Page 96 - bneIntelliNews monthly country report Russia May 2024

market, the sources said.
US drafting sanctions aimed at Chinese banks aiding Russia’s war effort.
Washington hopes they will allow Secretary of State Antony Blinken to arrive armed with diplomatic leverage on a visit to China this week, in a push to stop Beijing's commercial support of Russia's military production.
Banking bottleneck causing six-month delays for Russia-China payments, sources tell Reuters. That sanctions risk has left companies seeking alternative payment routes and led to a bottleneck at VTB Bank's (VTBR.MM), opens new tab Shanghai branch, the sources said. State-owned VTB is the only Russian bank with a fully fledged branch in China.
The European banks that remain in Russia paid over 800 mln euros in taxes in 2023, which marks a fourfold increase from before the launch of Moscow’s special military operation, the Financial Times writes.
According to the newspaper, "the seven top European banks by assets in Russia - Raiffeisen Bank International, UniCredit, ING, Commerzbank, Deutsche Bank, Intesa Sanpaolo and OTP - reported a combined profit of more than three bln euros in 2023." "Those profits were three times more than in 2021," when banks paid 200 mln euros in taxes, the paper points out.
The Financial Times notes that more than half of the European banks’ tax payments "correspond to Austria’s Raiffeisen Bank International, which has the largest presence in Russia of the foreign lenders."
"The foreign lenders have benefited not just from higher interest rates but also from international sanctions on Russian banks. Such measures have deprived their rivals of access to international payment systems and increased western banks’ own appeal to clients in the country," the paper writes.
VTB Bank disclosed financial results for 1Q24. Since the beginning of the year, the loan portfolio has grown by 5.4%, customer funds – by 3.0%. Net interest margin in 1Q24 decreased to 2.2% after 2.9% in 4Q23. Net interest income at RUB 154bn. in 1Q24 were below our expectations and the consensus forecast. Net commission income did not bring any surprises, increasing by 23% y/y to RUB 52bn. Other operating income amounted to an impressive RUB 64bn, which was significantly higher than our expectations. The cost of risk increased slightly (to 0.6% after 0.5% in 4Q23). Operating expenses increased by 24% y/y to RUB 99bn, while their ratio to operating expenses decreased seasonally, but turned out to be significantly higher than the level of 1Q23 (37% and 26%, respectively). Net profit in 1Q24 amounted to RUB 122bn. (above our expectations and the consensus forecast, ROE = 22%), while decreasing by 17% y/y. Taking into account the growth of the loan portfolio and other assets since the beginning of the year, the overall level of capital adequacy (N20.0) decreased by 20 b.p. up to 10.4%. The bank noted
96 RUSSIA Country Report May 2024 www.intellinews.com