Page 77 - RusRPTDec23

8.1.5 Liquidity, NIMs & CARs
LIQUIDITY: Against the backdrop of active lending, the volume of ruble liquidity decreased by 2.5%, amounting to a reduction of 0.4 trillion rubles.
The total volume of ruble liquid assets, denoted as G, reached approximately 15.3 trillion rubles. However, the coverage level of all client funds, represented as H, remains below the comfortable 20%, standing at 18.6%, which is a decrease of 0.6 percentage points from 19.2% in September. The coverage level of individual client funds decreased to 41%, down from 43% in September.
Due to the reduction in liquid assets, the proportion of banks with coverage of client funds below 20% increased slightly from 76% to 80%. The amount of liquid assets required to raise the coverage to 20% also increased to 6.0 trillion rubles from 5.2 trillion rubles. Currently, this does not pose risks to financial stability because these banks can attract the necessary amount by pledging non-market assets, denoted as F. In total, the banking sector can additionally attract 9.3 trillion rubles, which is 11% of client funds.
The Bank of Russia believes that credit institutions should reduce liquidity loss risks by increasing liquid assets and improving the structure of raised funds. Therefore, they plan to phase out the relaxation measures related to the Net Stable Funding Ratio (NSFR).
USD LIQUIDITY: The reserve of foreign currency liquidity has decreased to 51.4 billion J from 53.3 billion US dollars due to a reduction in foreign currency client funds. This reduction mainly occurred in cash currency holdings and balances in accounts with non-resident banks.
Additionally, the coverage of client funds has slightly decreased to approximately 53.5% from 56%, while the coverage of foreign currency obligations, denoted as K, remains at 29%.
CAPITAL: The sector's balance capital increased by 268 billion rubles, reaching 13.8 trillion rubles, primarily due to profit (256 billion rubles).
• According to preliminary data, in October, the indicator of total capital adequacy (N1.0) remained stable at 12.02%, driven by the growth in average risk-weighted assets (AVR) (+2.5%), which was nearly at the same level as capital growth (+2.2%).
• The growth in AVR was mainly driven by the expansion of the loan portfolio and a significant increase in macro-additions (+37%) for mortgage loans and unsecured personal loans (NPS). The increase in macro-additions for mortgages was a result of the introduction of additional risk coefficients from October 1, 2023, primarily for loans with high PDN (Probability of Default) and low down payments for housing under construction (DDU). Macro-additions for NPS continued to rise at a high rate following the increase in additional risk coefficients for unsecured consumer loans from September 1, 2023. The regulatory capital increased in October primarily due to monthly profit.
77 RUSSIA Country Report December 2023 www.intellinews.com