What will be the profit of the banking sector?

Banks are setting a new profit record; this year’s figures may be even higher than the results of 2023. This is indicated by a good start; the first quarter may turn out to be as successful as a year ago, noted Deputy Chairman of the Central Bank Olga Polyakova. The National Credit Ratings agency also expects high results, up to 3.5 trillion rubles. profit, which is 200 billion rubles. more than in 2023.

Banks will increase their loan portfolios and reserves, and margins will remain high, but this is unless the situation changes dramatically, noted Yegor Lopatin, deputy director of the NKR financial institutions ratings group: “If 3.3 trillion rubles are earned, it will not be the same money, that last year. What I mean is that the profitability, that is, the return on capital, will be lower. Capital has grown, assets have grown, while profit, according to our rather optimistic forecast, will remain at the same level.

Assets will grow and approach 200 trillion rubles, adding about 15%. The main credit segments will continue to grow, although, of course, not as strong. All this together will lead to the fact that we will receive 3.3 trillion rubles, unless, of course, there are any new macroshocks.”

But not all analysts agree with these conclusions. The Expert RA forecast is not so optimistic: they believe that at the end of the year, the net profit of the banking sector will not exceed 3 trillion rubles. And this is 13% below the record, noted Roman Kornev, director of bank ratings at the agency: “Firstly, we need to take into account the reduction in government incentives in the form of a revision of the conditions for providing co-financing in a number of industries. Reason No. 2 is quite serious, strict regulation in the retail sector. In 2023, it intensified in relation to unsecured consumer loans. We expect this to happen for mortgages this year.

Based on the first months of 2024, it can be judged that the retail sector is not slowing down, so, most likely, the regulator will take some additional measures to cause it to cool down. This will negatively affect banks’ income.

In summary, we believe that the year will still be successful. Credit institutions will most likely show a net profit of about 2.8 trillion rubles.”

At the same time, bank dividends will be as high as this year, even if their profits decrease, which is quite likely, noted financial expert Andrei Barkhota. He expects new players to enter the stock market: “Dividend payments from the largest well-known public banks in terms of the 50% norm are likely to be maintained. But I do not exclude the entry of other players into the stock market. And in order to compete with higher quality issuers, they will have to promise shareholders high dividend payments, maybe 70-80% of net profits.

Accordingly, for the largest banks the volume of dividends may indeed be comparable to what we will see at the peak. This year they will apparently be the same, maybe a little lower. But for new issuers, if they enter the market, they will be quite high relative to this norm as a share of net profit, but small relative to the scale of the largest public banks.”

The deposit segment, according to the NKR analysis, will cool down: their volume will increase by 18-22% against last year’s 23%. Maximum deposit rates, according to the forecast, will not exceed 14.5% per annum.

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Ivan Koryakin