Sovcombank beat off the year – Newspaper Kommersant No. 68 (7513) dated 04/19/2023

Sovcombank was one of the first to report for January-March 2023. During this period, the bank earned twice as much profit as in the whole of 2022. In Sovcombank itself, the situation is partly explained by “one-time events” that led to a sharp increase in “trading income”. However, in general, the work of credit institutions that have already reported in the first quarter shows that their balance sheets are growing, allowing them to generate quite traditional banking income.

According to the results of the first quarter, Sovcombank received 31.6 billion rubles. net profit, according to the published balance sheet according to RAS. For the entire 2022, the bank’s net profit amounted to 14.2 billion rubles, thus, the results of the first quarter exceeded the results of the entire last year by more than twice. The first deputy chairman of the board of the bank, Sergei Khotimsky, explained that “some one-time events took place, trading income turned out to be higher than usual.”

Net interest income of Sovcombank in the first quarter amounted to 22 billion rubles, net commissions – 17.2 billion rubles, expenses on reserves – 8.4 billion rubles, operating expenses – 21.2 billion rubles.

In the first quarter, there is a noticeable convergence of interest and commission income, which changed in the crisis year of 2022. Then fee and commission income exceeded interest income (see “Kommersant” dated March 20). “We do not see a pronounced trend here. But fee and commission income usually grows towards the end of the quarter,” Mr. Khotimsky explained.

The bank’s loan portfolio grew to 1.55 trillion rubles. against 1.49 trillion rubles. at the end of 2022. Compared to the end of the fourth quarter, growth occurred both in retail (by RUB 25 billion, to RUB 626 billion) and corporate (by RUB 35 billion, to RUB 927 billion) portfolios. “We expect the growth of the total loan portfolio by 15–20%,” Sergei Khotimsky clarified. The volume of client funds also increased (by RUB 29 billion in retail and by RUB 88 billion in the corporate segment).

At the same time, the bank does not disclose profit forecasts either for the next quarter or further, since “the situation on the markets is very volatile.”

So far, only a few Russian banks have disclosed the results of the first quarter. So, Sberbank received 350.2 billion rubles. net profit under RAS, also exceeding the result of the entire last year (300.2 billion rubles). VTB, after a loss in 2022, was going to receive a record 140 billion rubles in the first quarter. net profit (expected result under IFRS). As VTB board member Dmitry Pyanov noted, the positive revaluation of the open currency position gave more than 50 billion rubles, there was a one-time income from the consolidation of RNKB (31 billion rubles).

The first quarter was good for banks, confirms Olga Naydenova, Senior Analyst at IB Sinara, “despite various individual nuances.”

“All banks used the 2022 crisis to take full losses,” she explains. “Large amounts of reserves were created, which was explained by the worst expectations for the economy. Despite the fact that the worst expectations have not materialized, banks are not dissolving their reserves yet, but, obviously, they need to be created less this year.”

There is a nuance in terms of interest income, says Ms. Naydenova. “The maturity of assets is longer than the maturity of liabilities. And lending rates have grown, they have increased risks, rates on loans are declining slowly, in contrast to rates on deposits, ”she says.

According to the Central Bank, the net interest margin of banks by the end of 2022 was 4.7% against 4.1% in the first quarter of 2022. Usually, against the background of increased risks during a crisis, the marginality of the banking business grows, and this happened at the end of 2022 – “we are at the peak of marginality, so it is most likely that this year we will see its decrease,” explains Mikhail Matovnikov, head of the financial analytics center of Sberbank . However, bank balance sheets are growing, so the banking system will receive good returns this year, he expects. At the same time, according to the expert, now banks objectively accrue few reserves, but as lending expands, their costs will also grow, which will put some pressure on profitability this year.

Olga Sherunkova