Russia’s biggest private bank posts huge profits

Russia’s Alfa-Bank announced on Friday a robust net profit of 52.2 billion rubles ($526 million) for the first half of the year, showcasing its resilience amid Western sanctions and economic headwinds. The bank’s positive financial performance was attributed to its consistently high loan portfolio and strategic initiatives.

In a press release published on the bank’s official website, Alfa-Bank disclosed that it had earned $272 million during the first quarter of 2023. While a direct comparison to its 2022 figures was not provided, it was noted that the bank faced significant challenges last year due to Western sanctions, which led to a slump in profits.

“Despite the challenges of the first half of 2022 and a one-time loss, the bank has significantly strengthened its market position in terms of total assets and capital,” the statement from Alfa-Bank read.

Alfa-Bank’s net interest income for January to June surpassed $1.4 billion, marking a substantial 84% year-on-year increase. The bank also reported a 13% rise in net fee and commission income, reaching $823 million.

During the reporting period, Alfa-Bank’s total assets saw a 7% increase, amounting to $62 billion. This growth was partially fueled by a notable 17% surge in net loan debt. Notably, corporate loans experienced a robust 21% increase, with lending to small and medium-sized businesses witnessing a 35% and 22% rise respectively.

The bank’s deposit portfolio also expanded by over 7%, attributed to a significant 15% boost in retail deposits.

Alfa-Bank further highlighted its expanding customer base, revealing that the number of customers grew by 9% in the first half of 2023, now totaling nearly 28 million individuals.

“In 2023, we continue to follow the strategy, as well as actively implement technological innovations, work with machine learning models, and use advanced analytics in business processes,” the press release emphasized.

However, the bank’s positive performance occurred in the backdrop of international sanctions. In the preceding year, the United States imposed sanctions on Alfa-Bank and Russia’s leading lender, Sber, in response to Russia’s military operations in Ukraine. This year, Alfa-Bank found itself included in the European Union’s tenth sanctions package.

The owners of Alfa-Bank, businessmen Mikhail Fridman and Pyotr Aven, reportedly sought to sell their stakes in the bank to evade the blacklist. Unfortunately, their efforts were hampered as both Fridman and Aven were recently added to the U.S. sanctions list earlier this week.

Alfa-Bank’s impressive financial results amid these challenging circumstances highlight the bank’s resilience and strategic positioning, showcasing its ability to navigate a complex geopolitical landscape while continuing to drive growth and innovation.