Increasing tax burden on banks unwise, their capital needed for economy's financing - Russian finance minister

MOSCOW. Oct 14 (Interfax) - Russian banks need capital for financing, and it would be wrong to take part of their profits by raising taxes for credit organizations, Russian Finance Minister Anton Siluanov said.

Banking sector profit stood at 3.3 trillion rubles in 2023. The CBR forecasts that they could earn between 3.3 trillion and 3.8 trillion rubles in 2024. MPs have drawn attention to the banking sector's impressive financial results and proposed taking part of its profits, including by raising the tax burden, on several occasions.

"High banking profits upset everyone," Siluanov said at a meeting of the State Duma's Budget and Tax Committee.

In previous years, due to various restrictions on banks, regulations were eased for them, he said.

"Now this relief is being cancelled, and the banks need new capital. We don't have external financing now, we need or own financial resources. Where are these resources? Of course, this means the financial sector and the banks, so the banks need their own capital in order to provide more resources. So this profit, about which we like to say 'look how much it's grown', will be used to make the banks provide loans," he said.

"Yes, they [loans] are currently expensive, but as soon as we normalize the situation with inflation, monetary policy will ease, so loans will become cheaper as well. But the banks need capital. Taking a part of their profit, with everyone saying let's raise the tax on bank profit - we shouldn't do that, because [they] need capital," he said.

The CBR has repeatedly drawn MPs' attention to the fact that the net financial result for Russian organizations in 2023 exceeded 3.3 trillion rubles, amounting to 10 times more banking profit than the preceding year.

"Everyone knows the figure for banking profit well, because we publish a new figure every month on how the annual situation is evolving, and we correct the forecast. Everyone knows the 3 trillion [figure]. The figure for the net financial result for the economy as a whole tends to pass somewhat unnoticed because no one reports on it except for Rosstat," Central Bank Deputy Governor Alexei Zabotkin said at the Duma committee meeting.

"Everyone who suggests taking more taxes from the banking sector should understand that each ruble in tax taken from them reduces their ability to provide loans by 10 rubles," he said.

"So we have a choice. Yes, we can take a ruble in tax, but then the banks will have 10 rubles less of a chance to create financing in the economy. Undoubtedly, lawmakers have the right to take any decision based on what they consider to be right," Zabotkin told MPs.