Azernews.Az

By Bloomberg

VTB Group posted a first-quarter loss of 14.3 billion rubles ($292 million) as revenue at Russia’s second-largest bank plummeted while bad loan provisions increased amid an economic slump.

Net income fell from a profit of 2.4 billion rubles a year earlier to the biggest loss in six years. The amount is smaller than the average prediction of six analysts surveyed by Bloomberg of a 25.4 billion-ruble loss.

“The sharp rise in interest rates had a detrimental effect on our margins, and the general economic slowdown led us to continue building significant provisions against our credit exposures,” Chief Executive Officer Andrey Kostin said in a statement Tuesday.

Russian lenders’ profits have been squeezed as a plunge in crude, the country’s biggest export, exacerbates the impact of sanctions, pushing the economy toward its first recession since 2009. Gross domestic product will probably contract 4 percent this year, according to the median estimate of 49 economists surveyed by Bloomberg.

The provision for bad debts was 48.9 billion rubles, compared with 48 billion rubles in the year-earlier period, and includes a charge for impairment of debt financial assets.

The bank said its Tier 1 capital ratio, a measure of financial strength, declined to 9.7 percent from 9.8 percent at the end of 2014.

Net interest income, the revenue generated from the difference between what banks charge for loans and pay for funding, almost halved to 46.1 billion rubles from 89.9 billion rubles.