Page 66 - RUSRptSept18

8.1.5 NIMs & CARs
Excluding banks under CBR rehabilitation, the average capital ratios for the sampled banks (Core Tier 1 9.8%, Tier 1 10.4% and Total Capital 13.8% at end-June) decreased by 50bp-60bp during the month due to RUB359bn dividend payments in June (mainly RUB271bn by Sberbank and RUB74bn by VTB).
Moody’s preliminary analysis suggests that a $/RUB rate above 70 (currently 66) could be challenging for few larger banks, while above 80 could pose a problem for a wider sector, but we think that in such a scenario the CBR might provide forbearance on regulatory capital calculations, as it did in 2014.
All nine systemically important banks (excluding the rescued Otkriite and Promsvyaz) 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%). After June's dividend payment VTB had rather tight standalone Tier 1 and Total Capital ratios of 9.1% and 11%, respectively.
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 breached the required buffers. These were Moscow Industrial Bank, Absolut, UBRIR and SKB. Absolut is expecting a RUB6bn equity injection (3% of IFRS RWAs) from Non-State Pension Fund Blagosostoyanie in August 2018 (the issue has already been registered) and additional support by end-2018, while SKB would have complied with buffers if profit for 1H18 was included in core capital (currently accounted as non-audited profit in Tier 2 capital). 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 anticipated RUB23bn recap.
66 RUSSIA Country Report September 2018 www.intellinews.com