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.
