Russia’s second largest bank, VTB, has posted a 1H 2009 Net Loss of 31.5 billion Roubles under IFRS.

The bottom line compares with a 16.3 billion Rouble net profit for 1H 2008, despite customer deposits rising 41% half on half to 1.6 trillion Roubles, and total loans rising 3% half on half to 2.7 trillion Roubles.

VTB attributed the net result to loan provisions. During the half it charged 96.6 billion Roubles, or 6.9% of the loan portfolio, compared with 3.6% at the end of 2008. In the same half the share of overdue and rescheduled loans rose from 2.4% at the end of 2008 to 9.4% at the end of 1H 2009.

VTB noted that 2Q 2009 losses of 11 billion Roubles, were markedly lower than losses of 20.5 billion for 1Q 2009 as core income and foreign exchange and financial instrument gains buoyed the income statement.

VTB President and Chairman of the Management Board Andrei Kostin was upbeat about both the 1H 2009 results and the outlook, saying a rebounding economy will build strength into the capital and asset base of the bank, after the focus on risks during the economic downturn.

“Against a difficult economic backdrop, we continue to manage the business with a focus on costs and risk. In the second half of the year, we expect to see signs of improvement and the benefits of a reinforced capital base and, while there is still some uncertainty, we believe we have now passed the lowest point of the economic cycle.”