Page 67 - RusRPTFeb22

101bn rubles (-3.3%), as certain large loans were written off against provisions. In the retail portfolio, the decrease in overdue debt was not so significant (-21bn rubles, or 2.0%) and occurred mainly in the segment of unsecured consumer lending due to write-offs and sales of problem loans. In general, for 2021, a noticeable improvement in credit quality can be noted, which is also one of the key factors explaining the high level of profits of banks - reserve expenses were at historically low levels after over-reserving in 2020.
8.1.5 Liquidity, NIMs & CARs
Liquidity: The total volume of ruble liquid assets15 (cash, claims on the Bank of Russia and unpledged market collateral) grew by a significant 1.3 trillion rubles in December, to 17.3 trillion rubles, mainly due to a significant inflow of client funds to banks. This made it possible to close repo deals with the Bank of Russia in the amount of about 0.7 trillion rubles.
The volume of liquidity is at a comfortable level, sufficient to cover 32% of total customer funds in rubles (Fig. 15). About another 4.7 trillion rubles, sufficient to cover 9% of customer funds, banks can borrow from the Bank of Russia secured by non-marketable assets (loans, meeting the requirements of the Bank of Russia).
The volume of liquid assets of credit institutions in foreign currency, on the contrary, decreased to $45bn from $55.9bn (mainly due to a decrease in balances on correspondent accounts with non-resident banks). At the same time, the level of coverage of foreign currency funds of clients17
and FX liabilities fell to 18% and 13% (from 23% and 16%, respectively) (Chart 16), but this is still an adequate margin of safety given the availability of the foreign exchange market, market swaps and the Bank of Russia’s FX swap instrument, as well as a significant volume of international
reserves.
Capital: The balance sheet capital of the sector grew much more significantly than net profit (+201bn rubles, to 12 trillion rubles) due to the additional capitalization of a number of large banks (+61bn rubles), as well as positive revaluation securities valued through other comprehensive income (+36bn rubles), which may be associated with an increase in bond prices, especially in the second half of December (composite the Moscow Exchange bond index rose to 214.7 from 212.4 rubles. on 1 December20). In 2021, the total capital adequacy ratio decreased by 0.21%age points, to 12.26%, due to the outstripping growth of risk-weighted assets (RWA) (+12.3%) compared to with total capital (+10.4.%). The growth of ARR is associated with an active increase in lending (+17.9%), including through loans, to which macro allowances apply. The value of macro allowances increased by 1.6 times, to 8.8 from 6.2% of the ARR (most of it falls on the segment of unsecured consumer lending), including due to the tightening of macroprudential regulation measures. The capital stock increased over 12 months by 6% and
67 RUSSIA Country Report February 2022 www.intellinews.com