Top 1000 World Banks – Tinkoff is top performer but Russia has room to improve

Russia’s banking system has strengthened significantly in the wake of a sustained economic and financial crisis that hit the country from 2014 to 2017. Interventions by the central bank helped to secure failing banks, while efforts to cut costs and bolster capital positions have also contributed to the health of the sector.

Even so, frailties in the system remain, not least in terms of asset quality. The Banker’s Top 1000 World Banks 2020 offers a glimpse of a Russian banking sector that has battled through the difficulties of recent years, to emerge both leaner and stronger, but with sizeable room for improvement across several performance metrics. 

Tinkoff Bank, the country’s ninth largest bank by Tier 1 capital, tops the ranking of best-performing lenders with a score of 7.19 out of a possible 10 points. This is underlined by the bank’s chart-topping performance in the constituent return on risk, soundness and leverage tables, and it also places second for operational efficiency and growth. Nevertheless, it is worth nothing that Tinkoff Bank is in last place based on its asset quality. 

Sovcombank is second among the best-performing banks, with a score of 6.36 out of 10. This is a result of the lender’s strong showing in the profitability stakes, where it tops the table, a feat mirrored in its operational efficiency and liquidity. The lender also secures second place with respect to its return on risk. Sovcombank's weakest performance is in terms of its rank for soundness, where its score of 3 out of 10 points places it in eighth position among the featured Russian banks.

Russia’s largest bank by Tier 1 capital, Sberbank, is fourth among the best-performing banks. This is largely a consequence of its strong soundness ranking, where it is second, and its leverage, operational efficiency and profitability ranking (third position in each of these categories). Meanwhile, the country’s second largest bank by Tier 1 capital, VTB Bank, is seventh with a score of 4.64.

The overall performance score of 4 out of 10 points puts Alfa Bank*, Russia’s largest privately owned lender, at eighth in the best-performing table. Though it scores well in terms of liquidity, where it ranks third, its score of 2.76 points out of a possible 10 for profitability leaves it in last place. Indeed, with the fallout of the Covid-19 pandemic likely to hit Russia especially hard, profitability across the sector is expected to diminish over the coming year. 

*Alfa-Bank results are affected by the long dollar position of the bank. The translation movement from Russian rubles to US dollars is assessed 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.