Russian banks to face 'challenging times', VTB chief tells RBC

[MOSCOW] The Russian banking sector is likely to face a tough second quarter, hit by economic consequences from the coronavirus outbreak, Andrey Kostin, chief executive of the country's second biggest bank, VTB, told RBC in an interview.

"The second quarter, of course, will be a tough one. I think that the banking profits (across the sector) will fall significantly if not turn negative at all," Mr Kostin told RBC daily newspaper.

The Russian government and the central bank have tried to soften the hit from the coronavirus outbreak, easing some lending requirements for banks and individuals, part of a wider economic package worth around 2.8 per cent of Russia's gross domestic product.

The central bank has also recommended that banks postpone annual general meetings - and dividend payout recommendations - from May-June to later dates, allowing some financial flexibility to assess the impact of the virus.

Mr Kostin said VTB was so far sticking to an earlier plan to pay 50 per cent of last year's net profit in dividends but the final decision would be made later. VTB is ready to withstand a doubling of non-performing loans, he said.

"The most challenging times for the banks are yet to come," he told RBC.

Russia on Sunday reported 6,060 new cases in the previous 24 hours, bringing its nationwide tally to 42,853. The official death toll was 361.

REUTERS