By Andrey Ostroukh
SOCHI, Russia--Russia's second-largest lender, VTB Bank
(VTBR.MZ), expects its revenues for 2014 to be hit by the crisis in
Ukraine crisis and a need to protect itself from the effects of
possible domestic bankruptcies, its chief executive said
Friday.
Having posted a record net profit in 2013 on the back of strong
balance-sheet growth stemming from a secondary public offering in
May and the robust performance of its retail business and
transaction banking unit, the bank's net profit plunged 98% in the
first quarter as the Ukrainian crisis started.
Chief Executive Andrei Kostin said he "doesn't bet on big
profits this year" and instead the bank prefers to build up its
reserves. Speaking on the sidelines of an investment conference in
the Black Sea town of Sochi, Mr. Kostin said he expects the
debt-repayment situation from Ukraine to worsen.
VTB, which has a significant presence in Ukraine, has already
seen higher risk-associated costs along with weaker results from
securities and foreign currencies.
Mr. Kostin said VTB in Ukraine is now receiving only a half of
its debt repayments as some of its clients are based in Luhansk and
Donetsk regions, the epicenter of the stand-off between Ukrainian
troops and pro-Russia separatists.
In 2013, the bank ended the year with 100.5 billion rubles
($2.61 billion) in net profit.
Write to Andrey Ostroukh at andrey.ostroukh@wsj.com
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