Russian banks' assets, capital rise in July

MOSCOW, Sept 1 (Reuters) - Russia's banking sector saw a rise in capital and assets in July, central bank data showed on Tuesday, in a further sign that the worst of the economic crisis is over. But problems in the sector remained, with corporate lending shrinking for a third month despite the government calling on banks to increase financing of the real economy.

The number of loss-making banks also rose, to 180 as of Aug. 1 -- or roughly one in six -- from 119 a month earlier. Their total cumulative loss was 117.6 billion roubles year to date.

Profitable banks made a total of 148.9 billion roubles, leaving the sector in profit on a net basis. Russia has nearly 1,100 banks, but the top five -- led by state-controlled Sberbank SBER03.MM and VTB (VTBR.MM) -- account for over 48 percent of the sector's assets, having seen their share grow during the crisis as people got worried about the possibility of failure of small lenders.

The sector as a whole saw assets rise 0.2 percent in July, while capital grew 1.8 percent, and retail deposits increased by 1.9 percent. However, loans to non-financial organisations were down 0.2 percent, while retail lending shrank 0.4 percent.

Russia's banks have been hard hit by the global credit crunch, a devaluation of the rouble and flight of foreign investors in the second half of 2008, as well as the domestic economy slipping into its first recession in a decade. Bad loans rose again in July, but at a slower pace than previously, the data showed. [ID:nLR695672].

Overdue loans to corporates rose by 12.5 percent in July -- a much slower pace than the 32 percent growth seen in June -- bringing the share of bad loans in a total corporate portfolio to 5.4 percent as of Aug. 1.

Russian banks are struggling with losses as provisions for soured loans consume their profit and capital and the number of loss-makers increased by 50 percent in July versus June 2009. (Writing by Toni Vorobyova and Dmitry Sergeyev; editing by Stephen Nisbet)