the rating of the largest banks in terms of profitability on January 1, 2020

© RIA Novosti, Vladimir Trefilov

RIA Rating – 13 Feb. The profit of the Russian banking sector in the fourth quarter of 2019 were very good, only slightly behind the historical maximum. For the last quarter of 2019, according to the Bank of Russia, credit institutions received a pre-tax profit of 536 billion rubles. For comparison, the record for quarterly profit is at 587 billion rubles was set at the beginning of 2019. It should be noted that the result of the first quarter was distorted by the transition to the new accounting standards, which have added about 150-200 billion rubles. Thus, the profit in the fourth quarter without addressing the new reporting is the maximum in history. Thus not only the first and fourth quarters was successful in 2019, but in the other two blocks 2019, the income has been at a high enough level. In particular, in July-September, banks earned 496 billion, is the third-best quarterly result in history. While the second quarter profit was a bit less – 418 billion rubles, but still good enough (sixth in history).

Against this background it is not surprising that by the end of the year a record profit record. Thus, pretax profit in 2019 amounted to 2.04 trillion rubles, which is significantly more than the financial result of 2018, when the banks earned 1,34 trillion rubles. It should be noted that the effect of the transition to the new standards by the end of the year, according to estimates of RIA Rating, was 0.3-0.4 trillion roubles. Thus, even without the “paper” profits record would be exceeded by a decent margin. Experts of RIA Rating expect earnings in 2020 will be more than cleared the financial result of 2019, and will be about 1.6-1.7 trillion rubles.

The growth of earnings in 2019 was much higher than the dynamics of the assets that led to the growth of profitability. So, if the average for the 12 months of the total assets of Russian banks increased by 7.2%, the increase in profits amounted to 51.5 per cent. As a result, the profitability of assets increased from 1.54% at the end of 2018 to 2.17% on January 1, 2020. In turn, the return on equity in the Russian banking sector on January 1, 2020 amounted to 19.6% versus 13.8% at the beginning of 2019. According to experts RIA Rating, projected for 2020, profit will correspond to a return on assets of 1.5-1.7% and return on capital – 14-16%.

To study the situation in the context of individual credit institutions, the Agency RIA rating on the order of AEI PRIME conducted a study on profitability of banks and prepared a ranking of Russian banks in terms of return on assets on January 1, 2020. The ranking presents data on the 200 largest in terms of assets of credit organizations on January 1, 2020 (they control 97% of all banking system assets), which published statements according to forms No. 101 and No. 102 on the website of the Central Bank of the Russian Federation, and who had license on 13 Feb 2020.

by Almost all banks in the ranking profitable

The share of profitable banks among the two hundred largest in terms of assets in 2019, significantly increased. Presented in the current ranking of banks by the end of last year the profit was 181 Bank or 90.5% of the total. For comparison, the ranking on 1 January 2019 and 2018 profitable banks was 86% and 82%, respectively. Thus, the result of 2019 was the best in 2013. According to experts RIA Rating, in 2020 the share of profitable banks will continue to grow and at year-end could be closer to 95%, this happens by improving the financial condition of many of the rehabilitated banks.

Among different size groups of the TOP 200 banks ranked by asset size and divided into 50 banks, the share of profitable fluctuated slightly, within 6 percentage points (from 88% to 94%). The greatest share of profitable banks was characterized by banks located from 51 to 100 in terms of assets. Among the largest credit organizations of the TOP 50 profitable banks 92%. While the two remaining banking groups – from 101 to 150 seats 151 and 200 places profit showed 88% of the banks. Thus, among large credit institutions, the share of profitable banks were somewhat larger.

The most profitable Russian Bank in 2019 was Sberbank, and the amount of its profit before tax amounted to 1.1 trillion rubles. Towards the end of 2018 savings income grew by 8.6%, or 86 billion rubles. The main sources of growth are: growth in fee income, the decline in newly established reserves, and the increase in other income. The second absolute financial result in the year 2019 was the VTB Bank, the profits of which during this period amounted to 167 billion rubles. The profit of VTB Bank decreased in 2019 43%.

At third, fourth and fifth places in terms of revenue in absolute terms is located ALFA-BANK, Bank GPB (Gazprombank) and Bank TRUST, but the amount of their profit for the 2019 year is much less than the two leaders. So, ALFA-BANK last year earned 69 billion rubles, Gazprombank received profit amounted to 62 billion rubles, and the TRUST Bank earned 58 billion. Still have seven credit institutions the profit was in the range from 20 to 51 billion rubles, while total revenue more than 10 billion rubles received 23 credit institution. For comparison, in 2018, there were 17 such banks. This profit more than 1 billion rubles in 2019 received 103 of the Bank against 75 banks, the company informed.

in two thirds of banks ' profitability increased

According to the study of RIA Rating, the median return on assets of banks from the ranking is increased is similar to the profit rate. So, the one hundredth Bank in the ranking of the ratio of profit to assets on January 1, 2020 was 2.1% vs 1.4% and 1.1% at the beginning of 2019 and 2018. It is worth noting that the median profitability of banks is increasing in 2015. The increase of the median profitability is similar to the dynamics of the profit rate indicates organic growth of profitability of banks of different size groups, not just the major banks.

In the rating of the hundred of banks on January 1, 2020, in comparison the result for the same period of the previous year, the increase in profitability was characterized by 133 Bank. Moreover, among the fifty most profitable banks in the current ranking of 43 was characterized by increased profitability or 86%. In turn  the big banks from TOP-50 in terms of assets, less characterized by the growth of profitability (66%). Thus, the profitability grows primarily from highly profitable banks.

The leader on growth of profitability in 2019 became the Bank TRUST, the profitability of which for the year increased from -15,6% to 4.6% on January 1, 2020. The second banks according to the change of profitability in 2019 became the Bank CentroCredit, the profitability of which increased to 15.5% against -1,8% at the beginning of the year. Closes the top three on the maximum changes in the profitability of Asian-Pacific Bank (+13,4 percentage points). Thus, two out of three of the Bank with the greatest increase in profitability, are on rehabilitation. It should be noted that rehabilitated banks, which in the initial phase of rehabilitation, often form of excess reserves, which leads to significant losses, however, subsequently going on to improve the quality of the credit portfolio and the banks profit from the dissolution of these reserves. Thus, most likely, these banks will fail in the future to maintain a high level of profitability.

Foreign banks – leaders in ROI

Foreign banks among all types of banks by forms of ownership (public, private and banks with controlling foreign participation) are characterized by the highest return on assets in 2019. Return on assets foreign banks from the rating was 2.5%. While private and public banks return on assets was somewhat smaller – 2.4% and 2.1% respectively. Thus, in 2019, the trend where foreign banks have become profitable by year-end, which is observed in 2014.

The leader of the ranking in terms of return on assets was NKO Yandex.The money, the return on assets which at the end of last year was 17.2%. Second in the ranking of return on assets was the Bank CentroCredit, with return on assets 15.5%. Also high profitability demonstrated by: KIWI Bank and rnko Payment Center, which took 3-th and 4-th place in terms of return on assets (13.2% and 13.1 percent, respectively). Thus, three of the four most profitable credit institutions engaged in similar business – services of electronic payment systems.

Наиболее слабую рентабельность активов в прошедшем 2019 году продемонстрировал санируемый МИнБанк, рентабельность активов которого составила -33%. Второе и третье место с конца по рентабельности активов заняли Эс-Би-Ай Банк и банк МЕЖДУНАРОДНЫЙ ФИНАНСОВЫЙ КЛУБ, рентабельность активов которых составила -8,7% и -6,2% соответственно. На четвертом места расположился Swazi-Банк, с результатом – -5,1%, БАЛТИНВЕСТБАНК замыкает пятерку (-3,9%). Таким образом, три из пяти наиболее убыточных банков – это банки находящиеся на санации.

The experts of the RIA Rating expect the banking sector will continue to demonstrate good profitability in the current year, and the amount of profit in 2020 will be 1.6-1.7 trillion rubles. Profit growth is largely associated with the continued development of services generating fees and Commission income, as well as organic increase in assets and volume of customer transactions. Also in 2020, with the decline of interest rates can be expected to improve the quality of the loan portfolio, which will reduce the cost of risk. The predicted profit in the current year to the return on assets at 1.5% and 1.7%, and return on equity of 14-16%.

The rating of banks in terms of return on assets by 1 January 2020 in PDF format >>

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