Page 123 - RusRPTApr23

The profit of Russian banks in 2023 may surpass 1 trillion rubles ($13.24bn), according to preliminary conservative estimates of the Bank of Russia, Governor of the Bank of Russia Elvira Nabiullina said on Thursday.
"The preliminary (possibly somewhat conservative) profit forecast for the sector in 2023 is more than 1 trillion rubles. This is less than in 2021 (over 2 trillion rubles), because reserve expenditures will remain high, given current issues and the removal of concessions this year," she said.
In addition, the head of the regulator noted that the banking sector lost 400bn rubles ($5.3bn) in 2022 due to exchange rate volatility and the inability to hedge currency risks.
Nabiullina also noted that Russian banks were able to rebuild their business models in 2022 and started earning money again, despite sanctions. "What's important is that banks not only didn't ‘eat through’ their reserves from previous years, but they quickly rebuilt their business models and started earning again. This means that they are still able to provide the economy with the necessary financial resources," she said. At the same time, the regulator sees attempts by banks to make quick money, but such behavior is fraught with increased regulatory scrutiny, according to Nabiullina. "It's critical for us that the banking system is long-term driven and prioritizes stability," she said.
Despite the fact that the profit received by the sector amounted to RUB293bn , balance sheet capital grew by only RUB119bn , up to RUB12.1 trillion .
The difference was mainly determined adjustments to the accumulated profit of previous years (-RUB84bn ) due to events after the reporting date, revaluation of subordinated loans (-RUB36bn ), as well as negative revaluation of securities valued at fair value through other comprehensive income (~RUB32bn ).
Information on the dynamics of regulatory capital in February will available after the publication of this material, while according to the results of January 2023, the adequacy ratio total capital (N1.0) increased by 0.15 p.p. to 12.85% due to growth of total capital (+1.0%) with a reduction in AVR (-0.1%).
Regulatory capital increased in January due to financial result (~RUB200bn ), which for the purposes of calculation capital adequacy ratio is determined taking into account indulgence actions that allow not to recognize a part capital losses.
The decrease in ARR in January was caused by a reduction in corporate loan portfolio and lower risk ratios for individual operations.
123 RUSSIA Country Report Russia April 2023 www.intellinews.com