The Russian banking sector's profits in August surged by 42% month-on-month to RUB435bn ($4.6bn), according to data from the Central Bank of Russia (CBR), TASS reports.  (chart)

The increase in profits in August bring the cumulative profit of  the sector YTD to RUB2.4 trillion, just ahead of the RUB2.3 trillion earned by this time last year. (chart)

The actual profit, excluding RUB18bn ($194mn) in dividends received from Russian subsidiary banks, reached RUB435bn. This marks a RUB129bn ($1.4bn) increase over July’s figure of RUB306bn ($3.3bn), excluding subsidiary bank dividends. Return on capital jumped to 35.4% from 24.6% a month earlier, the CBR reported.

The surge is largely attributed to the currency revaluation of the long open currency position, which generated around RUB130bn ($1.4bn) in August compared to RUB16bn ($172mn) in July. This was driven by the rouble’s depreciation against the euro and the dollar by 7% and 5%, respectively, compared to a milder decline of 0.9% and 0.7% in July.

The Central Bank noted that banks, while hedging their long positions in "unfriendly" currencies with short positions in the yuan, also benefitted from the yuan's appreciation against the dollar and euro (by 4% and 6%, respectively).

However, core profits slightly declined to RUB257bn ($2.7bn) in August from RUB264bn ($2.8bn) in July, mainly due to an additional RUB35bn ($377mn) in reserve provisions, primarily for corporate loans.

By the end of August, the number of profitable banks increased to 261, representing 82% of all banks. Profitable banks continued to account for 98% of total sector assets since the start of the year.

The CBR has raised its profit forecast for Russian banks in 2024, from RUB3.1-3.6 trillion ($33-38.7bn) to RUB3.3-3.8 trillion ($35.5-41bn).