537 views
In Russia, banks’ profits exceeded one trillion rubles due to inflation
Russian banks managed to earn more than a trillion rubles due to accelerated inflation in the country and a multiple increase in the Bank of Russia key rate.
The annual profit of credit institutions was estimated at 1.3 trillion roubles in January 2021 to reach 2.4 trillion roubles ten months later, Izvestia reports with reference to the forecast of analysts of the Expert RA rating agency.
The explosive rise in prices forced the Bank of Russia to raise its key rate six times within the period since March (from 4.25% to 7.5%), and the regulator warned about such a possibility several times. The expectation of a more expensive borrowing, coupled with higher inflationary expectations, gave rise to a feverish demand for loans, which, in turn, helped Russian banks to achieve record high profits.
Besides, the banks' losses associated with the restructuring of bad debts, as well as the cost of provisioning turned out to be significantly lower than expected.
Taking into account the difference in forecasts, the change in the situation allowed banks to earn over a trillion roubles more than in case if the inflation has failed to start rising rapidly.
In the first nine months of 2021, the banking sector earned almost 1.9 trillion roubles, which is 65% more than in the same period of 2020.