Russia's VTB Bank reports record profits for 2024, recommends no dividend

By Elena Fabrichnaya

MOSCOW (Reuters) - Russia's second-largest lender VTB Bank made record profits of 551.4 billion roubles ($6.3 billion) in 2024, its chief financial officer said, but will not recommend a dividend as high interest rates and new regulation dampened this year's earnings outlook.

The state-owned lender has now reported successive years of record annual profits, rebounding from a sanctions-induced loss of 667.5 billion roubles in 2022 when it was cut off from the SWIFT global financial messaging system after Moscow sent troops into Ukraine three years ago.

High interest rates boosted banks' net interest margins, but with the Russian central bank's key rate now at 21%, lending growth is starting to slow as companies cut back on investment and people prefer to hold funds on deposit.

Despite the 27.6% year-on-year surge in net profit, VTB's management is recommending that no dividends be disbursed from the 2024 results, Chief Financial Officer Dmitry Pyanov told reporters in comments cleared for publication on Tuesday.

"The shareholder takes the dividends decision, but we, as management, will recommend against paying dividends on 2024 results due to the likely unprecedented number of simultaneously emerging negative factors affecting our ability to increase capital adequacy," Pyanov said.

Pyanov named the high key rate, harsher tax policy and tighter regulation, including a surcharge for banks when issuing new loans to large firms with a high debt burden, among those negative factors.

As a result, profits this year are set to fall to around 430 billion roubles, Pyanov said, before bouncing back to around 650 billion roubles the year after. Conflict resolution regarding Ukraine is not included in the bank's base case forecast, he added.

U.S. President Donald Trump is seeking a swift deal to end the conflict in Ukraine, fuelling speculation that sanctions imposed against Russia could be eased.

Pyanov expects the bank's overall loan portfolio growth to slow to 5% to 6% this year, largely due to more profitable corporate loans.

"This will be a year of credit manoeuvre for us," Pyanov said. "We will purposefully reduce loans to individuals."

($1 = 87.7455 roubles)

(Reporting by Elena Fabrichnaya; Writing by Alexander Marrow; Editing by Jamie Freed)