Russian Banks Post Record 3.8 Trillion Rouble Net Profit in 2024

The Russian banking sector closed 2024 with its strongest financial result ever: net profit reached a record 3.8 trillion roubles, the Bank of Russia said in its review of the dynamics of banking sector development. The previous record was set in 2023, when banks earned 3.3 trillion roubles, so the sector improved its best-ever result by roughly half a trillion roubles in a single year. The review paints a picture of an industry that kept accumulating capital even as monthly earnings became markedly more volatile towards the end of the year.

A weaker December after a record year

The monthly figures were far more subdued than the annual headline. In December, net profit of the sector fell 2.8 times compared with November and amounted to 187 billion roubles, while return on equity (ROE) declined from 37% to 13%. According to the review, three factors drove the December slowdown:

• a 120 billion rouble loss from negative foreign currency revaluation, following a 162 billion rouble gain in November, as the rouble strengthened 6% against the dollar after weakening 10% in November;
• a 184 billion rouble increase in operating expenses, largely due to the traditional year-end rise in personnel costs, which added 44 billion roubles;
• impairment of intangible assets worth 43 billion roubles at individual banks.

At the same time, December profit was supported by substantial dividends received from subsidiary financial organisations — 66 billion roubles more than in November — and by a positive revaluation of federal government bonds (OFZ) of 19 billion roubles, as yields declined across all maturities.

Capital cushion and lending potential

By preliminary data, the aggregate capital adequacy ratio (N1.0) rose 0.4 percentage points in December to 12.5%, as capital grew 1.7% while risk-weighted assets declined 1.4%. The capital buffer above regulatory minimums expanded by about 8% to roughly 7 trillion roubles. The Bank of Russia noted that regulatory capital grew over the year somewhat less than balance-sheet capital — by 1.8 trillion roubles — because investments in intangible assets and deferred tax assets are deducted from it.

Such an increase in regulatory capital is capable of supporting potential lending growth of 11–12%, assuming an average risk weight of 100%. The regulator stressed that this is a conditional estimate: the actual figure will depend on how much of the expansion goes to corporate versus retail lending, and on the quality of the loan book, since risky retail loans carry significantly higher risk weights due to macroprudential surcharges.

Looking beyond the record year, the central bank forecast in the review that sector profit would decline in 2025 to 2.7–3.2 trillion roubles under the influence of growing credit risks and lower margins. Even on that conservative outlook, the 2024 result leaves banks in Russia with a substantially larger capital base from which to absorb a potential slowdown in lending profitability.

Source: Interfax.