Russian banks ahead of schedule fulfilled the annual forecast of the Central Bank profit


The profit of the banking sector in January—July this year increased by 13.5% compared to the same period last year, when she was 34 billion rubles. according to the report of the Central Bank, the banking sector profit has grown from the beginning of the year, to 459 billion rubles.

In this case the regulator at the beginning of the year predicted that the banks ‘ profit for the whole of 2016 will amount to 500 billion rubles, he Adjusted their estimates only at the end of July. “Now, the first half shows that 500 billion rubles — this is a conservative estimate. Let’s see, maybe there will be more profit,” — said in late July the head of the Bank of Russia Elvira Nabiullina.

The financial result of the banking sector has largely influenced the reduction of allocations to reserves. Reserves on possible losses increased since the beginning of the year of 6.3%, or 343 billion rubles (over the same period in 2015 by 18.6%, or $ 754 billion). “Slowing the growth of reserves on possible losses caused by the stabilization of loan portfolio quality remains a factor in the increase of the financial result of banks”, — noted in the Bank.

Another factor is the increase in interest income. “Even if you remove the share of Sberbank (for January—July 2016 it amounted to 275 billion rubles), the sector’s good financial results compared to last year”, — said the partner of the National financial research Agency Pavel Samiev. “Now the growth rate of reserves banks have slowed down. Better was the situation with interest income. But, despite the fact that the pressure on the sector from the asset quality and interest margins were not the same as last year, the number of unprofitable banks is still high,” — said the expert.

Fitch estimates that the margin of banks increased in the first seven months of the year to 4% from 3.3% by the end of 2015, and the cost of credit risk (provisions and losses from the sale of collateral) for the half year fell to 2.5 percent from more than 4% in 2015. “Despite all this, the profitability to pre-crisis levels have not yet returned. Although the cost of funding likely will continue to decline, increasing the competition for borrowers, which lending rates will decline, and therefore, the margin is not particularly increased. In addition, deductions in reserves are unlikely to fall below 2-3% of the loan portfolio, because banks are now a lot of potentially problematic and poorly reserved restructured loans,” says Fitch analyst Alexander Danilov.

The National Agency for financial studies note that there is no sustainable points of growth for the banking sector. “Banks do not have steady credit growth, and not earn on other articles, such as Commission operations. Remains pressure risk of troubled assets on the financial results of credit organizations,” he says. By the end of July the share of overdue loans in the corporate portfolio amounted to 6.8% of the volume of the corporate portfolio and 8.6% from retail.

Bank assets decreased in January—July by 3.6% (in July they grew by 0.6%), the volume of credits to economy (non-financial organizations and individuals) has declined by 3.7%, loans to non-financial institutions — 4.7%, loans to individuals by 0.6%. However, in July after five months of decline in loans to economy loans to legal entities increased by 1.3 and 1.6%, respectively.

The role of deposits as a resource base increased in January—July, an increase of 1%, to 23.5 trillion rubles, and in July, the pace of Deposit growth was the fastest since December of last year of 1.7%. The volume of deposits and funds on accounts of organizations continues to demonstrate stability from month to month. With the beginning of the year it declined by 8.1%, including in July fell by 0.9%.