Page 76 - RusRPTJun20

8.1​ Bank sector overview
Russian banks' pretax earnings are expected to amount to RUB1.6 trillion in 2020 and profit growth is expected to be hampered by a slowdown in retail lending and an increase in the cost of risk in lenders' retail portfolios, according to Russia-based National Credit Ratings.
The 2020 profit will be similar to the 2019 figure without the technical boost from the implementation of the International Financial Reporting Standard 9, or IFRS9, which significantly influenced last year's earnings, the rating agency said in its February 6 analytical report.
Retail lending growth is expected to slow down in Russia to between 13% and 14% in 2020 — compared with 18.5% in 2019 — and will be mainly driven by the mortgage segment. Overall corporate lending is expected to grow by 5% to 6%, while lending to small and medium-sized businesses could expand by 12% to 14%. However, this growth will not compensate for the slowdown in the retail segment.
The value of the Russian banking sector's assets will hit a record level of 100 trillion in 2020 but the growth rate, without taking into account currency revaluation, will not exceed 4%, which is less than the 5% asset expansion in 2019.
National Credit Ratings also said that 25 to 30 banks could lose their operating licenses in 2020. Including voluntary liquidations and reorganizations, the total number of banks operating in Russia could drop to around 400 at the end of 2020 compared with 442 at the beginning of the year.
In April it was interesting to see that large banks and the rest of the sector diverged significantly​ in their retail segment dynamics. In particular, the retail loan book of large banks was down 0.4% m/m in April, while the rest of the sector posted a 2.0% decline. Retail deposits of the large banks were up 1.5% m/m, while those of other banks were down 0.2%.
8.1.1​ Earnings
In April 2020, net profit of the banking sector amounted to about RUB32bn,​ according to the CBR, which is significantly lower than the results of the previous three months.
The decrease in the financial result was largely due to the negative revaluation of foreign currency transactions with certain banks against the backdrop of the appreciation of the ruble.
76​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com