The Profit of the Entire Banking System of Belarus Fell 30 Times at Once

What does it mean?

Until recently, the banking system of Belarus worked with a record profit, but suddenly, by the end of the month, it fell 30 times at once, InfoBank.by noted.

Thus, in real terms and dollar terms, the profit for January-July was the highest in 7 years.

July became one of the best months in terms of profitability of the banking system of Belarus, not only this year but also in previous years - with an indicator of 143 million rubles.

And in the two months of 2021 - in April and May - the banking system was even more profitable (with 167 and 152 million rubles in profit per month, respectively).

And suddenly, in August, profit fell to only 4.6 million rubles - the lowest since 2015, when there was both a crisis and negative values, that is, monthly losses were recorded. Since last month, the profit of the system has collapsed in August more than 30 times.

Among the August values of previous years, the profit of August 2021 is the smallest in 11 years even at current prices, and, in dollar terms, this was once - in 2009. And in comparable prices - adjusted for inflation - there has never been such low profitability of the banking system in August.

Thus, August became the worst month in several years in terms of profit of the banking system of Belarus. It is impossible to know exactly what happened to which bank or banks (obviously, the largest ones) at the moment. However, it is not excluded that it could be somehow connected with those sanctions, which have been recently introduced against some banks (Belarusbank, Belinvestbank, Belagroprombank, and others).

The drop in profitability could not but affect such an important indicator of banks' performance as the return on assets. And this is despite the fact that the profitability of the banking system of Belarus is not that high, if, for example, we compare it with the Ukrainian one (according to the NBU).

Return on assets of the banking system:

Belarus - 1.4%

Ukraine - 3.67%

So, until August, the profitability of the banking system of Belarus this year turned out to be the best in many years, much better than in the crisis of 2020, rising every month along with the post-crisis economic recovery. But in August, there was a sudden 30-fold collapse.

If this is not an isolated case, it means that there are some serious problems in the banking system. That is, the September result in this regard will be decisive. But already a lot of data speaks of serious problems that arose in August. In addition to this collapse of the banking system's profits, there was also a sharp slowdown in GDP growth and a strong state budget deficit this month.