Page 95 - RusRPTJun21

The sector's balance sheet capital in April grew by RUB230bn , to RUB11.1 trillion. In addition to earned profit, capital growth was also influenced by additional capitalization by RUB30bn at one large bank.
Total capital adequacy ratio increased in March (Н1.0) by 0.1 pp, to 12.6%, mainly due to the profit earned by banks and attracting subordinated loans in the amount of about RUB60bn .
The capital stock is RUB6.0 trillion16 (about 10% of the loan portfolio), but take into account that it is unevenly distributed among banks.
8.1.7 Banks specific issues
Sberbank does not see risks and signs of overheating in its consumer lending portfolio, said the head of the bank, German Gref. According to him, now the situation with consumer loans is better than planned. Central Bank reported that the debt burden of Russians is at a historically high level, Kommersant cited the Russian national bank.
Gref claims that so far Sberbank “does not see any signs of risks associated with non-repayment” of loans.
“We are experiencing a fall in the cost of consumer lending risk, and the situation is developing more optimistic than we planned for this year’s business plan. So far, we do not see any signs of a bubble in our portfolio,” Gref said, TASS quoted him as saying.
In March, the Russians took out a record amount of consumer loans – it grew by 16.9% and reached 340.6 billion rubles. According to the credit bureau Equifax, the average loan size also increased – up to 308 thousand rubles. In 2021, market participants are expecting consumer lending to have a smooth recovery as the general situation with economy improves.
Russian banks are looking to capitalize on the ESG investing craze that’s taking over global finance. Sberbank and VTB banks are advocating regulators for a system in which loans that observe environmental, social, and corporate governance (ESG) principles are considered less risky than standard loans. VTB President Andrey Kostin is advocating a risk weight of 50% for green loans compared to the traditional 100% that is applied to ordinary corporate loans. Sberbank is in ongoing discussions with the Russian Central Bank and other relevant agencies about similar proposals. Deputy Chairman of the Board at Sberbank, Alexander Vedyakhin, explains that Sberbank considers ESG oriented loans to be more stable, which in turn reduces the bank’s risk as a lender. Vedyakhin points to the potential for non-ESG oriented businesses to face fines, as well as a more socially conscious market as reasons for the perceived stability in ESG loans. Challenges to the banks’ proposals include choosing criteria for evaluating which loans meet ESG principles, and how to monitor compliance when the loans are issued. In response to the proposals, the Central Bank indicated a preference for using tools like tax incentives towards the goal of making Russia more sustainable.
95 RUSSIA Country Report June 2021 www.intellinews.com