Analysis of the Profitability of the Banking Sector of the Russian Federation

Abstract

The profitability of the banking system is of great importance for its sustainability and development, as the 2007–2009 crisis has shown. The research on bank profitability and the factors influencing profitability started relatively recently, about thirty years ago. The results of this research have been contradictory, for many reasons. This paper provides a statistical analysis of the profitability of the Russian banking system over the period 2016–2020. The entire banking sample is characterized by a significant impact on banks’ profitability by the size of capital and a significant variability in the profitability of assets. This was the basis for dividing the banking population into four clusters based on the capital size criterion. The statistical analysis of the significance of standard bank determinants across clusters showed that cost and income management are important for all banks, but the significance of other determinants varies across clusters: the importance of loan shares, the ability to use modern technology, etc. differs for banks of different sizes. Nevertheless, the operating mechanisms of all banks in Russia in terms of ensuring profitability of assets remain in working order and from these points of view banks of different size are in roughly the same conditions.