Russian banks’ profits slumped around 90% in 2022: Central bank

RUSSIAN banks’ profits slumped around 90 per cent to just 203 billion roubles (S$3.8 billion) in 2022, the central bank said on Friday (Jan 27), with sweeping Western sanctions on Russia’s financial system and an outflow of depositors sorely hampering lenders’ prospects.

The West blocked several key Russian banks’ access to the Society for Worldwide Interbank Financial Telecommunication’s (Swift) international payments system soon after Moscow sent tens of thousands of troops into Ukraine 11 months ago. Dominant lenders Sberbank and VTB were forced to shutter operations across much of Europe.

Along with other areas of the Russian economy, the sector demonstrated some resilience. The central bank said that banks had managed to offset a first-half loss of 1.5 trillion roubles to post a profit by year-end.

“However, not all banks were able to completely recover losses from the beginning of the year, with some players ending the year with significant losses,” the central bank said in a report. It indicated that there were 104 unprofitable banks by the end of 2022, down from 130 in the middle of the year.

A year ago, the central bank had forecast banking-sector profits of over two trillion roubles last year, following record profits of 2.4 trillion roubles in 2021.

Shunned by the West and pivoting towards closer ties with the likes of China and India, Moscow has intensified efforts to reduce exposure to the US dollar and other so-called “unfriendly” currencies.

SEE ALSO

Russia looks to press big firms for more cash as war costs mount

Bank of Russia warns on wartime labour shortages, holds rates

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

Banks’ foreign-currency loan portfolio shrank by 18.2 per cent in 2022, the central bank said, or by US$30.2 billion. REUTERS