Experts predicted the profit of Russian banks in 2024 to reach 3 trillion rubles

 According to the forecast of the ACRA rating agency, the growth of the loan portfolio will slow down and by the end of 2024 will be in the range of 10-15%

MOSCOW, December 27. /TASS/. The net profit of the Russian banking sector at the end of the year will become a record and may exceed 3.3 trillion rubles, but in 2024 several factors may lead to a decrease in its volume - if the optimistic scenario is implemented, the profit of banks in 2024 will be about 3 trillion rubles. This is reported in the forecast for the banking sector for 2024 by the ACRA rating agency.

“According to the agency’s estimates, the net profit of Russian banks at the end of 2023 will exceed 3.3 trillion rubles. Against the backdrop of changing conditions, ACRA expects that the volume of net profit at the end of 2024 will be lower than that of 2023 and, in an optimistic scenario, will reach 3 trillion rubles. The growth of the loan portfolio will also slow down and by the end of 2024 will be in the range of 10-15%,” the report says.

The agency adds that the prospect of implementing the optimistic scenario depends on how successfully banks and borrowers cope with rising rates. At the same time, ACRA expects a reduction in the impact on profits of currency transactions, as well as deductions for the creation of new reserves.

Factors reducing profits

ACRA notes that the conditions for the development of the banking industry are gradually deteriorating. An increase in the key rate from 7.5% to 16% in 2023, according to the agency, will most likely lead to a significant decrease in the growth rate of the loan portfolio, as a result of which its increase in 2024 may not exceed 15%. In addition, ACRA considers there to be a significant risk of deterioration in the quality of the portfolio in the corporate segment, where a fairly large share of loans are provided at a floating rate, and in 2023 there was a significant increase in the debt burden.

The agency considers the worsening conditions for issuing loans to be another factor that is beginning to negatively affect the pace of development of the banking industry. To limit the growth of the population's debt load, this year the Bank of Russia introduced increased ratios to RWA (total bank assets, weighted by credit risk) in unsecured and mortgage lending. ACRA also expects a slowdown in the growth rate of the mortgage portfolio, which exceeded 25% this year, to 13-15% due to the gradual restriction of the use of government support measures.

Analysts say the sector remains resilient by most indicators. Even amid the rapid growth of assets in the industry, there remains a capital surplus of about 5 trillion rubles. Portfolio quality remains stable, with the sector avoiding the delayed rise in non-performing loans due to 2022 restructurings. Taking into account the high level of stability of the sector and the ability to adapt to rapidly occurring changes, ACRA assumes that new challenges will push credit institutions to modify strategies, which will not only limit the impact of next year’s challenges on its results, but also exceed the 2023 indicators in certain areas.