VTB Group Drops on Trading Losses

VedomostiVTB said Friday that nine-month net income at Bank VTB, its biggest unit, fell to 7.44 billion rubles after a revaluation.
VTB Group, the country's second-biggest bank, fell Friday after trading losses reached 9.31 billion rubles ($360 million) in September because of "negative market dynamics."

Nine-month net income at Bank VTB, the group's biggest unit, fell to 7.44 billion rubles from 16.8 billion rubles in the first eight months after a "revaluation of the bank's securities portfolio," the lender said in an e-mailed statement Friday. The results were calculated using Russian standards.

"This is confirmation that VTB can't meet our profit estimate of $1.6 billion for the year," said Natalya Orlova, banking analyst at Alfa Bank. "Profit will be much lower, although it's hard to say to what extent," she said.

Alfa put its "buy" recommendation for VTB under review Friday.

VTB Group fell 5.5 percent to 4.57 kopeks. It raised $8 billion selling shares for 13.6 kopeks apiece in the world's biggest initial offering in 2007.

State-run VTB, which had $453 million in trading losses in the first quarter and $276 million in gains in the second quarter, is "actively hedging" against risk, chief financial officer Nikolai Tsekhomsky said in the statement.

The September loss may be less under international standards, which will reflect completed hedging transactions not included in the Russian results, Tsekhomsky said.

Tsekhomsky said Sept. 24 that the bank expects slower loan growth and wider trading losses this year after the biggest market rout since the 1998 devaluation and default. The bank's first-half profit under international standards rose 41 percent to $666 million.

"Volatility led to VTB's loss," said Leonid Slipchenko, a banking analyst at UralSib. "I don't expect the market to collapse, so the fourth quarter should bring an improvement."