MOSCOW: Russian banks made record profits of 3.3 trillion rubles ($36.96 billion) last year, the central bank said on Tuesday, driven by sharp increases in mortgage, consumer and corporate loans as the sector rebounded from a sanctions-induced slump in 2022.
Profits fell by almost 90% in 2022 as the West imposed sweeping sanctions on Russia’s financial sector over Moscow’s actions in Ukraine. High net interest margins, especially thanks to the state’s burgeoning defense budget, also aided the recovery.
Alexander Danilov, director of the central bank’s banking regulation and analysis, said that the profits of banks this year were seen to decrease to 2.3-2.8 trillion rubles.
The bank previously said high interest rates would cool loan growth.
The bank raised rates to 16% at its last meeting in December and double-digit rates are expected to remain in place for the rest of the year, although Central Bank governor Elvira Nabiullina sent an appropriate signal on Tuesday when she returned to work after a short, unexplained absence. . .
Banks’ mortgage loan portfolio grew by a record 34.5% in 2023, the central bank said in a report, while corporate and consumer lending increased by 20.1% and 15.7% respectively.
Mortgage loans last year showed signs of overheating in the sector, Danilov said, expecting growth to slow to 7-12% in 2024. Growth in consumer and corporate loans is also seen slowing.
Since sending its army into Ukraine in February 2022, Moscow has seen an outflow of foreign capital and relied more on domestic lenders to finance government and private spending.
The central bank said Russian banks reduced their foreign currency lending by $3.1 billion in 2023, compared to $30.2 billion in 2022.
Russian banks, meanwhile, have acquired about 60% of the 2.5 trillion rubles of OFZ treasury bonds issued by the finance ministry in 2023, the bank said.