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Russian banks face another tough year in 2023

Wednesday, May 3, 2023

Significance

Banking-sector stability is vital for the functioning of the Russian economy: bank credit is facilitating economic restructuring. Although the sector withstood the first impact of sanctions in 2022, risks are mounting. Profits in 2022 were less than one-tenth the level of 2021, according to the Central Bank of Russia (CBR).

Impacts

  • Tighter underwriting criteria will restrict poorer households’ access to credit.
  • Banking-sector developments will affect demand for OFZ government bonds, as banks are the main investors.
  • Sberbank’s profitability and dividend policies will move the Moscow Exchange’s MOEX indices in 2023.
  • The rising threat of secondary sanctions will discourage foreign partners from rebuilding payment infrastructure with Russian banks.

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