VTB Group, Russia’s second-biggest bank, headed for a four-year low as Moody’s Investors Service and Standard & Poor’s said a weakening economy will hurt lending and erode earnings.
VTB fell 1.1 percent to 4.182 kopeks by 5:30 p.m. in Moscow, the lowest since September 2009 on a closing basis. The number of shares trading was equivalent to about 112 percent of the three-month average.
Russian lenders face a “challenging” environment this year and in 2014 amid slower economic growth, rising bad debt and declining profitability, Moody’s said. Banks’ loan portfolio performance will probably deteriorate in light of the weakening economy, according to S&P. The World Bank last month cut its forecast for 2013 economic growth to 1.8 percent, the slowest pace in four years, from a previous estimate of 2.3 percent.
“Investors have a cautious view on the market and they are avoiding riskier assets like VTB,” Mark Rubinstein, head of research at IFC Metropol, said by phone from Moscow.
S&P said in a report today that after a period of “aggressive” growth it expected declining asset quality to become the “main threat” to the capital sustainability of Russia’s largest banks in the next 12-18 months. Moody’s kept its “negative” outlook for the country’s banking system, according to an e-mailed note today.
VTB’s second-quarter profit rose less than analysts’ estimated to 12.6 billion rubles ($390 million) after the company than doubled its provision for bad loans to 28.7 billion rubles, the lender said Sept. 12. The bank kept its full-year profit forecast of 100 billion rubles.
VTB declined 1.4 percent to $2.598 in London. OAO Sberbank, the nation’s biggest lender, lost 0.7 percent to 99.54 rubles in Moscow, having retreated as much as 1.1 percent earlier.
Sberbank’s nine-month net income rose 6.3 percent to 286.2 billion rubles, the lender said today in a website statement. VTB and Sberbank account for about 45 percent of Russia’s banking sector’s assets, according to S&P.
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