Raiffeisenbank became the second in Russia

The Russian Raiffeisenbank increased its profit under RAS at the end of 2022 by 3.6 times, to more than 141 billion rubles. We can talk about the second result in the entire banking system after Sberbank, which received almost 300 billion rubles. Due to difficulties in paying dividends to hostile jurisdictions, capitalized profits provoked a sharp increase in the bank’s capital adequacy ratios, which exceeded 30%, while the average for the system was less than 13%.

Raiffeisenbank published 2022 RAS financials (.pdf). The bank received more than 141 billion rubles. net profit against 38.7 billion rubles. a year earlier. It significantly increased both commission fees (by RUB 38.6 billion to RUB 77.1 billion) and interest income (by RUB 16.9 billion to RUB 81.7 billion).

A sharp increase in profits – 3.6 times – was accompanied by a reduction in the loan portfolio. In particular, the volume of net loan debt decreased by 50.6 billion rubles, to 1.2 trillion rubles. As a result, the bank has seriously strengthened its position in terms of capital. Additional capital grew the most in the structure of equity — from 38.4 billion rubles. to 175.1 billion rubles, and the total amount of own funds – from 168 billion rubles. up to 305.3 billion rubles. At the same time, the cost of provisions for loans, although they increased by 4.7 times, but amounted to only 23.9 billion rubles.

Against this background, including due to the inability to distribute dividends (the bank capitalized profits), the capital adequacy ratio (N1.0) increased over the year from 13.7% to 30.1%.

Based on the reports of other banks, as well as interviews and statements by their top managers, in terms of profit over the past year, Raiffeisenbank ranked second after Sberbank (295 billion rubles). In particular, FC Otkritie expects a profit of 42 billion rubles, Sovcombank – about 30 billion rubles. VTB did not come out of losses at the end of the year.

Banking expert Olga Ulyanova notes that, other things being equal, a bank with a larger amount of assets can earn more significant profits relative to other players. However, she suggests comparing banks by return on assets (the indicator characterizes the relative profitability of operations). At Raiffeisenbank in 2022, it was 8%, the expert says. “This is a very high figure, it is above both the market average and in comparison with Sberbank. It can be assumed that in terms of profitability, Raiffeisenbank is in first place among the largest,” says Ms. Ulyanova.

At the same time, a foreign shareholder of Raiffeisenbank (Raiffeisen Bank International, RBI) cannot withdraw profits earned on the Russian market in the form of dividends.

Sergey Glandin, a partner at the NSP law firm, notes that formally, foreign banks from unfriendly jurisdictions can transfer profits abroad, but only with the permission of the government commission for monitoring foreign investment. So far, no such cases have been known. RBI itself wrote in the latest IFRS report about the impossibility of making a profit of a subsidiary bank in Russia as dividends. “One option is to get it through liquidation. For example, if a legal entity is liquidated, then the owner of the property of the liquidated entity must also receive the accumulated profit. However, I don’t think that this is a way out for RBI,” Sergey Glandin argues. “As long as the deadlock, all the money will be in Russia.”

If the bank does not reduce its presence in the country, then it can reinvest money in expansion here, says one of Kommersant’s interlocutors in the market. It would be strange, he adds, if Raiffeisenbank just stopped issuing loans, even in the current situation. Formally, the parent structure may freeze Raiffeisenbank’s profits in Russia to receive them in the future, the interlocutor of Kommersant says, however, most likely, “the commercial interests of top management will surpass the desire to receive momentary dividends.” Earlier this month, Raiffeisenbank announced the suspension of opening new accounts for corporate clients (both ruble and foreign currency; see “Kommersant” dated March 4). Due to the fact that banks fall under sanctions one after another, the bank faced an influx of customers who want to make currency payments in a “safe haven”.

Olga Sherunkova