Page 118 - RusRPTApr23

The release of updated data called into question the profit of the banking sector for 2022. It is likely that the Russian banking sector still received a small loss in 2022, but this is largely the result of an accounting adjustment.
According to a Bank of Russia analytical note, profits from previous years were reduced by RUB355bn rubles, and most of this decrease is likely to be in 2022. Firstly, retained earnings of previous years decreased by RUB195bn rubles due to events after the reporting date (expenses relating to 2022), and secondly, due to changes in the accounting for subordinated loans, profits decreased by approximately RUB160bn rubles. Earlier it was reported that at the end of 2022, the banking sector earned only RUB203bn rubles of net profit.
Russian banking sector has always been profitable since 2000, so we are not witnessing an ordinary negative event. The minimum profit in recent years was in 2015, when, against the backdrop of sanctions and a sharp decline in oil prices, the banking sector earned only RUB114bn rubles of net profit. For comparison, the average annual profit from 2012 to 2021 was more than RUB1 trillion rubles).
Data on the profit of Russian banks in January indicate a good financial result. The volume of net profit for January amounted to RUB258bn rubles, which is the best result for the first month in history. For comparison, the previous January record was in 2019 and amounted to RUB244bn rubles.
According to RIA Rating experts, January was the seventh month in a row with a profit of more than RUB200bn rubles. For comparison, the last time a trend similar in duration was observed in 2021 and totalled more than RUB200bn rubles per month for 6 months.
It is still difficult to estimate possible losses from frozen assets, so the financial result of Russian banks in 2023 is difficult to predict.
The situation with the revocation of banking licences at the beginning of 2023, as in 2022, was generally quite calm. In January 2023, two banks were liquidated, and there were no forced licence revocations or licence cancellations. For comparison, the number of liquidated credit institutions in January 2022 was 4.
RIA Rating experts expect that in 2023, with a high degree of probability, the dynamics of licence revocation will be at the level of 2022 (at that time, 6 banks lost their licences in a year), and a decrease in the number banks will be predominantly due to liquidations.
In Russia’s bank centric financial markets, bank lending pays a significant role in corporate finance. Given that the state, either through direct ownership or via intermediaries, dominates commercial banking, the government assures that the system continues under all circumstances. The
118 RUSSIA Country Report Russia April 2023 www.intellinews.com