Page 125 - RusRPTJun24

A 108 billion ruble reduction in reserves for other assets. In March, banks had created substantial reserves for investments in ecosystems.
A 22 billion ruble reduction in reserves for corporate loans. The cost of risk (CoR) for corporate loans was estimated at 0.6%, lower than the historical average of 1.1% from 2018-2021, following a significant reserve increase in March (~56 billion rubles, CoR of 0.9%).
Conversely, reserves for retail loans increased by approximately 60 billion rubles. The CoR for April returned to the historical average of 2.0% after adjustments for macroeconomic conditions in March.
The number of profitable banks decreased to 249 from 255 in March, with their share of the total number of banks dropping to approximately 78% from 80%. However, their share of the sector's total assets remained at around 97% in April.
Russian banks with foreign capital at the end of the first quarter significantly increased net profit, Kommersant daily reports based on an analysis of the RAS (Russian Accounting Standards) reports of more than 40 banks.
According to Kommersant's estimates, almost half of the banks' profits increased over twofold. Only six banks worsened their quarterly profits, and three banks posted a net loss (Credit Suisse Moscow, Natixis, American Express Bank).
As followed by bne IntelliNews, foreign banks remained top earners in Russia in 2022, with Italy's UniCredit and Austria's RBI (Austrian Raiffeisen Bank International) under strong pressure to divest Russian operations.
With few exceptions, foreign-controlled banks earned most of their income from placing free liquidity, according to Kommersant’s analysis. Over 70% of their interest income came from placement of funds in other banks. This points to a decline in crediting activity by the foreign banks.
However, 19% of foreign banks still maintained other sources of income, such as interest income from lending or investments in securities. Notably, Raiffeisenbank, the largest on the Russian market with foreign participation, still had 85.3% of its income generated from loans.
As for other banks, the RAS profit of Intesa grew 3.5-fold in 1Q24 to RUB3.27bn, of Asia-Pacific Bank 2.8-fold, to RUB1.7bn, of Bank of China 2.3-fold to RUB4.5bn, of OTP Bank 2.2-fold to almost RUB8bn, of JP Morgan Bank 2.1-fold to RUB1.16bn.
Smaller banks posted faster profit growth rates. Credit Agricole showed 5.2-fold y/y growth in profit to RUB156mn, Indo-Bank 4-fold growth to RUB2.3bn), BNP Paribas 4-fold growth to RUB0.6bn.
125 RUSSIA Country Report June 2024 www.intellinews.com