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Russian banks suffered losses of $25 billion in six months

Many banks are unlucky according to the law of a sandwich that always falls on the wrong side, explained Dmitry Tulin, First Deputy Chairman of the Central Bank.

For the first time since February, the Bank of Russia disclosed the provisional financial results of the banking sector: in the first half of the year, the net losses of Russian banks amounted to 1.5 trillion rubles (about $25 billion). This was said by the first deputy chairman of the Central Bank, Dmitry Tulin, RBC reports on Friday, September 2.

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It was noted that the Russian banking sector showed losses for the first time in seven years.

“Let me remind you that in 2019, in general, the net income of the banking sector after taxes reached 1.7 trillion rubles, in 2020 – 1.6 trillion rubles, in 2021 – 2.4 trillion rubles, if rounded. In first half of 2022, the financial result is negative – minus 1.5 trillion rubles,” he said.

According to him, in this figure, about 1 trillion rubles fall into the category of “operations with foreign currency.”

“This is the realization of losses due to the forced termination of transactions in derivative financial instruments, since the counterparties of our banks in hedging transactions are mainly foreign banks of countries that have imposed sanctions. -we are talking about swaps and forward contracts. When they are terminated, then, in Depending on the exchange rate at the moment, our banks have fixed the result, mainly losses,” said Tulin.

He added that “many banks are unlucky with the law of the sandwich that always falls on the wrong side.”

“The volatility of the exchange rate was huge, at first the ruble fell, and then broke – the rate was 110, and then became 55. It happened that losses on derivative financial instruments were recorded in a low ruble exchange rate,” Tulin explained.

In addition, many banks with international operations have an open balance sheet position for foreign exchange risk, which cannot now be closed quickly due to the collapse of the derivatives market. Accordingly, the exchange rate changes, and the financial result changes due to the currency revaluation effect. Some banks deviated their position in a direction that was not successful from the point of view of market conditions. They lost first by weakening the ruble, and then lost again by strengthening it. But the banks have not yet suffered other significant losses, Tulin said.

According to him, the net interest income of banks decreased by only 5% in the first half of the year compared to the first half of 2021.

Three quarters of the total number of banks in the first half of the year were profitable, and one quarter were unprofitable. Among the 13 systemically important banks, the ratio of profitable to unprofitable is 60 to 40%.

Note that Russia has extended the cash ban. Until March 2023, there will be a limit on cash foreign currency withdrawals from a foreign currency account or deposit in the amount of 10 thousand dollars or euros.

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Source: korrespondent

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