Credit institutions may lose 600 billion rubles

According to the Central Bank’s calculations, due to rising rates on liabilities, banks may lose 600 billion rubles. until next fall. The situation will worsen if the flow of funds from savings accounts to expensive time deposits accelerates, as well as if lending decreases against the backdrop of rising loan prices. Experts believe that lower margins could negatively impact banks’ profits as early as the fourth quarter.

Expected losses from the realization of interest rate risk for banks over the annual horizon, taking into account the recent increase in rates, will amount to about 600 billion rubles. lost net interest income, estimated on Thursday, November 30, the director of the Central Bank’s financial stability department, Elizaveta Danilova: “But these losses are insignificant relative to the net interest margin of banks: it is 4.8%, and these losses are about half a percentage point.”

As noted in those published on November 30 materials of the Central Bank, vulnerability to interest rate risk is one of the most pressing issues for banks. In July-October 2023, the regulator increased the key rate from 7.5% to 15% to limit risks and price stability. According to the Central Bank, OFZ yields during this time increased by an average of 310 bps. p., that is, their market value decreased, rates on newly attracted deposits of non-financial organizations in July-September increased by 4.9 p.p., on deposits of individuals – by 3.8 p.p., on loans to legal entities – by 3 .4 percentage points, and for loans to individuals decreased by 0.2 percentage points. “Thus, conditions have been created for the realization of interest rate risk,” the Central Bank is confident.

In the third quarter, despite the rapid growth of rates on newly attracted deposits, according to the Central Bank, the quarterly net interest margin of banks increased from 4.6% to 4.8% due to the rapid growth of interest income: “This is explained by a significant share of loans at a floating rate and a high share of customer funds in current accounts, the rates on which have increased less than on deposits.” Nevertheless, banks’ exposure to interest rate risk remains high, given the possible further flow of funds from current accounts and long-term deposits to deposits at higher rates, the regulator believes.

According to the Central Bank, in the third quarter, each month about 65% of household deposits were placed for periods of up to six months, while in 2021 this share was about 33%. “The growth of short-term liabilities to the population is associated with an increase in rates on such deposits and a relatively low premium for maturity – in August-September the difference between the weighted average rate on deposits over a year and up to a year decreased to almost zero, in the past it was about 1.5–2 p.p. . p.,” says the Central Bank materials.

As a result, as noted in the document, the share of banks’ liabilities in rubles to the population and companies with a maturity of up to 1 year has increased.

“Funds in current accounts or short-term deposits are more susceptible to flowing into new deposits at higher rates if they grow,” the regulator writes. As of the beginning of October, the Central Bank’s estimate of interest rate risk for the banking sector on the horizon of the year in the event of an additional increase in rates by 1 percentage point is 1.6–3.6% of the annual net interest income of the banking sector.

Leading analyst at Digital Broker Daniil Bolotskikh believes that the forecast for banks to lose 600 billion rubles. close to reality, in 2024 they expect a profit of 1.8–2.3 trillion rubles. (at the end of 2023 – 2.9–3 trillion rubles). At the same time, according to Mr. Bolotskikh, in the fourth quarter the sector’s profit will suffer more from currency revaluation: “In September, net interest and net commission income decreased by only 4% precisely because of the rapid revaluation of liabilities, for the same month the currency revaluation amounted to 8 billion rubles. against 106 billion rubles. in August”. Deputy Director of the Financial Institution Ratings Group of the NKR Agency Yegor Lopatin believes that in the event of further tightening of monetary policy in December, the margin may decrease even more, which will negatively affect profits in the first half of 2024.

Maxim Builov