Page 65 - RUSRptOct18

8.1.4 NPLs
8.1.5 NIMs & CARs
The share of overdue amounts improved slightly m/m and was down 37bp y/y in retail, but up 20bp y/y in the corporate segment. The coverage ratio stayed solid at 169% vs. 153% in August 2017.
Excluding banks under CBR rehabilitation, the sampled banks' Core Tier 1 and Tier 1 average capital ratios of, respectively, 9.6% and 10.2% at end-7M18 decreased by 20bp, as asset growth was not compensated by earnings due to interim profits being excluded from Tier 1 capital until audited, while some banks also declared dividends (RUB37bn for the whole sector, of which RUB21bn by Gazprombank). The Total Capital ratio for the sector was stable at 13.8%.
All nine systemically important banks (excluding Otkriite and Promsvyaz, which are under CBR rehabilitation) had capital ratios above the minimum requirement including conservation and systemic importance buffers (Core Tier 1 ratio of 7.025%, Tier 1 ratio of 8.525% and Total Capital ratio of 10.525%).
Non-systemically important banks' requirements including buffers are lower (Core Tier 1 ratio of 6.375%, Tier 1 ratio of 7.875% and Total Capital ratio of 9.875%). Four sampled non-systemic banks (excluding failed lenders and those not reporting capital ratios) had capital ratios above the required minimums, but below the buffers. These were Moscow Industrial Bank, Absolut, UBRIR and SKB. Absolut received RUB6bn of new capital from shareholders in August (about 3% of risk-weighted assets (RWAs)) and SKB's shareholders also approved a RUB11.5bn (about 10% of RWAs) increase of Core Tier 1 capital in September that may be in the form of subordinated debt conversion, which should allow both banks to comply with buffer requirements. An inability to meet buffer requirements on a consolidated level by the end of the quarter could lead to limitations on dividend payments, but would not represent grounds for a licence withdrawal.
Uraltransbank and Roscap remained in breach not only of the buffers but also of all three minimum capital ratios, which could result in regulatory intervention. Roscap is still under rehabilitation procedures and is likely to restore its capital ratios after an a recap expected by end-2018.
8.1.7 Banks specific issues
The Central Bank of Russia (CBR) wants a law to oblige banks to renegotiate mortgage payments if the borrower should lose their job , Vedomosti reported on September 6. CBR Chairman Elvira Nabiullina said that the regulator is discussing "the right to restructure the loan in case of loss of work, perhaps once in a lifetime" as applied to mortgage borrowers. "There are difficulties connected with the impossibility for a borrower who finds himself in a difficult life situation to restructure a mortgage loan for the time necessary for him to restore solvency, for example, to find a new job or recover," the CBR press service quoted her saying. "Protection of the interests of the creditor can be ensured by establishing a limited number of cases in, which the borrower has the right to restructure," the press service noted.
65 RUSSIA Country Report October 2018 www.intellinews.com