Page 89 - RusRPTFeb21

end of March. (10% of the portfolio).
For those loans where borrowers will not be able to restore their financial position (according to estimates, 20-30% of restructured loans, or respectively 2-3% of the total loan portfolio), banks will have to gradually create reserves. Taking into account the already created reserves for these loans, the volume of additional provisioning can be up to 2% of the loan portfolio. This is feasible for the sector given the current profitability and capital stock.
8.1.5​ NIMs & CARs
8.1.7 ​Banks specific issues
Russia’s banking sector capital adequacy was 12.7% in December, ​up from 12.1% in 2019 and 12.2 at the start of 2020. This is less than the 20% EM banks typically like to hold and a little uncomfortably close to the 10% mandatory minimum, but the trend is now for CAR to increase and give banks more wiggle room.
Russia’s subsidised mortgages could be prolonged to YE21. Residential price growth is a key criteria.
Interfax, citing its sources, has reported on the meeting with President Vladimir Putin with industry participants about the future of the subsidised mortgage programme. It could be prolonged to YE21, but the initiative is only going to be supported by the CBR if the programme is modified.
Potential updates could require the exclusion of those regions with the most aggressive residential price growth (Moscow, St Petersburg, and the Krasnodar region were mentioned) and would target the social contribution of the programme, alongside smoothing inflation in housing prices.
Beyond 2021, the CBR is only going to support selective subsidised credit measures for housing.
The subsidised mortgage programme, with a 6.5% rate, was introduced on 17 April and last year saw origination of RUB1tn, or over 80% of the primary market and 23% of all new mortgages. The latter set a new record, with a 50% y/y surge and a total value of RUB4.3 trillion.
The original end date of the programme was moved from 1 November 2020 to 1 July 2021, while the total cap was raised 2.1x to RUB1.85 trillion. The programme became the prime driver for the sales of commercial developers and one of the key support initiatives during these turbulent times. In the 4Q20 sales of listed developers, the share of mortgages increased 8-9pp y/y to 44- 74%, while the figures released by PIK and Etalon show a 32% y/y rise
89 ​RUSSIA Country Report​ February 2021 ​ ​www.intellinews.com