Quarter to quarter January: banks' net profit decreased by 25%
The net profit of the banking sector in February 2025 decreased by a quarter compared to the results of January. It decreased from 286 billion to 214 billion rubles. This result is associated with a decrease in net interest income, an increase in reserves and an increase in operating expenses, experts say. By the end of the year, profit correction is projected to be 5-10% of the record values of 2024. Market participants will have to adapt to the new reality with tougher margin conditions. What will happen to the banks' profits is in the Izvestia article.
Noticeable decrease
The net profit of banks decreased in February 2025 to 214 billion rubles. It decreased by 25% compared to the January results. This is reported in the analytical material on the development of the banking sector posted on the website of the Bank of Russia. In annual terms, profit decreased by 22.2%.
At the same time, the return on equity (ROE) decreased from 19% to 14%. Core profit, which includes net interest and net fee income, expenses and net additional reserves, decreased by 19% to 212 billion rubles. This situation is caused by a typical increase in operating expenses for some items in February, due to the seasonal revival of banking activity after the January holidays.
At the same time, non-core (volatile) revenues remained almost unchanged, amounting to 65 billion rubles. During the month, they decreased by only 3% (2 billion rubles).
At the same time, losses from the negative revaluation of the currency increased by 90 billion rubles in a month. This situation has developed against the background of the strengthening of the ruble against the dollar. However, to a large extent these losses were offset by the revaluation of subordinated currency instruments recorded in the balance sheet.
Revenues from the revaluation of fixed-coupon debt securities, in particular, increased by 60 billion rubles. This became possible against the background of market expectations for monetary policy easing.
Meanwhile, in mid-March, the Central Bank of the Russian Federation lowered its forecast for the net profit of the banking sector in 2025 to 3-3.5 trillion rubles. The regulator explained this result by the expected compression of the net interest margin and an increase in the cost of risk.
The editorial board of Izvestia sent a request to the Central Bank of the Russian Federation. No response has been received at the time of publication.
Waste month
The Central Bank did not disclose detailed data on the profits of the banking sector, but the reports of the largest banks for January – February suggest that the recorded decline in profits is due to a decrease in net interest income and an increase in reserves and operating expenses, said Dmitry Gritskevich, Head of Banking and Financial Market Analysis at PSB.
The growth of the latter, caused by the seasonal revival of the activities of credit institutions, amounted to 45 billion rubles in February this year, says Pavel Neumyvakin, Executive Vice President of the Association of Russian Banks.
"After the slowdown in activity in January, institutions go to full capacity, which leads to an increase in administrative and, in some cases, marketing costs," says Stanislav Paulauskas, an economist and member of the expert council at the State Duma Committee on the Financial Market.
In general, the first quarter of the year always has characteristic seasonal trends, so it is more correct to look at the "moving" indicators for the last 12 months relative to the same period last year, says Ivan Uklein, Senior Director of Banking Ratings at Expert RA.
In addition, the financial result of the banking sector in February is strongly distorted by one-time non-operational factors, he warns. The net profit of banks, in particular, was affected by losses from the negative revaluation of the currency due to the strengthening of the ruble, amounting to 90 billion rubles, adds Pavel Neumyvakin. The national currency strengthened its position by 11.8%, which is significantly higher than the January figure of 3.7%.
He contributed to the revaluation of securities and currency and the growth of the Moscow Exchange index, which reached more than 10% in a month, Uklein notes.
— This led to a negative recalculation of foreign currency assets, especially against the background of their high share in the portfolios of individual banks. However, compensating mechanisms have also emerged here. For example, the growth in the value of fixed—coupon bonds," Paulauskas draws attention.
The February results of the banking sector demonstrate important structural changes in the industry, Ilya Sivoplyas, head of the WhiteBird crypto trading department, is convinced. The annual decline in profitability exceeding 22% should alert investors.
— The dynamics of the loan portfolio deserves special attention: the corporate segment grew by 100 billion rubles, while the mortgage showed minimal growth of only 0.2%, to 20 trillion rubles. This situation reflects the caution of banks in the context of a high key interest rate," the expert explains.
A natural result
The decline in profits, although it looks noticeable, is unlikely to lead to systemic consequences even in the short term, Stanislav Paulauskas is convinced.
"For stable players with a diversified income structure and a wide range of operations, this is more a reflection of seasonal fluctuations than a symptom of deterioration," he believes.
The recorded amplitude of profit deviations during the year fits into the standard monthly fluctuations of financial indicators, Pavel Neumyvakin agrees. It is important to take into account that in two months the total profit of the banks amounted to 500 billion rubles. And the equity capital of the banking sector increased by 327 billion rubles in February.
However, banks that focus primarily on foreign exchange transactions or have a limited customer base may face the need to reduce reserves and review their strategy for attracting funding, Paulauskas warns.
Change of strategy
By the end of 2025, according to Expert RA's forecast, banks' profits are expected to adjust by 5-10% from the record values of 2024.
— At the same time, we allow for deviations from the baseline forecast when the macroeconomic or geopolitical background changes, — says Ivan Uklein.
The Central Bank's forecast for a drop in sector profits to 3-3.5 trillion in 2025 now looks likely mainly due to the restoration of CoR (cost of risk) to the historical average and further pressure on margins, said Mikhail Matovnikov, head of Sberbank's Financial Analytics Center.
The PSB, in turn, expects that the profit of the banking sector in 2025 will amount to about 3 trillion rubles, which corresponds to the lower limit of the regulator's forecast. Dmitry Gritskevich is convinced that the main challenges for the banking system expected this year will be a decrease in the net interest margin and an increase in deductions to reserves from Russian banks against the background of the tight monetary policy of the Central Bank.
The February results confirm that the period of easy money for the banking sector is over, Ilya Sivoplyas believes. Market participants will have to adapt to the new reality with tougher margin conditions.
"Despite the continued stability of the system (as evidenced by the positive cumulative result), this is a signal of the need to adjust strategies for both the banks themselves and their customers," the expert believes.
In this regard, in the coming months, the banking sector will see a further rebalancing of the business models of credit institutions, predicts the interlocutor of Izvestia. They will be forced to optimize costs and revise the product line.
The continued high key interest rate will continue to restrain demand for retail loans and increase the burden on business borrowers, Stanislav Paulauskas points out. However, the growth of income from investments in debt securities and the partial recovery of margins after adjustments to foreign exchange positions may support the profitability of the sector.
The net profit of banks by the end of the year, according to the economist, will depend both on the dynamics of the key interest rate and on the pace of recovery of credit demand in the corporate segment.
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