Russia's Central Bank on Friday assessed the reserve of ruble and foreign currency liquidity in banks as adequate, with available sources of liquidity covering a significant part of customer funds
MOSCOW (Pakistan Point News / Sputnik - 27th January, 2023) Russia's Central Bank on Friday assessed the reserve of ruble and foreign currency liquidity in banks as adequate, with available sources of liquidity covering a significant part of customer funds.
"The reserve of ruble and foreign currency liquidity is adequate ... The reserve of ruble liquidity is generally estimated as adequate to the current funding structure, but it is distributed among banks unevenly," the regulator said in a report.
Thus, the total volume of ruble-denominated assets amounted to about 18.9 trillion rubles ($273 billion) by the end of 2022, which is enough to cover 26% of customer ruble funds and 58% of individuals' funds. Banks may borrow another 9.3 trillion rubles, sufficient to cover 13% of customer funds, from the central bank on the security of non-marketable assets, the report on the development of the banking sector of Russia in December 2022 said.
"The reserve of foreign currency liquidity is even higher, it covers 59% of customer funds and 55% of foreign exchange obligations," the central bank said.
It is also noted that in December, 2022, Russian banks tripled their profits compared to 2021, up to 342 billion rubles.
"At the same time, at the end of 2022, the banking sector managed to compensate for the loss of 1.5 trillion rubles received in the first half of the year (mainly from currency revaluation and derivative financial instruments) and get a small profit - 203 billion rubles," the report said.
This result, among other things, was facilitated by the gradual recovery of core income against the backdrop of lower rates and business growth in the second half of the year, the regulator said.
However, some banks were not able to fully win back the losses. In total, the share of profitable banks in the sector's assets amounted to 77%.
It is expected that Russian banks will turn a profit of over 1 trillion rubles ($14.4 billion) in 2023, if there are no further adverse shocks, the head of the bank's Department of Banking Regulation and Analytics, Alexander Danilov, said.
In 2022, the Russian financial sector faced severe issues against the backdrop of the military operation in Ukraine. Western nations and their allies have responded with comprehensive sanctions, including restrictions on the Russian central bank, export control measures, SWIFT cutoff for select banks, and asset freezes.