Page 57 - RusRPTFeb20

Over 10M19, corporate lending grew about 4% net of exchange-rate effects and excluding January changes from the implementation of IFRS9-like rules.
The Central Bank of Russia (CBR) has been worried by the ballooning retail borrowing​ and has moved to cool the business. Retail lending growth decelerated in October, growing by RUB123bn, or 0.7%, compared with RUB256bn (1.5%) in September.
A few large banks reported higher retail lending growth in October,
namely Sberbank (RUB108bn, 1.5%), Alfa-bank (RUB24bn, 3.9%) and FC Otkritie (RUB16bn, 5.1%).
“Excluding January changes from implementation of IFRS9-like rules, retail loans grew by 15% in 10M19, and this may reach 17% for the whole year, while for 2020 we forecast a slight slowdown to about 15%,” Fitch reports.
Banks continue to mainly rely on the customers’ deposits for funding.
Deposits (excluding state entities' deposits) nominally increased by RUB109bn (0.2%) in October, but net of currency movements by a higher RUB243bn (0.4%), Fitch reported.
Over 10M19, customer funding grew by RUB1.3 trillion (2.5%) adjusted for exchange-rate effects (corporate decreased by 1.1%; retail increased by 5.9%).
Funding from state entities increased by RUB109bn, or 1%, in October
and by RUB2.7 trillion (33%) from the beginning of the year, reaching RUB8.6 trillion (excluding the CBR RUB0.5 trillion subordinated debt provided to Sberbank and RUB1.8 trillion of deposits at the CBR-owned bad bank) or 11% of sector liabilities at end-October.
Some banks that are large borrowers from the Ministry of Finance
(RUB1.7 trillion total sector increase in 10M19) and regional/federal budgets (RUB0.7 trillion) are also placing deposits with the CBR or buying its bonds, suggesting there may be opportunities for arbitrage.
Total liquidity in interest-bearing deposits with the CBR, and banks' investments in short-term CBR notes were about RUB2.5 trillion​ at end-October, or about 3% of sector assets, down from RUB3.1 trillion at end-September.
Foreign currency liquidity was sound with liquid foreign currency assets estimated at about 45% of foreign currency customer accounts at end-October.
Ruble interest rates decreased by 35bp-45bp in October​ judging by Mosprime rates for one week to six months, which was due to generally healthy liquidity and the CBR's key rate cuts of 25bp in September and a further 50bp to 6.5% in late October.
57​ RUSSIA Country Report​ February 2020 ​ ​www.intellinews.com