Russia’s second largest bank VTB said yesterday its net profits in 2014 had fallen by 99.2% due to the collapse of the rouble, spiking interest rates and western sanctions over Ukraine.
The majority state-owned bank earned a profit of 0.8bn roubles (€12mn, $12.7mn) in 2014, down from 100.5bn roubles a year earlier.
In the fourth quarter of 2014 alone the bank lost 4.6bn roubles.
Andrei Kostin, the bank’s president, said in a statement that “2014 was a very challenging year for both the Russian economy and the banking sector.”
“During 2014, our clients were affected by an economic slowdown and tough geopolitical environment, as well as by the rapid depreciation of the rouble and subsequent spike in interest rates. This led to elevated risk costs for VTB, which in turn resulted in subdued net profit despite our very strong operational results,” he said.
The bank has been the target of European Union and US sanctions over Moscow’s role in the conflict in eastern Ukraine.
Last October VTB filed a lawsuit in the Court of Justice of the European Union to contest the sanctions, which prevent European entities from lending to the bank—one of several hit with similar measures.
In December the bank received 100bn roubles from Russia’s national welfare fund as part of a plan to recapitalise the banking system hit by the falling rouble and Western sanctions.
The national welfare fund is a mammoth pile of money accumulated over the years of high oil prices, when Russia made billions of dollars through its energy exports.
