The profitability of the Russian banking industry has remained stable throughout 2019, the first year of solid growth since the 2014 oil price shock, which drove the country’s economy into stagnation.
According bne IntelliNews, April was also the month that the pandemic shock hit, and as the graph illustrates, banking sector earnings in April were lower than in 2017 and 2018. Having said that, banking sector profitability held up fairly well in 2020, nearly regaining 2019 levels in August once the lockdown was lifted.
In all, this year’s earnings in April were somewhat higher than those in 2020, with banks earning RUB779 billion ($10.6 billion) in the first four months of the year, compared to RUB611 billion a year ago. That outcome was also better than the RUB750 billion earned by banks in the first four months of 2019, and far better than the previous three years.
Banks also exceeded on a month-to-month basis in March, earning RUB201 billion ($2.75 billion), which is six times higher than in March 2020 and well ahead of every year for the previous five years.
So far this year, banks have outperformed last year on a month-by-month basis in every month except January, but have only surpassed last year on a cumulative basis in April, due to banks’ exceptionally dismal performance in April, when the pandemic began. Nonetheless, the profit performance of banks in the first three months of this year was relatively comparable to that of 2020 on a cumulative basis.
The banking industry’s view for 2021 is positive, with a year of strongish economic growth ahead and a thriving corporate sector, where Russian corporations are presently making their highest profits in five years.