Russian banks could post 800-900 bln rubles profit in 2016 - Central Bank deputy head
MOSCOW. Nov 15 (Interfax) - Russian banks could post 800 billion-900 billion rubles in profits in 2016, Valery Pozdyshev, deputy head of the Central Bank, said at a meeting between bankers and top Central Bank officials.
Banking sector profits quadrupled year-on-year in January-October to 714 billion rubles, he said.
"Moreover banks have made nearly 400 billion rubles on provisions, which is also not bad at all, and less than last year. This suggests that the banking system has is now in a normal profit-generating and margin mode. In better years, our banking system would on average generate a margin of around 1.5 trillion rubles a year, and that amount would usually be split, depending whether it was a good or bad year, into around 1 trillion rubles profit and 300 billion-400 billion rubles provisions or vice-versa," Pozdyshev said.
"This year we'll probably see that 1.5 trillion rubles margin. We can see that so far banks are probably assessing risks to be lower than in previous years, and this distribution will likely be 800 billion-900 billion rubles for profit and 500 billion-600 billion rubles towards provisions. We would of course like banks to be deducting a little more for provisions, but so far the provisioning that we see is in line with our expectations. If somebody somewhere doesn't have it in line we'll make a subtle hint in the form of instructions," he said.
"You know that the banks are carrying out normal constructive dialogue with the regulator, initially we are warning calmly, we are recommending. If the bank doesn't make any arguments, and we see and are convinced that we are correct, then we will send instructions," Pozdyshev said.
He said that about a third of Russian banks had losses this year: 422 credit organizations as at November 1 posted 974 billion rubles of net profit, the remaining 216 banks posted losses in the amount of 259 billion rubles.
"That is, a good part of the banking system returned to recovery growth and normal profit generation," Pozdyshev said.
The Central Bank will more attentively monitor banks with losses, he said.
"Because here there is not only the element of problem credits and consequences of one or two of the previous crises. We are seeing that in many cases, there simply is an incorrect business model. And despite the fact that the business model has already generated losses, the owners and managers in some cases continue to persistently use it, covering negative capital with various schemes," he said.
