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Index – Economy – It's amazing what Russian banks have done

Index – Economy – It's amazing what Russian banks have done

Russian bank profits reached a record level last year, and may decline this year, according to a central bank official.

According to data provided by the Russian Central Bank on Tuesday, banking sector profits jumped to 3,300 billion rubles (13,241 billion forints) last year from 203 billion rubles the previous year. The sharp increase in mortgages, consumer and corporate lending contributed significantly to the increase in profits. According to the Central Bank report, the banks’ real estate loan portfolio increased by a record 34.5 percent, corporate loans by 20.1 percent, and consumer loans by 15.7 percent.

Last year, 90 percent of the banks, 292, were profitable in Russia.

Two years ago, in 2022, the sector's profits fell by almost 90 percent after the West imposed sweeping sanctions on the Russian financial sector over Russian aggression against Ukraine. Banking sector profits will fall to 2,300-2,800 billion rubles this year, Alexander Danilov, head of the Central Bank's Banking Regulation and Analysis Department, said on Tuesday.

The central bank had previously indicated that higher interest rates were slowing credit growth. At its last meeting in December, the central bank raised the key interest rate to 16% from 15% previously, and set the possibility of the double-digit interest rate remaining this year. According to Alexander Danilov, the growth rate of mortgage lending will slow to 7-12 percent this year, and the expansion of lending to individuals and companies will also moderate, MTI concluded.