Intesa's Russian subsidiary sees huge profit jump in 2022

MOSCOW (Reuters) - Italian bank Intesa Sanpaolo's Russian subsidiary saw profits more than six times higher in 2022 than the year before, independent audit documents showed, as Western sanctions on Russia's banking sector gave foreign lenders an unlikely boost.

Foreign banks have stepped in to take business from Russian lenders who fell under sweeping Western sanctions imposed following Moscow's decision to send tens of thousands of troops into Ukraine last February.

Russia's banking sector profits slumped around 90% in 2022.

Intesa's Russian subsidiary made net profit of 2.02 billion roubles ($26.7 million) in 2022, up from 317 million roubles in 2021, the documents showed, a 538% rise.

Intesa only serves corporate clients in Russia, where it had staff of around 980 people when the Ukraine conflict broke out.

Austria's Raiffeisen Bank International, one of the European banks most exposed to Russia, earned more than half of its profit last year from Russia. It is considering exiting the market though and has been studying its options.

The bulk of Intesa's initial 5.1 billion euro exposure to Russian and Ukrainian customers was cross-border, meaning loans granted by the bank's domestic business, mainly to oil and gas firms.

Italy's biggest bank booked 1.4 billion euros in provisions last year against its Russian assets, as it reduced them to account for just 0.3% of its total client assets.

UniCredit, which has retail operations in Russia and has also been working to reduce its cross-border exposure, in January reported a 220 million euro ($235 million) net loss for its Russian unit, hit by spiking loan loss provisions despite revenues more than doubling.

Intesa has sharply cut its exposure to Russia. CEO Carlo Messina in November said clearing Russian risks from its balance sheet cost Intesa 1.1 billion euros out of last year's profits.

Getting out of Russia is proving difficult for many companies, while restrictions mean profits are stuck in the country.

Moscow has banned investors from so-called "unfriendly" countries - those that have imposed sanctions against Moscow -from selling shares in banks, unless Russian President Vladimir Putin grants an exemption.

($1 = 75.8095 roubles)

($1 = 0.9366 euros)

(Reporting by Elena Fabrichnaya; Writing by Alexander Marrow;Editing by Elaine Hardcastle)