Interview with Andrey Kostin, President – Chairman of the Management Board of VTB Bank

20 April 2020

Andrei Kostin, President and Chairman of VTB Bank Management Board, in an interview with RBC spoke about his crisis formula and assessed the threat of a pandemic brunt on banks, economy and people.

When being in office, have you found yourself in a more problematic confluence of circumstances? How does this crisis differ from those that you have already passed through?

I passed through the crises of 1998, 2008-2009, 2014-2015. Usually, in a crisis, you have to be responsive, to solve everything promptly. Now everything has become more complicated: although I am at my workplace every day, it seems that there are still all means of communication, but the main thing is missing – the ability to fully communicate with clients who have problems. Yes, we quickly created over 15,000 remote jobs, and employees, including a number of my deputies, work from home. But I feel sorry for them, because it is extremely difficult to do the banking business remotely, which is largely based on personal communication. But a crisis is a crisis. For me, this is always an opportunity, a concentration of my mental strength, knowledge, qualifications.

How deep can the economic downturn be? Are you expecting a V-shaped quick recovery?

We are dealing with a crisis that is not fully predictable either in time or in its depth. We proceed from what we know today, while what we will learn tomorrow is another issue.
Hopefully we can avoid the worst possible scenarios. Now people have begun to say that this is the Great Depression, but there is an IMF estimate that the global decline in production will be about 6%. The forecast for Russia is minus 5.5%. This is a serious challenge. At the same time, the IMF plans that in 2021 the growth rates in developed countries, in Russia, will on average be higher than even in previous years. Therefore, I expect a fairly quick rebound.

Do you share the fears of Alexei Kudrin that the next stage will be a crisis in the financial sector?

I still do not believe that a crisis in the banking sector will inevitably await us. And I and my colleagues, including those from Sberbank, say that it is impossible today to try to solve the problems of other areas of the economy at the expense of banks. Because then at some stage it will be necessary to treat the banks themselves, and this may cost more than the injections in other sectors of the economy.

Do citizens need direct payments in the new crisis? Or maybe the tax exemption for the poor is needed, as you proposed last September?

In a crisis, it is necessary to identify the areas that need support first of all. The truth is, who are not the poorest today may become poor later. For example, today a person receives unemployment benefits, it is guaranteed to him. At the same time, a person who today works at an enterprise and receives a decent salary may find himself in a situation where the enterprise will stop working and he will generally be left without a livelihood. The abolition of personal income tax for the poor is the easiest measure as usual, but now is not the time for it.

Is VTB revising its profit forecast? Do you have a calculated scenario in accordance with which the bank will need state support?

We are not currently considering the issue of support. Now it is difficult for us to revise the forecasted results for this year, because given the crisis, it is practically impossible to do this. But there was a law passed to postpone the annual meetings of shareholders. This allows banks to think about their approach the middle of the year or even in the third quarter, with what results, opportunities, prospects, including the payment of dividends.

How many people applied to VTB for credit vacations with a 30% decrease in income and what is the percentage of refusals?

As of mid-April, since the beginning of this month, more than 9 thousand clients have used mortgage vacations. More than 4.6 thousand clients among them are under the bank’s programs and about 4.5 thousand are under the government’s program. And if we also take consumer and other loans, then more than 90 thousand credit applications out of 97 thousand were satisfied, that is, more than 90%.

Does VTB have an informal ban on lending to employees of companies in the most affected industries, such as tourism and aviation?

Not. We do not have such a prohibition.

What kind of questions do your clients and partners call you with?

The bank must respect the client, because the health of the bank depends on the client. We monitor the situation online for all our clients – both corporate and retail. You know, from the experience of the past crises, I realized how important it is to support and trust a client. You can’t be a friend only in good times. Therefore, I tell the employees that all requests should be carefully considered. We must meet half way where possible.

How do you yourself go through the viral crisis?

I know that all crises have characteristic features and the means of dealing with them are also known. The first rule is not to panic, not to be afraid. We need a joint search for solutions by all: society, government, business.
Life is given once, it is beautiful. Difficulties are as much a part of life as happy moments. For me, the main thing is to take care of people dear to me. Me myself, I am not afraid, I go to work every day, observing, of course, all safety measures. I think it is important to work as much as possible. So that the virus does not defeat us economically.