Page 27 - BELRptOct18

8.0 Financial & capital markets 8.1 Bank sector overview
The financial sector remains a contingency liability to the government
and a potential risk for macroeconomic stability, despite some improvements. Regulatory NPLs (the three riskiest categories) have stabilised, reaching 12.8% of gross credit exposure in 3Q17 due to the improved macroeconomic backdrop leading to lower interest rates and lower exchange rate volatility.
Capitalisation levels have improved somewhat, but remain modest given high credit risks. The large presence of the public sector (65% of assets) creates fiscal risks for the sovereign due to the potential need of further capital injections, execution of guarantees and issuance of securities in exchange of loan transfers.
The portfolio of investment loans of the Development Bank of the Republic of Belarus (DBRB) rose by 12% in January-August 2018 , BelTA reports. In January-August 2018 the volume of the Development Bank's portfolio of investment loans went up by 12% to total BYN4bn as of 1 September. In January-August, the Development Bank issued BYN964.6mn worth of loans for investment purposes. Almost half of the loans (BYN436.7mn) was earmarked to finance infrastructure projects, including to increase the Belavia fleet, to build the second runway at the Minsk National Airport, facilities for the 2nd European Games MINSK 2019 and highways of local importance. More than a third of the loans (BYN347.3mn) were extended to finance the purchase of modern machinery and equipment under Decree No. 146 of the Republic of Belarus as of 2 April 2015. In July 2018 the Development Bank started financing the reconstruction of the bridge over the Pripyat River. This year the DBRB is to issue BYN44.4mn to fund this project.
27 BELARUS Country Report October 2018 www.intellinews.com