In March, the banking system once again became unprofitable

Revenues from core banking activities continue to grow. We believe that a further increase in allocations to reserves for losses on lending operations will continue to adversely affect the profitability of the banking sector in 2011 We believe that up to 2011 the overall financial result is positive, not small. Acceleration of growth in the loan portfolio of the banking system in 2001, yet had no impact on the profitability of the banking system. In line with our expectations, financial results for the banking sector in 2011 are volatile. Thus, the positive financial results in February gave way to a negative indicator in March, resulting in a total of 1 square. 2011 is negative (-0.2 billion USD).. Dynamics of income for banks in 1 square. In 2011 moved to the positive plane - this indicator has shown an increase of 5.5% on an annualized basis, compared with a decrease of 13.7% in 1 square. 2010 increase in income from operations is not associated with an increase in interest income of banks, which is 1 square. 2011 was little changed (-0.2% annualized). At the same time, fee and commission income increased by 15.6%, while revenue from trading operations (despite the low rate in absolute value) demonstrated on the basis of 1 square. In 2011 the rapid growth (174% annualized). Despite the substantial reduction of the banking system in an apartment. 2011 (13.3% annualized), all of them were big enough to move the financial result of the banking system back into the negative plane. Dynamics of income for banks from operating activities remained positive in the (net interest income and net fee and commission income increased by 13.6% and 15.1% yoy, respectively), which ensured the growth of bank profits from operations in a square. 2011 At the same time, the deteriorating financial performance of the banking system in March compared with February, was due to increased allocations to reserves for losses on lending operations in March (by 6.2% per month) and other operating expenses (23.1% ). We reserve our opinion as to whether the financial results of the banking system in 2011 will remain volatile due to the problems and constraints faced by banks in their operations. We maintain our expectations that the financial results of banks in 2011 would be positive but small. Alexander Pecherytsyn, Head of the analysis of financial markets ingbank.com