The Kremlin's Spasskaya Tower, left, and St. Basil's Cathedral in Moscow, Russia - Source: CNBC WORLD
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Billionaire Vagit Alekperov topped the list with dividends of 186 billion rubles
Many of these billionaires have close ties to President Vladimir Putin, including some who have been subjected to sanctions over the war, which is now in its third year.
Profits of Russian billionaires
Vagit Alekperov, the main shareholder and former president of the oil giant Lukoil PJSC, topped the list with dividends estimated at about 186 billion rubles. Despite the British and Australian sanctions imposed on him, he has so far avoided American and European sanctions.
Billionaires Alexei Mordashov, from Severstal PJSC, and Vladimir Lisin, from Novolipetsk Steel PJSC, ranked next with dividends of 148 billion and 121 billion rubles, respectively. Mordashov is subject to US, British and European sanctions, while Lisin has not suffered any major restrictions.
The list also includes Putin’s ally, billionaire Gennady Timchenko, and Tatiana Litvinenko, who acquired a stake in PhosAgro PJSC before US sanctions were imposed on her husband, Vladimir Litvinenko, in 2023.
Vladimir Litvinenko holds the position of rector of the St. Petersburg Mining University, the university from which Putin obtained his doctorate in 1997, and Litvinenko was his campaign manager in St. Petersburg for three elections.
Russia’s economy is adapting to the situation
The United States and its allies imposed sweeping sanctions on Russia in response to its invasion of Ukraine in February 2022, prompting several companies to halt dividends amid uncertainty about a potential economic collapse. But these fears did not materialize as the Russian economy gradually adapted to the new conditions, and exporters found alternative markets.
The Russian economy has rebounded at a remarkable pace after contracting in the year after the war began, and the government has spent heavily to strengthen the defense sector, protecting local companies from the impact of sanctions while providing social support to families.
GDP grew by 5.4% in the first quarter compared to the same period last year. Many commodity exporters have also resumed dividends after reshaping their trading businesses and directing their sales toward markets in China, India and other Global South countries that have not imposed sanctions against Russia over its war on Ukraine.
Many government institutions, such as Gazprom Neft PJSC and Russia’s largest bank, Sberbank PJSC, did not stop paying dividends because they achieved record profits during the war. Last month, Sberbank shareholders approved a record dividend of 752 billion rubles for 2023.
Major challenges facing the Russian economy
However, the Russian economy may face major challenges in the second half of this year and through 2025, which could prompt the government to raise taxes, according to Chris Weaver, CEO of Macro-Advisory. Many business owners “would rather withdraw the money now than risk losing it to taxes next year,” Weaver said.
He also reported that companies are facing increasing difficulties in making payments, which could lead to shortages of industrial components and consumer goods.
This comes after the United States intensified its threats to impose secondary sanctions on banks in countries that Russia considers “friendly.” Last month, the Moscow Stock Exchange was forced to suspend trading in dollars and euros due to US sanctions.
In a related context, the Ministry of Finance last month raised its estimate of the 2024 budget deficit to 2.12 trillion rubles, or the equivalent of 1.1% of GDP, after it was 1.595 trillion rubles. The Bank of Russia may raise the key interest rate by about 2% at the end of this month, in addition to the current 16%, amid a rise in the inflation rate to more than double the target of 4%.
Where can dividends be invested?
Investments in Russian industries jumped by 14.5% year-on-year in the first quarter of the year to reach a record level of about 6 trillion rubles, according to central bank data. However, local opportunities are still limited.
“Business moguls have doubts about making large investments at the present time,” said Weaver of Macro Advisory, especially given the possibility of obtaining high interest rates from Russian banks on ruble deposits, so “the wisest option for most is to wait.” banner.
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