Page 79 - RusRPTOct21

unpledged government bonds) representing about 20% of sector assets at end-7M21 and covering customer accounts 27%.
Capital: The sector'salance sheet capital grewy RUB233bn to RUB11.5 trillion in August, which is slightly lower than the earned profit due to the negative revaluation of securities valued through other comprehensive income (down RUB18bn).
The aggregate capital adequacy ratio (Н1.0) in July decreased 0.2 p.p., to 12.4%, due to the outstripping growth of assets weighted by the level of risk (AVR) (up 2.3%), compared to the amount of total capital (up1.1%).
Acceleration of the AVR has caused the growth of the corporate loan portfolio, as well as the increase from July 1 of macro-prudential premiums to the risk ratios for consumer loans to pre-pandemic values, estimated as 0.3 percentage points of the increase in AVR.
Since July 31, 2021, some majoranks have been using an approach based on internal ratings (IRR) in terms of credit requirements to legal entities in order to calculate the ratios capital adequacy. The total number of banks that have received permission from the bank of Russia for the use of IRP has reached three.
Sector average common equity Tier 1 and Tier 1 capital ratios (excluding theadank, whose Tier 1 capital was negative RUB1.4 trillion at end-7M21) fell 30bp in July due to dividend payments and lending growth. The average Total capital ratio decreased a smaller 10bp, as unaudited profits are included in Tier 2 capital. The sector’s average core Tier 1 ratio was 10.5%, the Tier 1 was 11.6%, and the Total capital ratio 14.1% at end-7M21.
Banking groups need to comply with capitaluffers on a consolidated basis at the end of each quarter. Ten systemically important banks (SIBs) complied with the minimum requirements, including offers, at end-1H21, while Promsvyazbank did not disclose ratios. These requirements were 8% for core Tier 1, 9.5% for Tier 1 and 11.5% for Total capital. Three SIBs had modest cushions on some of their consolidated capital ratios. VTB had low cushions for all three consolidated ratios, with a total capital ratio of 12.4%, a Tier 1 of 10.2% and core Tier 1 of 8.5%. Rusag had tight core Tier 1 and Tier 1 ratios (8.4% and 9.9% respectively). Sovcombank had a thin cushion in respect to all three ratios with a core Tier 1 of 8.5%, a Tier 1 of 10.4% and a Total capital of 12.5%.
8.1.7 Banks specific issues
The rising debt burden of citizens is a major concern for the Central Bank of Russia (CBR). The NKR rating agency estimates that consumer loans in Russia will grow about 20% to over RUB11.5 trillion ($157.6illion) in 2021. According to data from the CBR, from January-August 2021, the consumer loan portfolio increased 14%,MB Russia reports.
79 RUSSIA Country Report October 2021 www.intellinews.com