Page 80 - RusRPTDec23

portfolio of Sberbank grew by 2.7% in October with the bank issuing 779bn rubles of loans to individuals. The corporate loan portfolio gained 0.9% in the month to 22.9 trillion rubles. The deposits of individuals with Sberbank rose by 1.2% on the month and 16.3% since the year start to 21.2 trillion rubles in September, while corporate deposits increased by 3.4% on the month and by 20.8% since January 1 to 10.5 trillion rubles.
8.1.8 Bank news
JPMorgan quadruples assets in Russia despite quit claims. JPMorgan's Russian arm has seen its assets grow sharply since it announced it was winding down operations in the country back in March 2022. According to the company's filings, the lender's assets increased by 48% to more than 203bn rubles in the first nine months of 2023, making it the first in terms of assets among foreign investment banks in Russia. Given the significant growth recorded in the previous year as well, the bank's assets as a whole more than quadrupled despite the planned exit. About 80% of JPMorgan's assets are on classified accounting ledgers, which in Russia can be kept undisclosed.
8.2 Central Bank policy rate
The Central Bank of Russia (CBR) implemented a substantial rate hike of 200bp at the end of October, hiking the key rate to 15% in an effort to combat escalating inflation.
The size of the hike caught analysts out who were largely expecting a 100bp hike. The CBR explained its move by citing a substantial rise in current inflationary pressures, surpassing the bank's own projections. As of October 23, annual inflation stood at 6.6%, a notable uptick from September's 6%.
The Russian economy faces a situation where increasing demand contrasts with constrained supply, leading to accelerated price growth. Labour shortages further exacerbate the situation, with unemployment in Russia hitting historic lows. The CBR pointed out that steadily rising domestic demand has begun to outstrip the capacity for expanding goods production and service provision, thanks to the constraints on the economy caused by the war in Ukraine.
The government's budget has played a significant role in the rate hike decision. As Russia allocates more resources to its conflict with Ukraine, surging government expenditure has resulted in an overheating economy. Over the past year, Russia's defence budget has more than tripled. Western sanctions have also impacted the economy by depreciating the value of the ruble.
These factors, among others, have led to a heightened inflation forecast for the
80 RUSSIA Country Report December 2023 www.intellinews.com