President of Russia Vladimir Putin: Mr Kostin, let us talk about the bank’s performance in the first six months of the year.
President and Chairman of VTB Bank Management Board Andrei Kostin: Certainly, Mr President.
Vladimir Putin: Go ahead, please.
Andrei Kostin: We only have audited accounts for the first five months, during which the bank’s profits have increased by 74 percent to over 87.1 billion rubles.
Vladimir Putin: Increased by 74 percent?
Andrei Kostin: Yes, and we expect our half-year profits to reach 95 billion or100 billion rubles, which is as much as we netted in all of 2017.
It should be said that our performance indicator, which is known as return on capital and denotes a bank’s revenue from the money invested in it by its shareholders, has risen above 14 percent. This makes the bank one of the five most efficient and profitable banks in Europe, if we consider large banks. In other words, this is a positive development.
At the same time, we have reported an increase in our portfolio of loans to companies and individuals. Mortgages are a major driver, of course. I would like to note not only the increased number of mortgages (we expect it to grow by 20 percent this year), but also a decrease in the interest rate on mortgages. Our goal is to further reduce it to 7 or 8 percent, as you have indicated in your Address to the Federal Assembly. The current rate is 8.9 percent. There is a short distance to the figure you have indicated. We will be working to attain this goal.
You often ask me about corporate lending to Russian companies. Let me show you a chart that I have brought with me.
Vladimir Putin: Not all of them are the same: there are also small and medium-sized businesses.
Andrei Kostin: Of course.
Vladimir Putin: What is the interest rate on loans to small and medium-sized enterprises?
Andrei Kostin: The chart refers to the corporate sector. If we look at the last 16 loans to big corporate borrowers in the second quarter, you can see that the interest rates have gone down substantially, ranging between about 6.75 and 10 percent. Companies working in trade, equipment manufacturing and medicine, as well as major metallurgical companies get an interest rate between 7 and 8 percent.
Vladimir Putin: What about smaller companies?
Andrei Kostin: Smaller companies currently have to pay a higher interest rate of over 10 percent, although we are working on lowering their borrowing costs. I think that all the conditions are in place for achieving this result.
Vladimir Putin: So that the national average is below 10 percent.
Andrei Kostin: Yes, somewhere around this figure.
Vladimir Putin: The interest rates must come down much faster.
Andrei Kostin: We are working on it.
There is one interesting thing I wanted to highlight. Since the beginning of this year, people seem to be less interested in making dollar deposits or taking out dollar loans, compared to ruble-denominated deposits and loans. We believe this to be an important step towards the de-dollarisation of the Russian finance sector.
I would also like to say that our experts have drafted a package of proposals designed to further promote the ruble in international settlements and thus develop the Russian market for floating Eurobonds, shares and creating other derivatives that are now used only in the West. I think that we need to create our own financial tools. This would serve as an additional safeguard for the Russian financial sector against external shocks, and would give a new impetus to its development.
I would like to ask you to instruct the relevant agencies, the Government and the Central Bank to review these proposals and, if possible, to support the policy of de-dollarisation and countering tax base erosion and profit shifting.
Vladimir Putin: Thank you.