Page 113 - RusRPTJul22

8.1.5 Liquidity, NIMs, NLPs & CARs
After recovering somewhat in 2020 the capital adequacy ratio at Russian banks has started to decay in 2021, falling from a 2020 peak of 12.8% in July that year to 11.8% in February this year. Banks are starting to eat into their capital as anecdotal evidence suggest non-performing loans (NLPs) are slowly beginning to rise.
Banks’ capital has been rising steadily in the last three years as Russia emerged from a recession, but in February the tide turned and once the March results arrive the trend of falling capital is likely to accelerate.
The spike in repo deals with the CBR at the end of February also shows clearly the shock to the banking system and also how quickly the CBR dealt with this.
Less than a quarter of Russian borrowers are confident that they will be able to service loans already taken. For banks, this portends a reduction in lending, an increase in bad debts and a share of fee and commission income.
The results of a large survey conducted in April-May by Kept (former KPMG) are published by Kommersant. The main figure is only 23% who are confident in their ability to service current debts. This is about half as much as it would have been without the “special operation,” says Olga Blednova, director of the practice for providing consulting services to companies in the financial sector Kept.
The survey involved not only retail customers of banks, but also small and medium-sized businesses, in total over two thousand respondents. For individuals, the main factor of uncertainty is the potential loss of a job, but almost everyone plans to cut costs (93% of respondents).
The high anxiety of borrowers is not yet visible in the sector's summary statistics. Thus, according to the Central Bank, as of April 1, loans overdue by 90 or more days exceeded RUB1 trillion, but in percentage terms this is only 4.1% of the banks' portfolio and less than last September (4.3%). Sberbank told the publication that the share of loans overdue by a day or more is only 1.5%, and “no problems” are visible in terms of corporate clients.
The situation is smoothed out by credit holidays and restructuring, without which bad debts in April-May could grow by 15%, Kommersant quotes independent expert Andrei Barkhota. “This means that during this period at least every seventh borrower has lost the ability to service their loans,” the expert explains. He estimates the growth of bad loans, excluding restructuring and vacations, by the end of the year at 25-30%.
113 RUSSIA Country Report October 2020 www.intellinews.com