Andrei Kostin on VTB and Russian banking

VTB head, Andrei Kostin, is in London with an eye to making investments abroad and spoke exclusively to RT Business.

RT began by asking if the bank was in a good position to invest given it will post a loss for 2009.

AK: “The loss is mainly based on growth of our provisions and we very much expect that this year will be quite different, and we can compensate whatever losses we had last year. So we have a very high capital adequacy as a result of the additional capitalization last year. So we are quite in a position to do this, but will be very selective. We still rely on the organic growth as our major driving force in our development, but we will also be seeing some good chances and opportunities happen in business, and will be making decision from that as well.”

RT: And what figures are you expecting for 2010?

AK: “We expect something around 2 billion dollars net profits, for this year, maybe slightly less.”

RT: What is the key issue for the banking industry?

AK:  “I think competitiveness, issues of capitalization in general, that’s quite an issue. I think that, although the banks like VTB, Sberbank resolved this issue last year, there still could be a problem for some Russian banks, particularly, if you take into account the fact of non-performing loans, which are probably not as high as many expected, but still exert some pressure on the capital base of the Russian banking sector.”

RT: You mentioned non-performing loads (NPL’s), which you predict could rise to 10 per cent, what’s happening in the real economy to make that happen?

AK:  “I think it’s vice versa, if things go worse in the real economy, then the banks will be badly affected, but we see now the signs of stabilization in the real economy and we expect, personally, I mean our analyst, the growth of around 5 per cent at least of GDP during this year, so it does provide quite a reasonable basis for banks in increasing our loans again and to limit the amount of NPLs overall.”