Russian banks’ profits slumped around 90% in 2022 – central bank
MOSCOW — Russian banks’ profits slumped around 90% to 203 billion roubles ($2.9 billion) in 2022, the central bank said on Friday, with sweeping Western sanctions on Russia’s financial system and an outflow of depositors sorely hampering lenders’ prospects.
The West blocked several key Russian banks’ access to the international SWIFT payments system soon after Moscow sent tens of thousands of troops into Ukraine 11 months ago, with dominant lenders Sberbank and VTB forced to shutter operations across much of Europe.
Along with other areas of the Russian economy, the sector demonstrated some resilience. The central bank said banks had managed to offset a first-half loss of 1.5 trillion roubles to post a profit by year-end.
Depositors hurriedly withdrew funds in the spring, but by year-end, the sector saw a net inflow to retail deposits.
“However, not all banks were able to completely recover losses from the beginning of the year, with some players ending the year with significant losses,” the central bank said in a report, with 104 unprofitable banks by year-end, down from 130 in the middle of 2022.
Provided there are no new shocks in 2023, banks’ financial results will be significantly better this year and profits could exceed 1 trillion roubles, said Alexander Danilov, director of the central bank’s banking regulation and analytics department at a briefing.
A year ago, the central bank had forecast banking sector profits of over 2 trillion roubles last year, following record profits of 2.4 trillion roubles in 2021.
Shunned by the West and pivoting towards ever closer ties with the likes of China and India, Moscow has intensified efforts to reduce exposure to the U.S. dollar and other so-called ‘unfriendly’ currencies.
Banks’ foreign currency loan portfolio shrank by 18.2% in 2022, the central bank said, or by $30.2 billion, a process achieved mainly through converting FX loans into roubles.
Banks would have made a loss in 2022 were it not for regulatory relief from the central bank, Danilov said.
Financial institutions were ordered to limit disclosures in 2022, but will have the right to resume reporting results under international accounting standards this year, Danilov said.
Corporate loan growth of 14.3% in 2022 exceeded the 11.7% rise the year before, partly down to domestic sources of financing replacing external ones and state support for crucial industries, the central bank said.
Danilov, giving provisional guidelines, said this year’s corporate loan growth would likely be 10%-14%.
Mortgage loan growth was 20% last year, down from 31% the year before. Growth this year is seen at 15%.
($1 = 69.2500 roubles) (Reporting by Elena Fabrichnaya and Alexander Marrow Editing by Mark Potter)
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