Bank St. Petersburg almost did not increase profit in 2023

Bank St. Petersburg, one of the twenty largest in the Russian Federation in terms of assets, was among the first after Sberbank to disclose financial indicators for 2023. In contrast to the state bank and the industry as a whole, it showed modest net profit growth of 2%. Falling under sanctions at the beginning of 2023 did not allow us to maintain the growth rate of 2022. Against the backdrop of high interest rates, this will be even more difficult, experts say.

Bank St. Petersburg (16th place in terms of assets among Russian credit institutions in the Interfax rating) was one of the first on the market to disclose financial indicators for 2023 (excluding events after the reporting date, SPOD). Last week, Sberbank published its reports (see Kommersant, January 18). In contrast to the largest player in the market, St. Petersburg showed a symbolic increase in net profit by only 2%, to 48.7 billion rubles. Sberbank reported its fivefold increase, to 1.5 trillion rubles.

Bank St. Petersburg did not answer Kommersant’s questions.

Experts draw attention to the high base effect of 2022, when Bank St. Petersburg increased its profit by 2.6 times, to 47.6 billion rubles. “It is difficult to maintain such a pace constantly, but it is worth paying attention to the high level of return on equity (ROE) of the bank – in both years it exceeds 30%,” explains banking expert Alexey Nechaev.

After most large banks entered the SDN list at the beginning of 2022, “second-tier banks, and to a large extent St. Petersburg Bank, have a competitive advantage,” notes Sinara Bank analyst Olga Naydenova. In particular, in 2022, the net profit of Uralsib increased 1.7 times, to 12.4 billion rubles, and Unicredit Bank – almost four times, to 56.5 billion rubles.

In addition, according to Ms. Naydenova, the pre-crisis strategy of Bank St. Petersburg involved the development and servicing of foreign economic activity, so “it was ready to accept new clients.” As a result, against the background of high commissions for foreign exchange transactions, the volume of commissions in 2022 increased 1.4 times, to 16.9 billion rubles.

However, in February 2023, Bank St. Petersburg itself was included in the US blacklist (SDN-list), as a result of which it lost one of its serious competitive advantages. At the end of the year, the bank showed a decrease in net commission income by 11%, to 12.7 billion rubles. In addition, net income from operations in financial markets decreased by 67%, to RUB 13.2 billion.

Alexey Nechaev, based on an analysis of previously published reporting under RAS, speaks of the likelihood of a decrease in income from transactions with foreign currency, including derivative financial instruments (DFI), as well as from the revaluation of currency positions (it is not possible to determine more precisely). This goes against the industry-wide dynamics: according to the three quarters of 2023, the sector has improved its financial results from currency revaluation and derivatives, the expert notes.

At the same time, the bank’s profit was supported by interest income against the backdrop of low funding costs and a net recovery of reserves, Ms. Naydenova clarifies.

According to St. Petersburg, net interest income increased by more than 27%, to RUB 50.7 billion. According to RAS reporting, for January-September 2023, the bank recovered 6.9 billion rubles in the “other losses” line.

According to Olga Naydenova, the main part of this amount is the recognition of funds collected from the Euroclear depositary (the bank won the court for $107 million and €489 thousand, but subsequently abandoned the claims in euros). In addition, there was a small (RUB 705 million) restoration of loan portfolio reserves, the expert points out.

The fact that the bank retained its profit, albeit “on a much larger balance sheet,” emphasizes Ms. Naydenova, is “already a significant positive moment.” At the same time, according to her forecast, in the future the profitability and net profit of St. Petersburg may begin to decline – “with such high rates it is difficult to grow, in addition, there are potential risks of loan default.”

Olga Sherunkova