Banks are preparing record profits – Kommersant

By the end of 2023, the net profit of Russian banks may reach 2.4-2.6 trillion rubles. This is higher than the pre-crisis 2021, follows from a study by the NKR rating agency. The sector will be supported by lending to small and medium-sized businesses (SMEs), as well as a recovery in consumer activity in unsecured lending. Bankers, however, are in no hurry to distribute future profits.

By the end of 2023, the net profit of Russian banks may reach 2.4-2.6 trillion rubles. and to be higher than the record figure of 2021 of 2.37 trillion rubles, NKR experts estimate. “The margin of the sector will increase, as well as the volume of earning assets, the cost of risk will decrease,” the agency expects. This is significantly more optimistic than previously sounded forecasts. In early March, Director of the Department of Banking Regulation and Analytics of the Central Bank Alexander Danilov estimated the sector’s profit for the year at 1.5 trillion rubles, the expectations were shared by Expert RA analysts. In April, the head of ACRA, Mikhail Sukhov, predicted a profit of over 2 trillion rubles, but not a record.

The results of the first quarter made it possible to improve the forecast: according to the Central Bank, in January-March, banks earned 881 billion rubles.

Given the fairly stable situation with the cost of funding, NKR experts expect that in 2023 the net interest margin of banks (NIM) will be in the range of 4.3-4.6%. Stabilization of the economic situation will have a positive impact on the cost of risk in all segments. “We expect that the cost of risk (excluding blocked assets) in 2023 will decrease compared to 2022, but will remain higher than the pre-crisis 2021: CoR in corporate lending will be 0.7-0.8%, in retail – 1.7 -1.8%,” the forecast says.

According to analysts of the rating agency, the main driver will be the growth of lending to SMEs. At the end of 2022, the volume of loans issued to such borrowers increased by 8.5%, to RUB 11.4 trillion. The NKR also expects an acceleration in unsecured lending amid “restoration of consumer confidence in the economy.” The total portfolio of retail loans on banks’ balance sheets will grow by 13-14% (vs. 9% a year earlier). But some slowdown is possible in mortgages, the NKR warns: due to the increase in the cost of loans and tightening of regulation. Banks in 2023 will issue about 5.0 trillion rubles. new mortgage loans against 4.8 trillion rubles. a year earlier, while the loan portfolio will grow by 15–16% (plus 17% in 2022), experts expect. However, some banks, such as VTB, rely on this particular segment.

Interviewed bankers and experts generally confirm the forecasts of the NKR, although they warn that there are still factors in the market that may have a negative impact on the banking sector.

“In the absence of additional external negative, the profit of the banking sector by the end of 2023 should really return to the levels of 2021,” says Maxim Grigoriev, CFO of the HCF. But a lot depends on the dynamics of reserves in the industry as a whole – last year, despite the easing, banks increased the coverage of bad debts, the dissolution of such reserves may contribute to a temporary increase in net profit, says Valery Piven, head of the financial institutions rating group at ACRA. “Based on the financial results for the first quarter, it can be stated that banks retain the ability to maintain a high level of interest and commission income even with a limited growth in the loan portfolio,” the expert concludes.

The negative factors include the fact that in 2023 banks will have to create mandatory reserves for the so-called blocked assets. Taking into account the requirements of the regulator (at least 10% annually for ten years), banks may need up to 600 billion rubles. the creation of such reserves in the current year, according to the calculations of the NKR. The total amount may turn out to be less if part of the assets is transferred to the balance of subsidiaries – it is likely that some banks will test this mechanism for the first time this year.

Polina Trifonova