The largest private bank in Russia, Alfa-Bank, reported a loss of 117.1 billion rubles in 2022. The last time a financial institution recorded a loss back in 2009, when the country was experiencing the consequences of the financial crisis. The company's loss in 2009 amounted to 3.35 billion rubles, in 2021 the bank received 136.6 billion of net profit. The poor financial performance was driven by the aftermath of the war with Ukraine and the sanctions that followed the invasion, which led to asset freezes and account freezes.
“In the first half of 2022, the bank recorded a one-time loss due to the fact that part of the assets in foreign currency was frozen, in addition, the currency revaluation had an impact on the financial result and reporting under RAS,” RBC quotes the bank’s managing director Vladimir Verkhoshinsky.
He noted that Alfa has traditionally been the leader of the Russian market in international settlements, so the sanctions have significantly hit the financial organization and its business. However, already in the second half of 2022, the bank returned to a profitable business model and maintains a positive trend in early 2023, the top manager claims.
Significant problems of the bank are related to the need to increase the provisioning for loans – they increased five times, to 167.4 billion rubles, which is significantly higher than even in the pandemic year of 2020, when the bank reserved 57.5 billion rubles. Reserves to cover other losses quadrupled and amounted to 30.9 billion rubles.
The problems faced by Alfa last year were common to all large Russian banks that were under sanctions. At the same time, 2022 turned out to be profitable for the industry as a whole: according to the Central Bank, Russian banks earned 203 billion rubles, which has become an anti-record since 2015. A vivid example of the state of the Russian banking sector is Sberbank: at the end of 2022, the country's largest financial institution reported a drop in profit by 75.7% for the year, to 300.2 billion rubles.
The second largest bank in Russia – VTB – in 2022 received a record loss of 756.8 billion rubles, against 242.6 billion rubles profit a year earlier. Thus, the banking sector has become one of the main victims of Russia's full-scale invasion of Ukraine.