Cbank says Russian banks’ 2023 net profit to fall to 1 tln rbl

MOSCOW, Mar 2 (PRIME) --The combined net profit of Russia’s banking sector in 2023 should exceed 1 trillion rubles, Central Bank Chairwoman Elvira Nabiullina said on Thursday quoting a preliminary and conservative forecast.

“The preliminary and maybe even somewhat conservative forecast for this year’s profit shows that it should exceed 1 trillion rubles. This is below the 2 trillion rubles we had in 2021 because spending on reserves will remain high taking into account mounting problems and cancellation of regulatory exemptions this year,” she said during a meeting organized by the Association of Banks of Russia.

Russians’ deposits with banks will rise by slightly more than 7% in 2023, while corporate deposits with banks will grow by about 15%.

Corporate lending growth will slow down to 10% in 2023 from 14% in 2022 and 12% in 2021, she said, adding that the Russian authorities were going to launch a program to support lending to the priority projects until the end of summer.

“The Russian government is to define criteria for projects aimed at technological sovereignty and structural adaptation. On our part, we are preparing the necessary changes to the banking regulation together with the market. The program should be launched in the first half of 2023, likely in the summer of 2023,” Nabiullina said.

Mortgage crediting will rise by about 15% in 2023, and consumer lending by 10%. But the mortgage quality is deteriorating, and the regulator may take additional measures to curb risky mortgage loans, she said.

She also said that Russia’s financial system has withstood Western sanctions. The banks did not use up all the reserves of the previous years, adjusted their work swiftly and started making money again. Sanctions against new banks are not seen as shocks any more and create no system-wide risks, she said.

At the same time, the regulator sees attempts of some banks to make quick money to compensate the lower profits of 2022, and may toughen its regulations and monetary policy if this behavior creates systemic risks, Nabiullina said.

Easing of some regulations in 2022 creates potential for credit expansion by about 15 trillion rubles in the next 5 years. Cancellation of macro markups on retail and foreign currency corporate loans freed about 1 trillion rubles for banks. The regulator also cancelled markups to the capital adequacy ratios for 5 years for banks if they don’t pay dividends. The measures should allow banks to regain financial stability, she said.

The authority also plans to prolong restrictions on the flows of capital and foreign currency, including limits on withdrawal of foreign currency cash, on trans-border transfers, and on withdrawal of money by foreigners from the non-friendly countries. At the same time, the central bank may lift a ban on opening of foreign accounts for banks with basic licenses, she said.

She said that the regulator planned to meet with representatives of banks in March–April to discuss a concept of special associations that should allow small and regional banks to merge resources.

(75.2513 rubles – U.S. $1)

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