At the end of December, commercial banks allocated 240 billion rubles to reserves

Having achieved record high financial results, banks at the end of last year sharply increased contributions to reserves – up to 240 billion rubles. at the end of December. The size of deductions inevitably affected profitability indicators. But, as experts note, creating increased reserves in December, in anticipation of business growth next year, is the least painful for banks.

In December 2023, Russian banks significantly increased their spending on reserves – by 107 billion rubles at once, to 240 billion rubles. This is stated in the review “On the development of the banking sector” (.pdf) Central Bank. In addition to the growth of these expenses, including “due to the recognition of losses on old problem corporate loans and other claims,” operating expenses also grew (by 38%, to RUB 352 billion), in particular, “due to the payment of bonuses and high advertising costs.” As a result, net profit in December amounted to only 176 billion rubles, which is lower than in other months of this year. Moreover, as the Central Bank notes, part of this reflected profit was provided by dividends within one banking group. Previously, VTB announced it received dividends in the amount of 112 billion rubles in December last year. from the subsidiary bank FC Otkritie. Therefore, according to the Bank of Russia, the “actual net profit of the sector” in December turned out to be even lower – only 64 billion rubles.

The regulator also notes a certain “seasonality” of the financial result at the end of the year. “Now the profit is high, next year we don’t know what the profit will be, but we will most likely have to reserve. Let’s better reserve now, and next year we will need fewer reserves and, accordingly, our profits will be a little better,” explained the logic of the banks’ actions, the head of the department of banking regulation and analytics of the Central Bank, Alexander Danilov. In addition, according to Olga Naydenova, a senior analyst at the Sinara investment bank, in December banks may plan to overestimate the quality of loans or change their expectations regarding their default. “And given current profits, they have the opportunity to be flexible in their reservation policy,” she notes.

Increased expenses at the end of the year also led to an increase in the number of unprofitable banks at the end of December – 105 versus 71 in November. At the same time, at the end of the whole year, the volume of expenses on reserves for banks decreased to 1.8 trillion rubles, which is 26% lower than the figure a year ago. Last year, banks released excess reserves created in 2022, Mr. Danilov explained. As a result, at the end of 2023, the number of unprofitable credit institutions decreased from 63 to 40.

In 2024, the volume of expenses on reserves may increase in absolute value, a representative of the Central Bank admitted, without excluding that their volume may be comparable to 2022. However, the growth of reserves will also be associated with overall business growth.

In 2024, according to the Central Bank, the growth rate of lending will slow down, mortgages may grow by 7–12% against growth of 34.5% in 2023, the growth rate of consumer lending will slow down to 3–8% from 15.7%, and corporate will grow by 5–10% versus 20% in the previous year. At the same time, the profit of the banking sector in 2024 could amount to 2.3–2.8 trillion rubles, Mr. Danilov estimates, which is higher than the average profit for 2022–2023 in the amount of 1.7 trillion rubles. and comparable to the profit of 2021 (RUB 2.3 trillion). In total, at the end of 2023, banks set a profit record, earning 3.3 trillion rubles, but the Central Bank believes that this result should not be analyzed in isolation from the crisis year of 2022, when banks received only 199 billion rubles. arrived.

Experts note that there are no serious problems with the quality of loan portfolios and do not expect them to deteriorate significantly. The head of the Sberbank financial analytics center, Mikhail Matovnikov, believes that in 2024 there will be no problems with the quality of loans. He currently considers project financing for developers to be the only problematic segment against the backdrop of “collapsed mortgage issuance in new buildings.” According to Ms. Naydenova, the cost of risk may increase slightly in 2024, but it will be comparable to the level of 2023. “A significant increase in pressure from additional creation of loan reserves is not yet expected unless the economy slows down, individual problem cases emerge, or interest rates remain high for a long time,” she believes.

Olga Sherunkova