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state-owned banks (VTB, Rosselkhozbank, Gazprombank) that are nevertheless supported.
In order for the banking sector to improve on this front—i.e. independently generate capital by increasing profits—it needs growth in healthy, corporate lending. Business, in turn, requires greater demand to increase borrowing. According to ACRA, this that means annual growth of at least 4.5-5%. Despite a significant reduction in rates, corporate demand for borrowed funds is extremely weak. According to Danilov, this year’s modest 5% growth forecast for corporate borrowing is mainly due to the refinancing of external loans and deferred demand from the last economic crisis. Thus, for banks to begin to actively lend and earn more, they will ultimately need more substantial economic growth. As Russia’s current 2018 growth forecast stands around 1.5-2%, a noticeable improvement is unlikely.
2.8 Putin & government’s popularity
President Vladimir Putin remains extremely popular, although this took a hit following the decision to introduce new higher rates for VAT and retirement ages.
However, the public attitude towards the Duma and regional government remain mixed at best. But the majority of Russians believe the country is going in the right direction.
RUSSIA Country Report July 2018 www.intellinews.com