Page 100 - RusRPTApr24

on equity declined to around 23% compared to approximately 30% in January 2024 and around 29% in February 2023.
The primary profit in February contracted by approximately 90 billion rubles, reaching around 210 billion rubles from around 300 billion rubles in January. This reduction can be attributed to various factors, including a minor provision for corporate loans amounting to 10 billion rubles (compared to a restoration of around 30 billion rubles in January), a rise in operational expenses by 37 billion rubles, and a decrease in core income (net interest and commission income) by 23 billion rubles, or 4%, due to fewer calendar days in February.
The number of profitable banks decreased to 248 from 292 in January, with their share of the total number of banks decreasing to around 77 from 90%. However, these developments do not pose significant systemic risks for the sector, as the losses incurred by unprofitable banks are minimal (amounting to -14 billion rubles), and their overall share in the sector's assets is approximately 2%.
Overall, the sector's profitability remains above expectations (projected at 2.3-2.8 trillion rubles in 2024, averaging around 200 billion rubles per month) due to the very low risk cost for corporate loans (around 0.2% in February on an annual basis).
Despite a profit of 275 billion rubles, the sector's capital balance only grew by 182 billion rubles, reaching 14.6 trillion rubles. This increase is primarily attributed to the negative revaluation of securities, whose value is determined through other comprehensive income (approximately 71 billion rubles), and the revaluation of perpetual subordinated loans (decreasing by 22 billion rubles) amidst a 2.8% depreciation of the ruble. The significant revaluation of securities reflects investors' expectations that high interest rates, particularly on government bonds, will persist for the foreseeable future.
Preliminary data suggests that in February, the indicator of total capital adequacy (N1.0) experienced a slight decline of 0.1 percentage points, reaching 12.2%, due to the leading growth of risk-weighted assets (RWA) by 1.5% compared to prudential capital growth by 1.0%.
The increase in regulatory capital in February was driven by the monthly profit. The growth of RWA is associated with expanded lending activities, as well as an increase in macro-additions, primarily concerning consumer loans.
The capital buffer (above regulatory requirements) remained unchanged at 7.5 trillion rubles.
100 RUSSIA Country Report April 2024 www.intellinews.com