Page 85 - RusRPTNov20

increase their own cash reserves to cover potential losses — fearful that instructing them to do so would cause a drop in liquidity across the financial sector.
Instead, the overall loan book of Russian banks’ increased by 9.8% in the first eight months of the year, data from ratings agency Fitch shows.
Analysts say Russia’s banking system is in a much better position than during previous economic crises, thanks to the Central Bank’s massive clean-up of the sector under governor Elvira Nabiullina following the 2014-15 crisis.
The National Ratings Agency estimated the sector will only need to keep around 40% of its $75bn in capital buffers on the balance sheet into 2021 in order to meet minimum regulatory requirements. Current reserves almost match the entire value of loans restructured throughout the crisis, meaning covering even a significant increase in bad debts “will not have a negative impact on the stability of the banking system,” it said.
However, it pointed out that individual banks may not be so well protected. “Capital in the banking sector is unevenly distributed. Therefore, the financial stability of individual credit institutions during 2021-2022 may come under pressure.” State-owned Sberbank, for instance, accounts for 35% of all Russian loans, but holds almost 47% of the sector’s tier 1 capital — a measurement of a bank’s capital reserves and financial strength.
8.1.7 ​Banks specific issues
Russia’s subsidised mortgage programme is to increase 2.4x to RUB1.9 trillion ​providing further support for the primary residential market, VTB Capital (VTBC) said in a note on October 19.
The Ministry of Finance has submitted a draft resolution to the government proposing an additional 354,000 mortgages for RUB1.1tn, on top of the existing subsidised programme. MinFin estimates that RUB800bn and 268,000 mortgages are to be issued by 1 November 2020 (the previous deadline).
“The previous draft resolution of the programme implied that it would be prolonged until YE21, while the overall value was to be increased threefold, to RUB2.8 trillion. On 14 October, the timing was shifted to 1H21, with a value of RUB1.9 trillion,” Marina Kolbina, an analyst with VTBC said in a note.
The subsidised mortgage programme was launched on April 17 as a prime support initiative for the real estate sector during the coronacrisis.
Rates customers have to pay have been brought down to 6.5%, which is half
85 ​RUSSIA Country Report​ November 2020 www.intellinews.com