VTB returned to the black with a record 15.3 billion ruble ($491 million) profit for the first three months of 2010 after six quarters of losses.
The bank beat analysts' estimate of 10.2 billion rubles but decided not to raise its full-year forecast.
"We do not expect that from quarter to quarter we will show record profits. I hope that we will reach a profit of 50 billion rubles [for 2010], and for me that is enough for now," VTB deputy chairman Herbert Moos told reporters Wednesday.
The state-controlled lender on Wednesday posted the highest quarterly profit in its history as the economy recovers from recession.
"While we have been helped by an improving economic backdrop, I am pleased that the efforts to reorientate the group towards areas which can drive profitability are bearing fruit," Andrei Kostin, VTB's president, said in a statement.
The bank increased net interest margin to 5.2 percent from 4.1 in the first quarter 2009 and well above the 4.6 percent it plans for 2010 as a whole.
Moos reiterated the bank's expectation that the margin would not fall below 4.6 percent this year.
Lenders’ margins are being squeezed after the Central Bank moved too quickly to cut rates, Moos said. The 14th cut in as many months this week will put additional pressure on banks, he said, echoing comments made Tuesday by German Gref, chief executive officer of Sberbank.
With banks awash in uninvested capital, a result of nascent economic recovery, VTB said lending rates were under pressure while it was forced to compete for quality borrowers, and it called demand "subdued." Total loans were flat.
"For now we do not see the need to revise the forecast of 15 percent [growth in the loan portfolio]," Moos said. I have every expectation that the economy will stabilize. Central Bank data showed that growth started in April-May, and we expect this growth will continue."
VTB's investment banking business, which it started from scratch in 2008, earned 6.1 billion rubles before taxes, while corporate banking and retail banking made 9.1 billion rubles and 6.7 billion rubles of pretax profits, respectively.
“The problem of boosting provisions for bad loans, which we had last year, has significantly decreased,” Moos said. The lender increased its cushion against delinquent debt by 15.5 billion rubles in the first quarter, compared with 49.2 billion rubles in the same period a year earlier, he said. Provisions rose to 9.8 percent of total lending at the end of the quarter, compared with 9.2 percent at the end of last year.
(Reuters, Bloomberg)