Russia's Second Bank VTB Reports 98% Profit Fall as Economic Crisis Bites

Russia's second biggest bank VTB has reported its net profit fell by 98% in the third quarter, compared to the same period last year.

The state-run bank has faced sanctions from the United States and the European Union, while the economy as a whole in Russia has slowed amid heightened tensions with the West and a dramatic fall in the price of oil.

VTB reported its third quarter net profit was 0.4bn roubles ($8.5m, £5.5m, €6.8m,) down from 18.4bn roubles in the same period in 2013. The results were well below analysts' expectations of a 3bn profit.

The bank cited the falling value of the rouble, which has plunged by almost 30% against the dollar in 2014, while it has also had to make higher provisions for bad loans, which increased to 65bn roubles from 22bn a year before.

"The macroeconomic slowdown has had a negative impact on asset quality and the cost of risk in retail lending," the bank said in a statement.

The bank said it had witnessed an increase in demand for credit from large borrowers, after Western sanctions restricted access to global financial markets.

Russia's finance ministry bought 214bn worth of shares in the bank in September, while the country's finance minister has said the bank had also asked for 250bn roubles in state aid.

Both the US and EU imposed sanctions on Russia after the annexation of the Crimea peninsula in March. Those sanctions increased in severity as the conflict escalated in eastern Ukraine throughout the year, with the Western allies accusing Russia of fuelling the fighting.

Russia has denied supporting the separatists.