Bank profits continued to decline in October for the second month in a row – Kommersant

The net profit of Russian banks in October amounted to 256 billion rubles, which is 13% lower than the September figure (296 billion rubles). In September, banking sector profits fell by 16%. At the same time, in January-October 2023, banks earned 2.9 trillion rubles, as follows from the information and analytical report (.pdf) material from the Bank of Russia on the development of the banking sector in October.

The Central Bank said that in October, bank profits decreased due to negative currency revaluation (about 66 billion rubles) against the background of a strengthening of the ruble by 4.5% and negative revaluation of securities (8 billion rubles), caused by rising market rates. Banks admitted that due to the revaluation of securities in October, they also suffered losses in the amount of 20 billion rubles. directly in equity through other comprehensive income.

The report notes that not all of the banking sector’s profits for the first ten months of this year will be included in regulatory capital. Bank profits are inflated by IFRS adjustments for the dissolution of reserves and a negative revaluation of OFZ by approximately 0.8 trillion rubles, the regulator said. In October, the growth of banks’ core profits was ensured by net interest income, which totaled about 16 billion rubles. The increase in this indicator is explained by the continued growth in lending.

In 2022, the Russian banking sector, against the backdrop of sanctions, made a profit of 203 billion rubles. Based on the results of 2023, the Central Bank awaits the profit of Russian banks is at the level of 2.9–3 trillion rubles. In August, the Central Bank raised the key rate to 12%, in September – to 13%, in October – to 15%. In November, banks reacted with restraint to the key rate increase. Although the largest players announced an increase in rates to the level of the key Central Bank and higher, this applies to individual deposits. Banks do not expect further radical actions from the regulator.

More details in the material “Banks are holding deposits”.

Erdni Kagaltynov