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subsidization program was quite effective. Russian banks provided 862,000 mortgage loans in 2016, while in 2017, the number could exceed 1 million, Shuvalov also said. Overdue debt on mortgage loans does not exceed 2.8% of the combined mortgage loan portfolio, and the government is not concerned with this figure, he added.
The share of mortgages in the total portfolio of consumer loans should exceed 40% by the end of 2016 and reach 70% in the medium term, the head of the Russian mortgage analytical centre AHML Michael Goldberg, reports Vedomosti . "This is the average for developed countries. We are absolutely confident in the prospects for the mortgage market in Russia ", Goldberg said at a conference. According to him, the mortgage market has overcome the crisis and continues to grow. It is projected that by the end of 2017 mortgage rates could fall to 11% from the current 12%, and the following year the first time in the history of Russia to be at a level below 10%. The decline in interest rates has been the main driver for the mortgage market in the past year, AHML noted earlier. At the end of 2016 rates were on the level of 12-12.5%, and averaged about 12.6% for the year compared with 13.35% in 2015. The current rate has fallen back to the same level as in 2014. The volume of mortgage loans increased by almost 30% in 2016 y/y, according to AHML, and amounted to RUB1.475 trillion.
Russia’s de facto sovereign wealth fund, the Russian Direct Investment Fund (RDIF), will receive an additional $1bn capital injection in 2017, Reuters reports . The RDIF was set up in 2011 to buy stakes in companies alongside foreign financial and strategic investors and is allowed to invest up to 20% of its capital outside Russia. Technically part of Russia’s de facto development bank Vnesheconombank (VEB), following the near collapse of VEB in 2016 RDIF has been made independent. Under the original scheme the RDIF was supposed to get $2bn a year from VEB and use the funds to attract investment into big Russian projects. The plan was for the RDIF to match foreign investment dollar for dollar, but the hope was as investors get more used to investing in Russia (and made profits) the contribution from the RDIF would fall to something close to one dollar for every ten the foreign partner put in, CEO Kirill Dmitriev told bne IntelliNews at the time the fund was set up. The RDIF in effect was to provide big western investors with a “Krysha,” or “roof,” as the Russians say – political protection from abuse.
8.1.8 Bank news
Russia’s state-owned banking behemoths are going to go head to head this year after VTB Bank announced it would hire 7,000 new employees as part of expansion plans for the newly established post bank t hat will encroach on its sister Sberbank’s traditional domination of retail banking. VTB closed a deal last year to establish a bank on the premises of Russia’s Pochta Rossii, the post office, which has a total of 42,000, about half of which will be turned into banks, giving if about half as many again as Sberbank operates. The post office controls the distribution of some 40% of all pension payments. VTB’s plan is to tap into these payments as well as bring more of RUB1.7 trillion-RUB2.9 trillion ($30bn-$50bn) of “mattress money” into the system. Total individual deposits were RUB24 trillion at the end of January, of which Sberbank held RUB11.4 trillion. Pochta Bank hopes to increase deposits to RUB150bn this year and to RUB1.6 trillion by 2023, according to VTB.
72 RUSSIA Country Report February 2017 www.intellinews.com