Page 56 - RusRPTFeb22

8.0 Financial & capital markets 8.1 Bank sector overview
Growth in corporate lending and mortgages noticeably accelerated in December, while consumer lending, on the other hand, slowed down. Traditionally, for December, the funds of the population increased significantly due to the payment of bonuses and the advance of January social payments, as well as the funds of companies as a result of spending state budget funds. Profit sector was lower than in November due to an increase in operating expenses (including pre-holiday advertising and bonus payments), but individual banks had large additional creations reserves for possible losses.
8.1.1 Earnings
The net profit of the sector decreased to RUB111bn (return on capital - 11.3% per annum expression) from RUB151bn in November, mainly due to the formation of reserves for possible losses at individual large banks and an increase in operating expenses (including for pre-holiday advertising and bonus payments).
In total, banks earned RUB2.4 trillion in 2021. (return on capital - 21.1%), which is almost 50% more than profit for 2020 (RUB1.6 trillion). This was mainly driven by 15% and 20% growth in business volumes and, respectively, net interest and fee income18, as well as low reserve costs after banks had heavily reserved in 2020, when the pandemic the situation was extremely uncertain. Operating expenses also increased following business growth (+14%), but slower than operating income.
At the end of 2021, the share of profitable banks in the sector’s assets amounted to 98%, and their number more than 300 (Fig. 19). Over 85% of profit for 2021 was received by systemically important credit institutions (SICIs).
56 RUSSIA Country Report February 2022 www.intellinews.com