Russia expands restrictions on the transfer of funds abroad

The central bank of Russia has extended the restrictions on the transfer of funds abroad for another six months, the regulatory authority announced on Friday, according to Reuters.

Until March 31, 2024, Russian citizens and non-residents of "friendly countries" will continue to be able to transfer up to one million dollars or the equivalent of this amount in other currencies to any account in foreign banks within a month.

Russia considers as "unfriendly" the countries that have imposed sanctions on it because of the war in Ukraine.

• VTB: Banks in Russia, affected by interest rate increases

Back-to-back interest rate hikes have significantly hurt the outlook for Russia's banks, Dmitri Pianov, the chief financial officer of Russia's second largest lender VTB, recently warned, anticipating a sharp decline in banking sector profits in 2024, according to Reuters.

This month, the Bank of Russia raised the interest rate to 13%, the depreciation of the ruble adding to the inflationary pressures caused by the lack of labor force and the deepening of the budget deficit.

High interest rates have so far not affected VTB's net interest income, but the situation will change in the coming months, Pianov said, stressing: "We see a decrease of about 15 billion rubles in interest income at an interest rate increase one percentage point key. In this situation, you can calculate the decline in income we will have".

The bank expects a record profit of 420 billion rubles this year, after the major losses in 2022, caused by the sanctions imposed by the West on Russia following the invasion of Ukraine. "Nothing will prevent us from ending 2023 with record figures, only that in August-September a different era has set in regarding the key interest," Pianov said, noting: "It is clear, however, that the profits from the banking sector of Russia will be much lower in 2024, compared to 2023".

VTB expects Russia's central bank to further tighten monetary policy, raising interest rates to 14% by the end of the year.

Analysts of the Expert RA rating agency estimate that profits in Russia's banking sector will exceed 3,000 billion rubles in 2023.

• Collaboration between the Russian Banks Association and the West African Bankers Association

The Association of Russian Banks and the Association of West African Bankers signed a memorandum of understanding last week, at the 20th International Banking Forum, informs the TASS agency, according to APA.

The memorandum provides for the exchange of experience between the two associations, including in professional training in the banking sector, the development of new technologies, as well as the implementation of other programs to support cooperation between Russia and African countries in the financial sector.

Georgi Luntovski, president of the Association of Russian Banks, said: "Our surveys show that Russian banks realize the importance of establishing contacts and organizing interbank interactions to support economic relations with African countries. We expect this cooperation to promote the development of trade and direct payments between West African countries and Russia, including through the use of national currencies."

The West African Bankers Association was established under the auspices of the Economic Community in the region, which includes 15 countries. Over 240 banks operate on their territory. The association includes national banking associations, credit institutions and nine central banks of West African countries.

The Association of Russian Banks brings together over 250 organizations, including over 150 banks. The credit institutions, which are part of the association, hold 90% of all the assets of the country's banking system and of the deposits of natural persons.