February 26, 2018 / 10:47 AM / a year ago

UPDATE 1-Russia's VTB Q4 profit beats forecast

* VTB’s net profit beats forecast

* Q4 net profit at 44.8 bln roubles vs 17.5 bln roubles a year ago

* 2017 net profit at 120.1 bln roubles

* Retail gross loans up 14.3 pct in 2017

* Corporate gross loans down 0.3 pct in 2017 (Adds detail, quotes)

By Andrey Ostroukh

MOSCOW, Feb 26 (Reuters) - Russia’s second-biggest bank VTB said on Monday it made 44.8 billion roubles ($801.1 million) in net profit in the fourth quarter of 2017, beating market expectations.

Analysts polled by Reuters had on average expected VTB to post 29.6 billion roubles in net profit from October to December last year, an increase from 17.5 billion roubles earned by the bank in the fourth quarter of 2016.

Russian banks are in focus after the central bank rescued three major lenders in 2017, and has shut dozens of smaller lenders over the past few years under its banking sector clean-up programme.

State-owned VTB performed better than expected last year, earning 120.1 billion roubles in full-year net profit and beating its own call for a net profit of at least 100 billion roubles.

“We have improved our market share in the growing retail business, strengthened our funding structure, and delivered robust growth in fee and commission income,” Andrey Kostin, VTB’s president and management board chairman, said in a statement.

VTB shares had outperformed the broader market before the earnings report, which was made public an hour and a half later than expected for unexplained reasons.

As of 1040 GMT, VTB shares hovered at 0.055 roubles, up 6.2 percent on the day. The benchmark rouble-traded MOEX index was 0.9 percent higher.

As of late 2017, 39 percent of VTB’s shares trade on the Moscow Exchange .

Kostin said VTB benefited last year in the retail business as “customers continued to move funds to trusted market leaders like VTB”.

In 2017, the Russian banking sector saw a reshuffle of household and business deposits as the central bank bailed out the country’s then biggest private bank Otkritie and its smaller rivals Promsvyazbank and B&N bank.

VTB posted a 11.4 percent year-on-year growth in net interest income to 116.5 billion roubles in the fourth quarter, while its provision charges for bad loans declined 17 percent to 53.7 billion roubles.

These charges, however, were higher than 49 billion roubles in provisions forecast by analysts.

VTB’s net interest margin was 4.1 percent for the full-year 2017, up from 3.7 percent in 2016, while the cost of risk inched higher to 1.6 percent in 2017 from 1.5 percent a year earlier.

The earnings report also showed the loan book of VTB Group, which in 2017 also included Bank of Moscow and VTB24 retail arm, grew by 3 percent to 9,772.8 billion roubles as gross loans to individuals increased by 14.3 percent during the year.

Gross loans to legal entities declined 0.3 percent in 2017 to 7,286.5 billion roubles. ($1 = 55.9205 roubles) (Reporting by Andrey Ostroukh; Additional reporting by Tatiana Voronova; editing by Tom Balmforth)

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