Page 105 - RusRPTJul24

Key Factors Contributing to Profit Decline
The primary profit reduction, totaling 18 billion rubles (-8%), was attributed to an increase in operational expenses by approximately 10 billion rubles and an increase in reserves by around 8 billion rubles. Reserves for retail loans rose by 30 billion rubles, reflecting an increase in delinquencies for consumer loans issued after the third quarter of 2023. Conversely, banks recovered reserves for other assets and corporate loans by a total of 22 billion rubles compared to April, as certain clients resolved technical payment issues. The cost of risk in the corporate segment remains at a record low level. Core income, including net interest income and net fee and commission income, remained unchanged from April.
Impact of Securities Operations
The financial results were further affected by a loss of 15 billion rubles from securities operations, contrasting with a profit of 14 billion rubles in April, primarily due to negative revaluation, mostly in federal loan bonds (OFZ).
Profitability of Banks
The number of profitable banks decreased to 232 from 249 in April, reducing their share of the total number of banks to approximately 73% from 78% (with their share in sector assets decreasing to 98% from around 99% in April).
The decline in net profit and the reduction in the number of profitable banks indicate ongoing challenges in the sector, driven by rising operational costs and increased provisions for loan losses. Despite these challenges, the sector's core income remains stable, and the low cost of risk in the corporate segment continues to provide some support to overall financial performance.
105 RUSSIA Country Report July 2024 www.intellinews.com