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Fitch Publishes 8M16 Russian Banks Datawatch
October 3, 2016 / 10:17 AM / a year ago

Fitch Publishes 8M16 Russian Banks Datawatch

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Russian Banks Datawatch 8M16 - Excel data here MOSCOW/LONDON, October 03 (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 September 2016, as well as changes during August 2016 and since 1 January 2016 - Charts illustrating balance sheet changes in 8M16 for the main state-related, privately owned, foreign-owned and retail banks Fitch notes the following key developments in August 2016: Sector corporate loans nominally decreased by RUB354bn (1%), but after adjusting for 3% rouble appreciation against the US dollar marginally grew by RUB76bn (0.2%). The notable currency adjusted increases were reported by Gazprombank (RUB33bn, 1%), Credit Bank of Moscow (RUB39bn, 5%), Alfa (RUB22bn, 2%) and FC Otkritie (RUB52bn, 2%; net of RUB130bn increase due to merger with Khanty-Mansiysk bank Otkritie (KMBO)). The largest decreases in corporate lending were reported by Sberbank (RUB133bn, -1%) and Sovcombank (RUB24bn, -21%; due to decrease of loans to municipalities). Retail loans grew by RUB89bn (0.8%), adjusted for exchange rate moves, which was mainly accounted for by Sberbank (RUB38bn, 0.9%) and VTB group (RUB31bn, 1.7%). Among retail specialised banks Home Credit, Tinkoff and Rencredit grew by 0.5%-2.5%, Orient Express was stable, while Russian Standard and OTP deleveraged by 1% and 5%, respectively. Customer funding (excluding that from government entities) nominally decreased by RUB299bn (-0.6%), but increased by RUB285bn (0.6%) after adjusting for currency moves, which included growth of RUB121bn (0.5%) of corporate and RUB164bn (0.7%) of retail deposits. The largest increase of corporate funding was at VBRR (RUB78bn, 85%, mostly short tenor), most likely due to placements by a related oil company. Corporate accounts also notably grew at Gazprombank (RUB42bn, 2%) and FC Otkritie (RUB45bn, 6%; net of KMBO consolidation effect), while considerable outflows were reported by VTB (RUB143bn, -3%), Alfa (RUB21bn, -3%), Credit Bank of Moscow (RUB20bn, - 3%) and Unicredit (RUB31bn, -4%). Retail funding growth was relatively even across the sector. State funding nominally decreased by RUB64bn (1%), or RUB37bn after adjusting for currency moves. The latter figure is a net result of RUB278bn repayment to the Central Bank of Russia (CBR) and borrowings of RUB166bn from the Finance Ministry, RUB55bn from regional and federal budgets and RUB21bn from other government entities. VTB was the main borrower from the state in August, raising an extra RUB259bn (comprising RUB112bn borrowing from the CBR and a further RUB195bn from Minfin net of RUB48bn of repayments to regional and federal budgets), which covered the outflow of corporate funding. Gazprombank repaid RUB163bn to the CBR, although it borrowed RUB129bn and RUB20bn from budgets and other government entities, respectively. FC Otkritie repaid RUB121bn to the CBR, of which half was FX repo; its outstanding CBR FX repo funding fell to USD10bn (the majority of the sector's total USD11bn at end-August). The inflow of customer funding was mainly driven by the CBR's rouble issue. In August the CBR issued RUB0.4trn in exchange for foreign currency in government reserve funds (RUB1.2trn has been issued in total since end-2015 and we believe total issuance in 2016 could exceed RUB2trn), which are being used to finance the budget deficit. At the same time, the CBR made two one-week deposit auctions for banks to absorb about RUB0.2trn of excess liquidity. The CBR is also considering other liquidity sterilisation instruments including the issuance of bonds to banks, as the sector's structural liquidity surplus emerges. The sector reported a RUB44bn net profit in August (7% annualised ROAE), while Sberbank's profit was a higher RUB48bn (22%). Significant losses were reported by Alfa (RUB11bn, -5% of end-July equity, largely due to FX revaluation losses), Novikombank (RUB4.3bn, -22%, mainly due to impairment-driven losses), Jugra (RUB5.3bn, -18%) and Globexbank (RUB6.6bn, - 34%, was offset by RUB19.8bn of new capital from its shareholder Vnesheconombank). Among specialised retail banks, Home Credit, Tinkoff, OTP and Rencredit reported monthly profits equal to 3%-6% of end-July equity, Orient Express was slightly below break-even, while Russian Standard had losses equal to 5% of equity. The sampled banks' average capital ratio increased by 20bps-30bps in August due to deflation of FX-denominated risk-weighted assets stemming from rouble appreciation. The average core Tier 1 (N1.1) and Tier 1 (N1.2) ratios were, respectively, 8.4% and 8.7% (required minimums of 4.5% and 6%), and the total capital ratio (N1.0) was 12.5% (minimum 8%). We estimate that at 1 September 2016 capital buffers (excluding potential future profits) of 40 of the sampled banks (excluding already failed and rescued banks, and those not reporting capital ratios) were sufficient to absorb potential losses equal to less than 5% of loans, and five could absorb less than 1%. The five banks are VTB24, Post bank, UBRIR, Novikom (prior to planned capital support and Asian-Pacific. The latest Datawatch is available at or by clicking the link above. 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: Elaine Bailey, London, Tel: +44 203 530 1153, Email:; Julia Belskaya von Tell, Moscow, Tel: +7 495 956 9908, Email: Additional information is available on 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. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. 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