Published by Global Banking & Finance Review®
Posted on July 4, 2025
3 min readLast updated: January 23, 2026
VTB Bank stands to gain billions from interest rate cuts, boosting profits and dividends, as Russia's central bank faces pressure to lower rates.
By Elena Fabrichnaya
ST PETERSBURG, Russia (Reuters) -Every 1% cut in central bank interest rates gives Russia's VTB Bank an extra 20 billion roubles ($250 million) in net profit, CFO Dmitry Pyanov told Reuters, which benefits the government as the state-owned lender plans to distribute 50% of its profits via dividends - half of it to the state.
Russia's benchmark interest rate remains extremely high at 20%, discouraging borrowers and hurting banks' loan books. While the central bank cut the rate last month from a more than 20-year-high of 21%, pressure is growing on it to bring rates down faster, with government officials and business leaders fretting over the risks of a recession.
Among Russian banks VTB has the highest proportion of loans on floating rates, so high official rates raise the risk it faces of more defaults or debt restructuring moves, which in turn can push up its capital requirements, while lower rates stand to benefit the bank's bottom line.
"VTB Bank is a main beneficiary of the key rate cut," Pyanov told Reuters on Thursday at a financial forum in St Petersburg. "We suffer most of all during a period of its increase and will realise positive interest rate risk when the rate decreases."
"A one percentage point rate cut gives us 20 billion roubles of net profit."
President Vladimir Putin in June ordered that VTB's dividend payments be used to finance United Shipbuilding Corporation, which has been under VTB's management since 2023, and has state contracts in the defence sector. The state owns more than 60% of VTB.
High interest rates have indeed stalled investment and encouraged companies and consumers to hold money on deposit. Corporate and consumer lending is slowing and the central bank has noted a deterioration in credit quality, although it says the situation is not yet critical.
A survey of participants at a financial congress in St Petersburg this week pinpointed the key risk factors as corporate credit concerns and interest rate risks for banks.
Pyanov said he did not expect a banking crisis and saw no banks in need of a bailout.
DIVIDENDS PLAY KEY ROLE
Dividends from state companies are a major source of revenues for Russia's budget, which is operating at a deficit of 1.5% of GDP as Moscow diverts vast sums to the defence sector for its conflict in Ukraine and grapples with reduced energy revenues from lower oil prices this year and a strong rouble.
Shareholders of top lender Sberbank approved a $10 billion dividend payout this week.
VTB surprised the market in April by announcing its first dividend since the start of the conflict in Ukraine, having slumped to a $7.7 billion sanctions-induced loss in 2022.
The total payout of 275.75 billion roubles comes on the back of record profits in 2024 and though a decline is expected this year, profits could once again surpass 500 billion roubles, Pyanov said.
Depending on capital adequacy rules that the central bank may adjust, Pyanov said VTB would work hard to keep dividend payments at 50% of net profit for the years to come.
Pyanov also noted how the departure of Western capital and the emergence of retail investors as a dominant force in the Russian stock market since the start of the conflict in Ukraine had influenced VTB. Dividends are now key to maintaining shareholder value in Russia, he said.
"With such a dominant retail investor, everyone wants dividends," Pyanov said.
($1 = 79.0000 roubles)
(Reporting by Elena Fabrichnaya; Writing by Alexander Marrow;Editing by Andrew Osborn and Hugh Lawson)
VTB Bank gains an extra 20 billion roubles ($250 million) in net profit for every 1% cut in central bank interest rates.
Russia's benchmark interest rate is currently extremely high at 20%, which discourages borrowers and negatively impacts banks' loan books.
Dividends from state companies are a major revenue source for Russia's budget, and VTB aims to maintain dividend payments at 50% of net profit in the coming years.
The key risk factors for banks include corporate credit concerns and interest rate risks, as noted by participants at a financial congress in St Petersburg.
CFO Dmitry Pyanov stated he does not expect a banking crisis and sees no banks in need of a bailout.
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