By any standard, Russia’s economic performance in 2020 was strong. As the Covid-19 pandemic ripped through Europe and the US, giving rise to historic recessions, Russia’s gross domestic product contracted by just 3.1% over the year.
A number of reasons account for this relative outperformance, including effective government support, the low contribution of services to the national economy and the robust performance of the industrial sectors. Taken together, Russia has emerged somewhat unscathed from the worst effects of the global health crisis, even if collapsing oil prices and a volatile rouble were considerable pain points.
Evidence of this can be detected in the robust performance of Russian banks in The Banker’s Top 1000 World Banks ranking 2021 and performance tables. The best-performing lender, with an overall score of 6.71, is Alfa Bank. Contributing to its leading position is Alfa Bank’s outstanding performance in terms of its profitability and return on risk, while it also scores well in the soundness, leverage and operational efficiency stakes.
Indeed, Alfa Bank’s resilient performance over the 2020 review period highlighted many of the lender’s underlying strengths; from its advanced digitisation at both the front and back end of its operations, to its asset quality numbers, which are far stronger than the system average.
Taking second position in the overall best-performing banks ranking is Sovcombank, with a score of 6.58. Its commendable outcomes across a range of metrics, from its operational efficiency to its profitability to its soundness figures, underscore its position as a leader among the 10 largest Russian banks.
Credit Bank of Moscow and Tinkoff Bank come in third and fourth position, respectively, in the best-performance ranking. Notably, Credit Bank of Moscow achieves first place in terms of asset growth and operational efficiency among all of the featured Russian banks, while Tinkoff Bank is number one with respect to its liquidity position.
Meanwhile, Russia’s three largest banks by Tier 1 capital all fare relatively well in the 2021 performance rankings. Sberbank, for instance, achieves an overall performance score of 5.78, backed by strong figures in its soundness, liquidity, operational efficiency and leverage metrics. Though the lender missed its profit target for 2020, this was partly attributable to higher provisions being booked in light of the health crisis.
Nevertheless, Sberbank has taken great strides to reduce its costs in recent years, and the fruits of this work contributed to the bank’s development trajectory over the review period.
Of the remaining largest banks, Gazrpombank secures an overall score of 5.42, underpinned by its very strong asset quality numbers, while VTB Bank rounds out the best-performing banks with an overall score of 4.64.
Taken together, Russian lenders have demonstrated resilience and flexibility in their handling of the Covid-19 pandemic. With most banks aggressively pursuing further digitisation and cost-cutting measures, they will be well positioned to prosper from the country’s economic recovery over the coming years.
* Alfa Bank profits are affected by exchange rate fluctuation. The translation movement from Russian roubles to US dollars is reflected in other comprehensive income and not considered in the model. This peculiarity should be taken into consideration when interpreting results for Russian best-performing banks ranking.
