NewsExpert RA forecasts 15 banks to exit Russian market, profits to dip

Expert RA forecasts 15 banks to exit Russian market, profits to dip

The Russian rating agency Expert RA predicts that this year, 15 banks will exit the Russian market. This exodus is expected to result in the banking sector's overall profits decreasing by approximately 7.7 billion USD. The departure of these banks is attributed to either the voluntary surrender of their licenses or revocation.

In 2024, the profits of the banking sector in Russia, governed by Vladimir Putin, will fall.
In 2024, the profits of the banking sector in Russia, governed by Vladimir Putin, will fall.
Images source: © via Getty Images | 2024 Anadolu

5:44 AM EST, March 4, 2024

According to "Kommersant," the banking sector's profits in 2024 are anticipated to decline from a record high of 50.8 billion USD to 43.1 billion USD. Elvira Nabiullina, the head of Russia's central bank, suggests profits could even plunge to 35.4 billion USD.

This downturn in profits stems from stricter regulations, alterations in the provision of mortgage loan subsidies, and the central bank's potential establishment of loan limits, as reported by Russian media outlets. Consequently, this year's mortgage loan volume might see a reduction of 10-20% from last year's 120 billion USD.

Banking landscape transformation

At the year's start, Russia's banking landscape comprised 324 banks and 37 non-bank financial institutions. By February, the central bank took action by revoking banking licenses for the first time in eighteen months.

In this regulatory sweep, Qiwi Bank, an electronic banking entity, was among the first to lose its license, shortly followed by Hephaestus Bank. Both institutions were penalized for violating anti-money laundering regulations among other infractions.

In a discussion with "Kommersant," Ksenia Yakushkina, a director at the bank ratings agency, noted that license revocations would cause half of the affected banks to exit the market. Other exits will occur through license surrenders, planned reorganizations, and mergers and acquisitions (M&A).

Concurrently, the profit share of the top 10 banks within the sector is expected to rise from 72.7% in 2023 to 75% in 2024, with the largest banks amassing profits of 32.3 billion USD, as forecasted by Expert RA. This growth is attributed to reduced financing costs and the technological edge held by the largest banks. However, the profits of medium-sized banks are projected to shrink by nearly 29%.

© essanews.com
·

Downloading, reproduction, storage, or any other use of content available on this website—regardless of its nature and form of expression (in particular, but not limited to verbal, verbal-musical, musical, audiovisual, audio, textual, graphic, and the data and information contained therein, databases and the data contained therein) and its form (e.g., literary, journalistic, scientific, cartographic, computer programs, visual arts, photographic)—requires prior and explicit consent from Wirtualna Polska Media Spółka Akcyjna, headquartered in Warsaw, the owner of this website, regardless of the method of exploration and the technique used (manual or automated, including the use of machine learning or artificial intelligence programs). The above restriction does not apply solely to facilitate their search by internet search engines and uses within contractual relations or permitted use as specified by applicable law.Detailed information regarding this notice can be found  here.