MOSCOW, May 27. /ITAR-TASS/. Shares of state-owned VTB Group, which includes Russia’s second largest VTB Bank, plummeted on the Moscow Exchange on Tuesday on the bank’s negative profit report.

As of 11:40 a.m. Moscow time (07:40 GMT), VTB’s shares plunged by 3.5% to 4.36 kopecks per share.

VTB said on Tuesday its IFRS net profit had fallen by 97.5% in the first quarter of 2014 year on year to 400 million rubles ($12 million).

The bank’s net interest margin was unchanged at 4.5% in the first quarter of 2014 from the same period of 2013 and was 0.2% down from the previous quarter.

The bank said the contraction in the net interest margin was attributable to an increase in the Russian Central Bank’s key refinancing rate, the bank’s larger liquidity cushion and lower yields on the bank’s debt securities and retail loans.

The bank’s retail business and transaction banking earned 7.5 billion rubles ($218 million) and 4.7 billion rubles ($137 million) in the first quarter of 2014, or 52.4% and 32.9%, respectively, of the bank’s total net fee and commission income.

“Against the backdrop of Russia’s macroeconomic slowdown as well as political tensions in Ukraine, the Group saw elevated cost of risk and weaker results from securities and foreign currencies,” VTB said in a statement.

The bank’s net loss from foreign currencies was 8.2 billion rubles ($239 million), which was “driven by Ukrainian hryvnia devaluation and increased swap costs during the quarter,” the statement said.

VTB’s IFRS net profit increased by 10.9% in 2013 to 100.5 billion rubles ($2.9 billion).

VTB Group is Russia’s second largest bank group comprised of more than 30 banks and financial companies in more than 20 countries. The government has a 60.9% stake in the VTB capital. VTB shares are traded on the Moscow and London Stock Exchanges.

VTB’s assets as of December 31, 2013 totaled 8.8 trillion rubles ($254 billion).