Top 50 Russian Banks ranking: resilience tested by the pandemic - Banker Data -
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Russia’s banks were growing in the run up to the Covid-19 crisis, but the economic fallout has taken its toll. 

Otkritie

The Banker’s Top 50 Russian Banks ranking offers valuable insight into the health of the country’s leading lenders. Before the onset of the Covid-19 pandemic, most Russian institutions capitalised on years of steady, if unspectacular, economic growth to bolster their balance sheets and improve their asset quality. As such, the current ranking reveals a banking system that, for the most part, looks stronger and healthier than at any other time in the past few years. Whether this will be enough to sustain Russia’s leading banks through a prolonged economic and health crisis, which ravaged the country more than most during 2020, remains to be seen. 

The World Bank expects gross domestic product to contract by 4% in 2020, although the economy might only achieve anaemic growth in 2021 if the virus continues to spread. Profits among Russia’s large and medium-sized enterprises collapsed by 40% over the first nine months of 2020, contributing to a situation in which the health of the private sector has substantially diminished. As household finances also feel the strain, there is a strong probability that Russian banks are set to face heightened asset quality pressures over the next 12 months. 

In terms of banks’ performance outcomes, some changes can be noted between the 2021 Top 50 Russian Banks ranking and The Banker’s 2020 Top 1000 World Banks Russia coverage. This is largely due to the expanded cohort of lenders included in the analysis of best-performing banks, which is now applied to the largest 20 banks, excluding Bank Rossiya for which some data points were unavailable. Foreign-owned subsidiaries have also been included in this edition. As a result, some banks have moved in the performance tables.

Topping the main ranking is Sberbank, with a Tier 1 capital position of $70.7bn. VTB Bank came in a distant second position with $25.1bn in Tier 1 capital, while Gazprombank achieved third place with $11.1bn. Notably, all of the top three largest banks achieved outstanding Tier 1 capital growth, mirroring the trend across the wider ranking where only three of the top 50 institutions saw their Tier 1 capital contract over the 2019 review period. The same pattern was repeated in terms of total asset growth, with only three banks recording a drop in assets.  

Profits among Russia’s large and medium-sized enterprises collapsed by 40% over the first nine months of 2020

Beyond the main ranking, the overall best-performing Russian banks table is a relatively diverse affair. In first place is Tinkoff Bank, with a score of 6.61. Billing itself as an “online financial ecosystem”, Tinkoff Bank has emerged as the country’s leading online bank and, as a result, has fared well during the Covid-19 pandemic. Meanwhile, in second place, Home Credit and Finance Bank achieved a score of 6.47, while Bank Uralsib, which came in at 21st position in the main ranking, rounds out the top three best-performing banks with a score of 5.84. 

In the all-important asset quality stakes, the banks with the strongest numbers largely mirror the 10 biggest institutions in the main ranking. Otkritie Financial Corporation secured first place with a score of 8.01, while Raiffeisen Bank came in fourth with a score of 6.38. Other lenders from the top 10 main ranking in the table include Sovcombank, Gazprombank and VTB Bank. While these results point to the sound asset quality of Russia’s leading financial institutions, the relative absence of smaller regional banks potentially raises questions over their ability to endure the challenges of the coming year. 

Until the onset of the Covid-19 pandemic, Russian banks’ profitability was improving across the board, thanks to efforts by most lenders to streamline their operations and cut costs through impressive digitalisation agendas. This is reflected in The Banker’s data, where a healthy range of institutions appear among the top 10 banks by profitability. Bank Uralsib secured first position with a score of 7.15. SMP Bank, which came in 19th in the overall ranking, reached sixth place in the profitability stakes with a score of 5.89. Meanwhile, larger lenders are also featured, with Sovcombank, VTB Bank and Sberbank making the table.

Beyond profitability, the top 10 banks by growth table is led by Russia’s largest lenders, sourced from the top 15 institutions in the main ranking. Otkritie Financial Corporation, Tinkoff Bank and Sovcombank secured first, second and third place, respectively. Raiffeisen, meanwhile, secured fifth position with a score of 4.34, while Gazprombank achieved eighth place with a growth score of 4.05. 

Taken together, these results point to the relatively positive trajectory of Russia’s banks in the build-up to the current health crisis. Yet, uncertainties remain over the ability of the country’s smaller, regional players to withstand the mounting economic pressures of the pandemic. Although the Central Bank of Russia, in conjunction with the finance ministry, has helped to shepherd the economy through the worst challenges of 2020, there is some way to go before the country and its banks reach safer ground. 

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