MOSCOW (Reuters) - Russia's second-largest bank, VTB (MM:VTBR), said an economic slowdown and political tensions over the Ukraine crisis had damaged its business, as it reported a 82 percent slide in first-half profit.
The United States and European Union have put VTB on their Ukraine-related sanctions lists, restricting its access to international capital markets along with other Russian state-owned banks.
Chief Financial Officer Herbert Moos said on a conference call that a significant slowdown in the Russian economy and risks linked to Ukraine had significantly increased the bank's cost of risk and forced it to boost loan-loss provisions.
Dmitry Pyanov, the bank's senior vice-president, told the same conference call on Thursday that the bank's earnings were cut by 8 billion roubles in the second quarter because of the Ukraine crisis.
Bad loan provisions rose to 92.8 billion roubles for the first six months of the year from 50.7 billion a year earlier, while its cost of risk rose to 2.6 percent from 1.8 percent.
Its return on equity - a measure of the bank's profitability - slumped to 1.1 percent compared to 6.9 percent for the first half of 2013.
Its Tier 1 capital ratio - a measure of the bank's ability to absorb losses - fell to 9.4 percent from 10.9 percent.
The government plans to spend 239 billion roubles from the National Wealth Fund, which collects oil revenues, to buy out preferred shares of VTB and Rosselkhozbank to boost their capital following the sanctions.
VTB's net profit was 5 billion roubles (83.24 million pounds) versus 27.6 billion roubles a year ago.
(Reporting by Alexander Winning and Oksana Kobzeva; editing by Katya Golubkova and Tom Pfeiffer)