Page 62 - RUSRptSept18

8.1.2 Loans
Corporate loans have begun growing again albeit at a slow pace, up by RUB327bn (0.9%) in July, or by a lower RUB299bn (0.8%) adjusting for a minor ruble appreciation against the dollar.
The largest FX-adjusted increases were reported by VTB group (RUB247bn, 3.9%), Credit Bank of Moscow (RUB39bn, 2.6%, mainly due to reverse repos) and Sberbank (RUB67bn, 0.5%). Considerable decreases were shown by Gazprombank (RUB58bn, 1.6%) and National Clearing Centre (RUB74bn, 6.6%, solely due to reverse repos).
Retail loans net of exchange rate movements grew by RUB248bn (1.9%),
largely driven by state banks, namely Sberbank (RUB119bn, 2.2%) and VTB group (RUB45bn, 1.8%). Of the specialised retail banks, Tinkoff and Rencredit grew by 2%-3%, Home Credit by 1%, Russian Standard was stable and OTP deleveraged by 2% probably due to write-offs or bad loans sales, as the decrease was largely in overdue loans.
The central bank (CBR) has published its July review of banking sector dynamics showing that corporate lending varies widely across the sector.
But bankruptcy rates are dropping, which suggests firms are in a better position to pay off debts -- supported by the better profits earned by companies (see above). However, policy proposals giving state firms legal privileges to dodge sanctions and tax increases will likely disproportionately hit smaller businesses, the second leading growth sector for borrowing.
The most rapidly growing sector of the Russian economy, and the one demonstrating the highest demand for credit, is transport and communications . During the first half of 2018, credit to the sector increased 20.8%, although the CBR does note that the substitution of ruble-denominated debt for foreign currency loans contributed noticeably to the high growth.
The next leader in demand for loans is small- and medium-sized business , a sector that appears to be rebuilding after the 2015-17 recession. In the first half of 2018, credit to SMEs grew 8.8%.
62 RUSSIA Country Report September 2018 www.intellinews.com