By Alexander Kolyandr
MOSCOW--Russia's state-controlled bank VTB Bank said on Friday
that its 2014 net profit was almost wiped out during "a very
challenging year for both the Russian economy and the banking
sector."
The country's second-largest lender, battered by Western
sanctions and high interest rates imposed to stem the ruble's
plunge, said its profit plummeted to 800 million rubles ($13.1
million) from a record 100.5 billion rubles in the previous
year.
The result is better than analysts' expectations and comes
despite a warning from Chief Executive Andrei Kostin that the bank
could make its first loss in five years.
Once the flagship of the Kremlin's drive to create a
Western-style global banking giant, VTB has found itself cut off
from world financial markets by sanctions imposed last summer amid
the crisis in Ukraine.
"Our clients were affected by an economic slowdown and tough
geopolitical environment, as well as by the rapid depreciation of
the ruble and subsequent spike in interest rates," said Mr. Kostin
as the bank presented its earnings.
This led to higher risk costs despite strong operational
results.
The bank said its provision charge for impairment is up to 275.4
billion rubles from 99.2 billion rubles in 2013, and return on
capital dropped to just 0.1% in 2014 from 11.8% in 2013.
Write to Alexander Kolyandr at Alexander.Kolyandr@wsj.com
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