Page 66 - bne IntelliNews Russia Country report May 2017

July 1, 2018, but includes a longer transition for pension payments. Under the amendments, all banks must be able to accommodate Mir charge cards in e.g. their automatic tellers, and all businesses with net sales of more than 40 million rubles (about €650,000) must accept Mir cards. The project to create a national payments system with payment cards was given a boost in spring 2014 after international sanctions were imposed on some Russian banks. The first Mir cards were introduced at the end of 2015. The CBR is currently the sole owner of the company administering the national payments system and Mir cards. The law specifies that the CBR must maintain a majority stake in the company. Over 70 Russian banks now issue Mir cards, and over 5 million Mir cards have already been issued. The use of Mir cards outside Russia remains limited. Currently Russian banks issue co-badging cards only with two foreign systems (Maestro and JCB), but Mir has announced it has reached deals with American Express and UnionPay, and is in talks with other majors such as Visa and Mastercard.
The Russian parliament is working on new legislation that is expected to crack down on microlenders charging enormous interest rates of up to 600% a year, Kommersant reported on May 31. The move was apparently triggered by comments made by President Vladimir Putin in April condemning dishonest microlenders. "Among lenders are those which deliberately mislead people," Putin said in a speech. "As a result, the majority of borrowers almost inevitably end up in debt." Under the regulations currently being prepared, the maximum interest rate microlenders could charge will be limited to 150% a year, which would drive lenders that offer loans "until payday" from the market, Kommersant reported. The new legislation is expected to come into effect by the end of 2017. According to the Central Bank of Russia (CBR), small, short-term loans amounted to RUB22bn (€349mn) in late September 2016, or 30% of all loans extended to private individuals.
8.1.7 Bank news
More than 40% of all loans issued by state-run lender VEB are toxic , Vedomosti reported on May 30, based on its analysis of the bank's portfolio. According to the report, VEB categorises 40% of the RUB2.2 trillion (€34.8bn) in issued loans as problematic. However, some of the loans are guaranteed by the Russian government. Specifically, RUB547bn worth of loans related to Ukraine are guaranteed. These were used to finance the acquisition by Russian investors of a controlling stake in the Industrial Union of Donbas. VEB has in the past been used to finance political projects by the Russian government and the lender faced difficulties in 2015 when it was hit by sanctions slapped on Russia over Crimea and Ukraine. In late 2015, the government issued a bailout package of RUB150bn to VEB. Vedomosti quoted a senior government official as saying that although the government sees a large role for VEB in project financing, the lender still has to get rid of previously accumulated problems.
Sberbank reports mixed 1Q17 IFRS results. The bank earned RUB167bn net income (+42% y/y), which is slightly above consensus. This implies annualised RoE at 23.1%, which is very high. Net interest income increased 3.4% y/y to RUB337bn, which was slightly below consensus due to a contracting loan portfolio (-3.4% YtD). F &C income added just 4% y/y to RUB80.4bn, which was well below consensus (RUB85bn) and Sberbank's own guidance (double-digit growth for the full year). There are a few reasons for the
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