Reduction portfolios – Kommersant

This year, the structures of foreign banks in Russia continue to report on the reduction of loan portfolios. The market has developed a favorable environment for earning on commissions, so unnecessary spending on risks becomes redundant. OTP-bank, for example, notes a positive effect from the sale of the portfolio, the dynamics of which led to a multiple decrease in the cost of reserves.

As follows from the IFRS report for the first quarter of 2023, the Hungarian OTP Bank in Russia has slightly reduced its loan portfolio. Adjusted for currency revaluation in annual terms, it decreased by 5%, although it increased by only 1% compared to the last quarter of 2022. This happened against the backdrop of a significant reduction in the corporate loan portfolio – by 79% in annual terms and by 36% compared to the fourth quarter of 2022 (to HUF 21.1 billion). At the same time, the retail loan portfolio grew by 5% and 3% respectively (up to HUF 565.5 billion).

Against this backdrop, spending on reserves also declined by 89% yoy to HUF 4.7 billion. However, based on the report, it follows that such dynamics was facilitated, among other things, by the favorable effect of the portfolio sale. At the same time, the issuance of new retail loans increased, but the bank attributes this to a low base at the beginning of 2022. At the same time, according to reports, the bank managed to significantly increase its passive base: the total portfolio of client funds grew by a third – up to 683.5 billion forints.

The financial results of the bank as a whole improved: net profit amounted to 3.9 billion rubles. (an increase of 29% compared to the previous quarter). At the same time, the bank has a large reserve of free capital, which exceeds the value of the required regulatory minimum (at the end of the first quarter of 2023, the capital reached 63 billion rubles against 47 billion rubles at the end of the first quarter of 2022).

The reduction of the loan portfolio is also characteristic of other subsidiary foreign banks. In particular, it follows from IFRS of the Italian Unicredit Group that in the first quarter of 2023, its loan portfolio in the Russian Federation fell to €5.6 billion (a decrease of 46.7% in annual terms and 15% compared to the previous quarter). At the same time, the reduction occurred in the portfolio of deposits (up to €9.0 billion, by 28.9% over the year). At Raiffeisenbank, the reduction in the loan portfolio in the first quarter was supported by the depreciation of the ruble. According to the consolidated report of the parent RBI, there was a reduction in the loan portfolio by 24% in annual terms and by 10% compared to the previous quarter (to €8.1 billion). At the same time, client deposits grew by 3.2% QoQ and 28.1% YoY (to €20.8 billion).

Dmitry Kurbatsky, managing partner of FG Dmitry Donskoy, notes that a significant part of OTP-Bank’s income is provided by the settlement business – these are payments in foreign currency that go through the bank. He explains the growth in client funds by the flow of clients from sanctioned banks to players with foreign capital against the background of the military conflict between Russia and Ukraine.

“The current situation allows banks to earn on commissions, so it makes no sense to take on big risks,” explains Roman Kenigsberg, head of the FBK internal audit and risk management department. That is why foreign banks may reduce lending activity or partially sell their portfolios. At the same time, the reduction in the corporate segment (which was observed by OTP-bank), according to his assessment, can be explained by at least two possible reasons. This can be both the impact of sanctions risks (for example, it is difficult to track the use of a loan), or the tightening of requirements for borrowers, as well as the complication of scoring procedures due to the fact that companies have the right not to disclose financial statements.

Olga Sherunkova, Ksenia Dementieva