Russian banks' profits slumped around 90% to just 203 billion roubles ($2.9 billion) in 2022, the central bank said on Friday, with sweeping Western sanctions on Russia's financial system and an outflow of depositors sorely hampering lenders' prospects.

The West blocked several key Russian banks' access to the international SWIFT payments system soon after Moscow sent tens of thousands of troops into Ukraine 11 months ago, with dominant lenders Sberbank and VTB forced to shutter operations across much of Europe.

Along with other areas of the Russian economy, the sector demonstrated some resilience. The central bank said banks had managed to offset a first-half loss of 1.5 trillion roubles to post a profit by year-end.

"However, not all banks were able to completely recover losses from the beginning of the year, with some players ending the year with significant losses," the central bank said in a report, with 104 unprofitable banks by year-end, down from 130 in the middle of 2022.

A year ago, the central bank had forecast banking sector profits of over 2 trillion roubles last year, following record profits of 2.4 trillion roubles in 2021.

Shunned by the West and pivoting towards ever closer ties with the likes of China and India, Moscow has intensified efforts to reduce exposure to the U.S. dollar and other so-called 'unfriendly' currencies.

Banks' foreign currency loan portfolio shrank by 18.2% in 2022, the central bank said, or by $30.2 billion.

($1 = 69.2500 roubles) (Reporting by Elena Fabrichnaya and Alexander Marrow Editing by Mark Potter)