Russia's VTB targets 30% profit rise for dividends, reserves

VTB's Financial Strategy and Future Outlook

MOSCOW, Jan 30 (Reuters) - Russia's second-largest bank VTB is targeting a 30% rise in annual profit to ensure sufficient funds to maintain dividends and fulfil central bank demands to boost capital reserves, CEO Andrei Kostin said on Friday.

Dividend Payments and Central Bank Relations

VTB, which says it has lost $8 billion due to Western sanctions, paid dividends for the first time in four years last year with the payout reaching 50% of its 2024 net profit of 551.4 billion roubles ($7.29 billion).

Profit Projections and Share Valuation

"We have started this (paying dividends) and plan to continue in all subsequent years," Kostin told students at the Moscow State Management University.

Impact of Sanctions on Financial Operations

Kostin criticized the central bank's stance on reserves, which is based on the global banking rules known as Basel 3, as "unreasonably high and excessive" given Russia's economic situation.

"The central bank consistently insists that we pay fewer dividends and channel more funds into capital formation. We believe dividend payments are absolutely essential," Kostin said.

VTB, which issued shares to raise 84 billion roubles last year in order to boost capital, is targeting up to 650 billion roubles in net profit in 2026, a 30% rise compared with 2025, with Kostin saying that would be enough both for dividends and reserves.

He said that in future the bank will issue new shares only if necessary. He argued that the shares, currently trading at 76.90 roubles on the Moscow Exchange, were undervalued.

"This is clearly an abnormal situation. It will certainly change once the special military operation ends and sanctions on the financial sector are lifted," he said, referring to the four-year operation in Ukraine.

($1 = 75.6500 roubles)

(Reporting by Elena Fabrichnaya; Editing by Gleb Bryanski and Elaine Hardcastle)