Page 83 - RusRPTFeb24

8.1.1 Earnings
In December, the actual net profit of the sector amounted to 64bn rubles, which is four times lower than the result in November (approximately 270bn rubles). The reflected net profit in the balance sheet, amounting to 176bn rubles, was inflated due to dividends received from the Russian subsidiary bank (approximately 112bn rubles).
The reduction in financial results was influenced by the increase in allocations to reserves (240bn rubles in December compared to 133bn rubles in November), mainly due to recognizing losses on old problem corporate loans and other claims. Additionally, the traditional year-end increase in operating expenses (352bn rubles, +38%) also impacted profitability, including bonus payments and high advertising expenses.
For the year 2023, the sector earned a record 3.3 trillion rubles (adjusted for dividends), driven by the recovery of core income, significant reduction in reserve expenses, and substantial income from currency revaluation. However, this result should not be viewed in isolation from the weak results of 2022 when the sector earned around 0.2 trillion rubles. The average profit of the sector for 2022-2023 was 1.7 trillion rubles, which is 27% lower than in 2021. Nevertheless, the total income for the year was lower by approximately 0.2 trillion rubles due to the negative revaluation of debt securities through capital, bypassing profit.
The number of profitable banks decreased to 219 in December, accounting for
83 RUSSIA Country Report February 2024 www.intellinews.com