Page 165 - RusRPTAug24

8.1.7 Banks specific issues
The State Duma has adopted in the first reading a bill that defines the procedure for regulating the activities of branches of foreign banks in Russia. The document has been published in the Duma database. According to the proposed draft law, Part 1 of Article 2 of the Federal Law “On Banks and Banking Activities” is proposed to be set out in a new form: “The banking system of the Russian Federation includes the Bank of Russia, credit institutions, foreign banks operating on the territory of the Russian Federation through their branches, as well as representative offices of foreign banks.” A foreign bank, in order to operate in Russia, must have a permit for banking activities in its home country for at least three years and a credit rating not lower than the level established by the Central Bank. A foreign bank, through its branch, will not be able to open and maintain bank accounts for legal entities or transfer funds on behalf of legal entities.
Mortgage growth speeds up in June amid expected changes in subsidised programmes. The mortgage portfolio expanded by 3.1% over the month, compared to 1.7% in May, according to preliminary data. The acceleration was associated with borrowers’ desire to raise a mortgage loan before the termination of the Subsidised Mortgage programme and changes in the Family Mortgage programme. Mortgages issued under the subsidised programmes accounted for 80%.
The growth rate of the consumer loan portfolio equalled 2%, which was driven by high consumer activity amid rising incomes. Given higher deposit rates, households’ funds with banks continued to quickly increase, growing by 1.7% over the month. Legal entities’ funds contracted by 0.5% after surging by 2.7% in April—May. The reduction was attributed to dividend payments, among other reasons. Banks’ profit (adjusted for the redistribution of revenues across the banking sector) totalled ₽225bn in June, which is 12% less month-on-month.
Non-preferential mortgage rates for new housing have reached 19.5%
according to Kommersant Daily. Rates have been growing because the Central Bank has kept its key rate high (with the possibility of a further hike at the end of this month) but also because the government has been phasing out preferential mortgage programs, including for families and IT workers. Some banks are currently offering subsidized (but time limited) mortgages, but the terms of these are risky—especially if Russia’s economy is affected by an outside shock or “hangover” effects of its current war-related overheating—and thus the Central Bank may prohibit them to avoid a credit shock. Maintaining the programs while interest rates are growing would put an increasing strain on Russia’s war-focused budget. Without preferential lending, which has led to a construction boom in recent years, the
165 RUSSIA Country Report August 2024 www.intellinews.com