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Fitch Publishes 5M17 Russian Banks Datawatch
July 5, 2017 / 1:43 PM / 5 months ago

Fitch Publishes 5M17 Russian Banks Datawatch

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Russian Banks Datawatch 5M17 - Excel File here MOSCOW, July 05 (Fitch) Fitch Ratings has published the latest edition of the "Russian Banks Datawatch", a monthly publication of spreadsheets with key data from Russian banks' statutory accounts. The publication includes: - Balance sheet numbers as of 1 June 2017, as well as changes during May 2017 and since 1 January 2017 - Charts illustrating balance-sheet changes in 5M17 for the main state-related, privately owned, foreign-owned and retail banks Fitch notes the following key developments in the banking sector in May 2017: Corporate loans nominally decreased by RUB30 billion (0.1%), but after adjusting for a minor rouble appreciation against the dollar grew by RUB62 billion (0.2%). The largest FX-adjusted increases were reported by VTB group (RUB82 billion, 1.4%), Russian Agricultural Bank (Rusag, RUB33 billion, 2.2%), Sberbank of Russia (RUB31 billion, 0.3%), Credit Bank of Moscow (RUB51 billion, 5.4%, but was partly offset by a RUB35 billion decrease of reverse repo exposure in subsidiary SKS-Bank), VBRR and Trust (each by RUB17 billion, 13%), while considerable decreases occurred in National Clearing Centre (RUB50 billion, 8%, all corporate reverse repo), Gazprombank Joint-Stock Company) (RUB43 billion, 1.3%), Promsvyazbank (RUB23 billion, 3.4%) and AO Raiffeisenbank (RUB19 billion, 5.5%). Retail loans grew a moderate RUB76 billion (0.7%), with VTB group achieving a higher 1.5% and accounting for 40% of sector growth. Among the specialised retail banks Tinkoff Bank and Rencredit grew 2%-3%, Home Credit & Finance Bank and Russian Standard were around stable, while Joint Stock Company OTP Bank deleveraged by 1.5%. As the Ministry of Finance (Minfin) did not sell FX reserves in January-May, there was no rouble issuance by the Central Bank of Russia (CBR), but customer funding inflow was still significant in May. Adjusting for rouble appreciation customer accounts (excluding those from government entities) grew RUB576 billion (1.2%), of which RUB516 billion was from corporate and RUB60 billion from retail clients. Large FX-adjusted corporate account inflows occurred in VTB group (RUB185 billion, 3.5%), Sberbank (RUB82 billion, 1.5%), Joint Stock Company Alfa-Bank (Alfa, RUB58 billion, 7%), Credit Bank of Moscow (RUB51 billion, 9%), AO UniCredit Bank (RUB55 billion, 9%), Rosbank (RUB36 billion, 14%) and Moscow Exchange group's National Clearing Centre and National Reserve Depositary (together RUB63 billion). Considerable outflows were seen in Gazprombank (RUB109 billion, 3.8%) and Rusag (RUB49 billion, 4.6%). Retail funding inflow was skewed towards VTB group and Rusag, which managed to attract, respectively, RUB35 billion (1.3%) and RUB25 billion (3.7%), making up the majority of the sector's monthly growth. State funding decreased RUB380 billion after adjusting for currency moves. This was a net result of repayments of RUB424 billion to CBR and RUB85 billion to Minfin and borrowing of RUB129 billion from regional and federal budgets. VTB group made the largest net repayment of RUB318 billion, returning RUB316 billion to CBR and RUB105 billion to Minfin, while borrowing RUB103 billion from regional and federal budgets. A further RUB75 billion was repaid by Alfa, mainly to CBR and MinFin. Gazprombank borrowed RUB68 billion, mainly from regional and federal budgets. Sector liquidity was generally sound (highly liquid assets, including cash, short-term bank placements and unpledged government bonds accounted for 19% of sector assets at end-May), although unevenly distributed. Sberbank and most foreign and large private banks had surplus liquidity as they have repaid the majority of CBR funding and kept RUB0.6 trillion on interest-bearing deposits with CBR. However, VTB group, Gazprombank and Rusag were still reliant on state funding, accounting for 74% of the RUB2.4 trillion still outstanding. Some smaller banks experienced tight liquidity, including Moscow Industrial Bank (6% of highly liquid assets, covering customer accounts by 8%) and Jugra (4%, 5%), which also had limited volumes of unpledged securities. The sector reported a moderate RUB75 billion net profit in May (annualised ROAE of 11%). Sberbank outperformed the sector earning RUB55 billion (22%). Large losses were reported by PJSC Sovcombank (RUB6.6 billion, 13% of end-April equity, mostly reversal of a similar technical gain in April) and Jugra (RUB2.8 billion, 10%, presumably due to creation of extra reserves). Among the specialised retail banks, Russian Standard reported high RUB2.8 billion net income (6% of end-April equity, but the nature of this profit is unclear), Tinkoff earned 4%, Home Credit and Rencredit about 2% and OTP was break-even. The sampled banks' average capital ratios were stable in May as lending growth was compensated by internal capital generation. All 10 systemically important banks complied with capital requirements including buffers (core Tier 1 ratio of 6.1%, Tier 1 ratio of 7.6% and total ratio of 9.6%); however, Promsvyazbank had only a minimal cushion with a Tier 1 ratio of 7.7%. Non-systemically important banks' requirements (including buffers) are slightly lower at 5.75%, 7.25% and 9.25%, respectively. Six of the sampled banks (excluding failed and rescued banks and those not reporting capital ratios) had capital ratios above the minimum capital requirements, but did not meet the regulatory buffers. These are Post Bank, Bank Rossiysky Capital, UBRIR, Moscow Industrial Bank, Orient Express Bank and PJSC Asian Pacific Bank. An inability to meet buffer requirements by the end of the quarter could lead to limitations on dividend payments, but would not represent grounds for a license withdrawal. In addition, Uraltransbank was in breach not only of the buffer but also the minimum Tier 1 capital requirement itself for 18 days in May (reported ratio 4.7% at end-May vs. required minimum of 6%), which according to Russian legislation may result in regulatory intervention. We estimated that at end-5M17 the capital buffers (excluding potential future profits) of 27 of the sampled banks (excluding failed and rescued banks, and those not reporting capital ratios) were sufficient to absorb potential losses equal to less than 5% of loans (based on minimal capital requirements) and five could absorb less than 1%. The latter are Post Bank, SKS-bank, UBRIR, Moscow Industrial and Uraltransbank. The latest Datawatch is available at www.fitchratings.com or by clicking the above link. Contact: Anton Lopatin Director +7 495 956 70 96 Fitch Ratings CIS Limited 26 Valovaya Street Moscow 115054 Ruslan Bulatov Associate Director +7 495 956 99 82 Alexander Danilov Senior Director +7 495 956 24 08 James Watson Managing Director +7 495 956 6657 Media Relations: Julia Belskaya von Tell, Moscow, Tel: +7 495 956 9908, Email: julia.belskayavontell@fitchratings.com; Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com. Additional information is available on www.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. 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