this year, slower economic growth
* VTB meets its profit forecast of 100 bln roubles
* Profits driven by one-off items and loan book growth
(Recasts with comments from conference calls, adds analyst)
MOSCOW, April 2 Russian lender VTB
forecast lower loan growth across the country's
banking sector this year due to a sluggish economy, and said the
Ukraine crisis could affect its ability to pay dividends.
The environment for Russia's banks has been challenging
because of a sharp slowdown in the economy, forecast by the
central bank to grow by less than 1 percent this year. The
crisis in Ukraine and Western sanctions have hurt the country's
stocks and currency and accelerated capital outflows.
"We realise that in a stress scenario, (GDP) growth could
come down and potentially be zero," said VTB chief financial
officer Herbert Moos, adding the most likely scenario was for
GDP growth of 1.25 percent this year.
"Our loan growth assumptions are relatively modest," he
said. He forecast corporate loan growth across the sector of
about 10 percent this year and retail loan growth of about 20
percent - a slowdown versus 2013 when corporate loans grew in
the high teens and retail loans by over 30 percent.
Moos said growth in VTB's own corporate loans would be in
line with the market while retail lending would outpace it,
without being more specific. For 2013, VTB - the country's No.2
bank behind Sberbank by assets - reported corporate
loan growth of 21 percent and retail loan growth of 36 percent.
NATO suspended all practical cooperation with Russia on
Tuesday in protest at its annexation of Crimea, and ordered
military planners to draft measures to strengthen its defences
and reassure nervous Eastern European countries.
Moos said he expected the situation in Crimea and Ukraine to
normalise, adding: "We do not expect additional sanctions
against Russian enterprises or banks."
"There are a number of discussions going on regarding how
the crisis in Ukraine will end," he said. "Depending on it, the
group will or will not have to form any additional reserves and
this will of course influence our capital and our ability to pay
VTB has previously said it has exposure to Ukraine of 20
billion roubles and that its operations there amount to about
2-3 percent of the bank's total operations. Moos said that VTB
still considers Ukraine to be one of its key markets.
Russia's weak economy has prompted lenders to set aside more
money to cover potential losses on high-risk loans. VTB recorded
a 97 billion rouble debt impairment provision charge last year,
compared with 59.4 billion roubles in 2012.
VTB said its cost of risk increased to 1.6 percent in 2013
versus 1.2 percent the previous year and that it tightened its
risk-management policies to focus on high-quality borrowers in
large and medium-sized corporate lending. It also tightened
lending policies in retail lending, it said.
MEETS PROFIT TARGET
VTB reported full-year 2013 net profit in line with its
expectations on Wednesday after sceptical analysts had pointed
to previous missed targets. It said stronger net interest income
from an expanded loan book helped to lift it to 100.5 billion
roubles, against a forecast of more than 100 billion roubles.
Some analysts had expressed doubts that VTB would be able to
meet the profit target after it fell about 10 billion roubles
short of the same target in both 2011 and 2012.
"(The earnings) were partly driven by one-offs ... but the
core line is good - VTB is gradually building up on its interest
line," said Andrey Klapko, banking analyst at Gazprombank.
He said the results were boosted by a revaluation gain on
Tele2 Russia, the country's fourth-biggest mobile operator which
VTB bought in April last year from Sweden's Tele2 for
$3.55 billion. VTB sold 50 percent in October.
VTB said it recorded a 5.4 billion rouble gain primarily due
to its ownership of Tele2 Russia. In the fourth quarter its
private equity business sold the White Gardens office centre in
Moscow and raised $95.2 million from the sale of its stake in
software developer Luxoft.
For the fourth quarter, VTB had net profit of 54.5 billion
roubles, up 79 percent on the same period a year ago and beating
analyst expectations of 39.6 billion roubles.
($1 = 35.0870 Russian roubles)
(Reporting by Katya Golubkova, Maria Kiselyova, Megan Davies
and Oksana Kobzeva; Writing by Megan Davies; Editing by Pravin