Page 95 - RusRPTNov23

8.1.4 NPLs
NPLS: in August, amidst active lending growth, the proportion of problem loans decreased across most segments. More detailed information for August can be found in a similar report for the previous month.
In August, the volume of loan restructuring for corporate companies nearly doubled, reaching 764 billion rubles, up from 396 billion rubles in July. Almost 70% of the total volume of restructuring was attributed to a few major companies in the oil and gas and mining and metallurgical industries. Approximately half of the restructuring cases were related to changes in interest payment schedules.
8.1.5 Liquidity, NIMs & CARs
LIQUIDITY: The volume of ruble liquidity has experienced a reduction of 7.1%, equivalent to 1.2 trillion rubles. This decline is primarily attributed to the decrease in funds held at the Central Bank of Russia, which contracted by 1 trillion rubles. This phenomenon occurred against the backdrop of an expansion in lending activities and a moderate influx of customer deposits.
The total ruble liquidity available in the banking sector has reached approximately 15.7 trillion rubles. This sum is sufficient to cover 19% of all customer funds and 43% of individual customer funds held in rubles. However, it's important to note that the coverage ratio of customer funds has noticeably declined since the beginning of the year, decreasing by 6.6 percentage points from 26% on January 1, 2023. This decline is largely attributed to banks prioritizing the maintenance of credit growth over the creation of an additional liquidity buffer.
Additionally, banks have the capacity to attract another 9.9 trillion rubles (12% of customer funds) from the Central Bank of Russia, collateralized by non-market assets. Consequently, the available sources of ruble liquidity cover approximately 31% of customer funds in rubles, as compared to 39% at the beginning of the year.
However, it's worth highlighting that the distribution of liquidity reserves among banks is uneven. Some institutions have coverage ratios for customer funds in Very Liquid Assets (VLA) below 20%. We believe that banks should manage liquidity risk by increasing their VLA holdings, improving the structure of attracted funds, and gradually moving away from a stance of relaxation in this regard.
In September, the reserve of foreign currency liquidity saw a slight increase,
reaching 53.3bn US dollars, up from the previous 53.1bn US dollars. This level
of liquidity is adequate to cover approximately 56% of customer funds and
29% of foreign currency obligations, maintaining a similar ratio to that observed
in August when it stood at 55% and 29% respectively.
95 RUSSIA Country Report November 2023 www.intellinews.com