Page 117 - RusRPTJul24

The consistent levels of problematic loans in both corporate and retail segments reflect ongoing efforts to address credit risks and improve financial health across sectors. As new data becomes available, further insights into these trends will help inform future economic strategies and regulatory measures.
8.1.5 Liquidity, NIMs & CARs
LIQUIDITY: The structural liquidity situation in Russian banks has not improved, as banks continue to expand lending while their liquid assets have slightly decreased. Some banks still rely heavily on funding secured by non-market assets from the Central Bank of Russia. Starting from July 1, 2024, the threshold for fulfilling the Liquidity Coverage Ratio (LCR) with own funds will increase to 50% from 40%, with the remainder being met through other sources. To improve their LCR, banks are seeking to extend the maturity of attracted funds and replace secured funding with deposit attraction.
Ruble Liquid Assets Decline
Ruble liquid assets (cash, claims to the Central Bank of Russia, and unencumbered market collateral) in the banking sector decreased by 0.6 trillion rubles (-2.9%) to 20.7 trillion rubles.
Client Funds Coverage
Despite the overall sector maintaining a client funds coverage level close to a comfortable 20% (21.8% in May, down from 22.3% in April), the situation is heterogeneous across banks. The proportion of banks (by assets) with client funds coverage by liquid assets below 20% increased to 74% from approximately 61% in April. Additionally, the share of banks where the total sum of liquid assets and available non-market collateral is less than 20% of client funds also grew, reaching a substantial 20% as of May 1, 2024, up from 12%.
The persistent expansion of lending and the slight decline in liquid assets highlight ongoing liquidity management challenges within the banking sector. The upcoming regulatory changes and banks' strategies to meet these requirements reflect the sector's efforts to navigate through the current liquidity landscape.
CAPITAL: Despite earning a profit of 255 billion rubles in May, the balance sheet capital of the Russian banking sector experienced a slight decrease of 9 billion rubles (-0.1%). This was mainly due to a significant negative revaluation of securities through other comprehensive income (-219 billion rubles) caused by the ongoing rise in long-term bond yields. The average monthly yields of federal loan bonds (OFZ) increased by 120-170 basis points in May, significantly higher than in April. Additionally, a substantial amount of dividends (96 billion rubles) was paid out. Meanwhile, several banks were recapitalised, raising a total of 31 billion rubles, primarily through additional share issuance.
117 RUSSIA Country Report July 2024 www.intellinews.com