Alfa-Bank set an anti-record for profit among large banks

Despite the overall growth in banking sector profits in July, many major players worsened their results. Alfa-Bank earned the least of all among systemically important credit institutions (SZKOs), whose profit fell by almost 17 times. In terms of growth, MKB took the first place, which increased profit by 6.5 times. The reduction in the profits of individual players could be affected by the cancellation of some of the easing of the Central Bank.

“Kommersant” analyzed the reporting of credit institutions under RAS, published by the Central Bank on August 24. According to Kommersant’s calculations, Alfa Bank in July showed the lowest RAS net profit among systemically important players. Its profit in July decreased by 16.7 times, to 635 million rubles. (against 10.6 billion rubles of profit in June). The profit of the second-largest bank in the country has also fallen sharply. VTB — 19 times, up to 1.4 billion rubles. Other banks also showed a decrease compared to the previous reporting month (June), but on a much smaller scale: in particular, profit “FC Opening” decreased by 2.3 times, to 1.2 billion rubles, Sovcombank — 1.8 times, up to RUB 8.7 billion, Rosbank — 1.7 times, up to 3.5 billion rubles.

The highest profit growth among SZKOs at the end of the month was shown by Moscow Credit Bank (MCB): it increased 6.5 times, to 15.7 billion rubles. Profit rose sharply and Gazprombank — 5.3 times, up to 19.2 billion rubles.

Sberbank remains the leader in terms of profit – 130.4 billion rubles. for the month, the decrease to the maximum result for the year in June was only 6%.

Alfa-Bank explained the weak result of July by additional creation of reserves. “The bank continues to pursue a conservative policy regarding the provision of blocked assets, creating additional reserves in July 2023, which affected the final profit for the month,” the bank noted.

At the same time, “the main sources of income continue to grow,” assured Alfa-Bank: the bank’s net interest income for January-July increased by 82% year-on-year. “Net fee and commission income, which accounts for more than 30% of operating income, also shows stable growth, up 15% year-on-year,” the bank added.

The MKB Kommersant reported that net profit in July increased due to “an increase in net interest income against the backdrop of a growing loan portfolio and trading income on securities due to the volatility of individual financial instruments.” Other banks did not promptly respond to Kommersant.

In general, in July, the sector’s profit increased and amounted to 327 billion rubles. against 314 billion rubles. in June, cumulatively since the beginning of the year, banks have already earned more than 2 trillion rubles. According to the Central Bank, the result of July “generally corresponds to the result of June.”

Banking expert Alexei Nechaev notes that the sector’s open currency position “was long, therefore, the weakening of the ruble was beneficial for income.” At the same time, “specific banks could have their own peculiarities.”

Another factor in the decline in profits is the abolition of regulatory easing since the beginning of July, which “theoretically could cause an increase in reserves for individual banks,” says Mr. Nechaev. According to the website of the Bank of Russia, among the measures that were in effect until the beginning of July is the ability to violate the maximum risk limit per borrower or group of related borrowers (N6) and the maximum risk limit per borrower or group of related borrowers of a banking group (N21) in in relation to NCC and NSD.

In addition, since July, the preferential provisioning regime for a number of loans has expired. Until June 30, credit institutions were given the opportunity to form provisions for corporate borrowers with a delay of up to 90 days, as well as for non-resident borrowers subject to “blocking restrictive measures” (that is, “sanctioned” borrowers) and who have foreign currency loans with delayed by 90 days.

Also, from the beginning of July, easing ended, within which banks could not recognize a borrower’s default in order to calculate capital adequacy ratios. This was possible if the borrower could not repay the debt due to the blocking of funds or restrictions on payments on his part due to sanctions.

Olga Sherunkova