Page 130 - RusRPTApr23

the banking sector one of the most painful were the SWIFT sanctions that were imposed only days later that sent a shock throughout the financial system.
On a cumulative basis, it took all year for banks to make back the money they had lost in the first six months of the war, but the sector ended December with a small cumulative profit for the whole year of RUB203bn ($2.6bn)(chart).
But EkspertRA warns that up to RUB700bn of bad loans taken out by borrowers in a difficult financial situation are not accounted for in the official data by the Central Bank of Russia (CBR). Out of that 80% are corporate loans. The report by EksperRA notes a difference in the definition of provisions under IFRS and RAS, which could have led to a portion of bad loans being not backed up by adequate provisions.
CBR previously said that loans under the restructuring for retail clients amounted to RUB456bn at the end of 2022, to RUB1.2 trillion for SMEs, and RUB9.8 trillion for corporate lenders.
Analysts surveyed by RBC believe that the margin of capital safety for the banking sector is high, given RUB2.75 trillion in provisions made in 2022, net aggregate profit posted for the sector, and up to RUB2 trillion in total profit anticipated in 2023.
Data for February is not yet available, but in January the share of problem loans remained virtually unchanged compared to December 2022 (in corporate lending remained at the same level 6.5%, in retail increased by 0.1 percentage points, up to 5.2%).
In unsecured consumer lending, the share problem loans in January increased slightly (up to 8.9 from 8.7%), while in the mortgage portfolio the indicator is still remains at a minimum level (0.7%).
Maintaining a stable level of credit indicators quality contributed to temporary regulatory easing, and restructuring.
At the beginning of February, problem corporate loans were covered by individual reserves by 75%, and by general - by 113%, problem retail loans - by 91 and 128% respectively.
Data for February will be available later, while the balance it can be seen that in February there was a significant increase arrears on corporate loans (+RUB62bn rubles, +2.1%). This is due to the delay individual borrowers, which may slightly worsen the performance credit quality of the corporate portfolio. At the same time, according to retail loans, overdue debt increased slightly (+RUB12bn rubles, +1.0%).
Overdue debt last year was not a problem. The share of overdue debt in the corporate loan portfolio in 2022 significantly decreased, while in the retail loan portfolio it slightly increased. So, if in January 2022 overdue debt accounted for 5.6% in the structure of the corporate loan portfolio, in December its share was only 4.9%. The last time the share of overdue loans to legal entities was at
130 RUSSIA Country Report Russia April 2023 www.intellinews.com