Foreign banks in Russia double their profits in 1Q24

Foreign banks in Russia double their profits in 1Q24
Over half of banks in Russia with foreign capital saw their profits at least double at the end of the first quarter, Kommersant daily reports based on a survey of over 40 banks. / bne IntelliNews
By bne IntelliNews May 22, 2024

Russian banks with foreign capital at the end of the first quarter significantly increased net profit, Kommersant daily reports based on an analysis of the RAS (Russian Accounting Standards) reports of more than 40 banks. 

According to Kommersant's estimates, almost half of the banks' profits increased over twofold. Only six banks worsened their quarterly profits, and three banks posted a net loss (Credit Suisse Moscow, Natixis, American Express Bank).

As followed by bne IntelliNews, foreign banks remained top earners in Russia in 2022, with  Italy's UniCredit and Austria's RBI (Austrian Raiffeisen Bank International) under strong pressure to divest Russian operations.

With few exceptions, foreign-controlled banks earned most of their income from placing free liquidity, according to Kommersant’s analysis. Over 70% of their interest income came from placement of funds in other banks. This points to a decline in crediting activity by the foreign banks.

However, 19% of foreign banks still maintained other sources of income, such as interest income from lending or investments in securities.  Notably, Raiffeisenbank, the largest on the Russian market with foreign participation, still had 85.3% of its income generated from loans. 

As for other banks, the RAS profit of Intesa grew 3.5-fold in 1Q24 to RUB3.27bn, of Asia-Pacific Bank 2.8-fold, to RUB1.7bn, of Bank of China 2.3-fold to RUB4.5bn, of OTP Bank 2.2-fold to almost RUB8bn, of JP Morgan Bank 2.1-fold to RUB1.16bn.

Smaller banks posted faster profit growth rates. Credit Agricole showed 5.2-fold y/y growth in profit to RUB156mn, Indo-Bank 4-fold growth to RUB2.3bn), BNP Paribas 4-fold growth to RUB0.6bn. 

Indo-Bank attributed the profit growth to "maximising the use of market opportunities, including by expanding Russian-Indian cooperation and increasing its client base", while other banks did not respond to Kommersant’s demand for comments.