Fitch Publishes 7M14 Russian Banks Datawatch

Thu Aug 21, 2014 7:01am EDT

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(The following statement was released by the rating agency) Link to Fitch Ratings' Report: RUSSIAN BANKS DATAWATCH 7M14 - xls table here MOSCOW, August 21 (Fitch) Fitch Ratings has published the latest edition of the 'Russian Banks Datawatch', a monthly publication of spreadsheets with key data from Russian banks' statutory accounts. The latest issue includes balance sheet figures as of 1 August 2014, as well as changes in July 2014. In addition, charts indicate changes in the last month for Russia's main state-related, privately-owned, foreign-owned and retail banks. Fitch notes the following key developments in July 2014: - Corporate lending increased by a high 2% month-on-month (or by RUB536bn) compared with an already strong 1.4% monthly average for 1H14. However, more than half of July's growth was due to revaluation of foreign currency loans, as the RUB lost about 5% against the dollar. The underlying growth net of the revaluation effect was a moderate 0.8% (about RUB230bn). - Retail lending grew at a moderate pace of 1.7% month-on-month (8.9% in 7M14) or RUB189bn. The retail growth rate had only a minimal impact from FX revaluation due to the negligible share of foreign currency retail loans. Over 70% of the increase was accounted for by state banks. Of specialised retail banks only Sovcombank, OTP and Tinkoff grew in line with the market, while others moderately contracted their loan books. - Customer funding (excluding funds of government entities) increased by RUB332bn in July, of which corporate accounted for RUB111bn and retail RUB221bn. However, net of the foreign currency revaluation effect there was a net outflow of about RUB145bn, which was a combination of a RUB70bn inflow of retail deposits and RUB215bn outflow of corporate funds. - Given the underlying outflow of customer funding all of July's real lending growth was covered by funds attracted from the Central Bank of Russia (up by RUB223bn to RUB5.6trn), regional and federal budgets (up by RUB87bn to RUB624bn) and The Ministry of Finance (up by RUB36bn to RUB656bn). As a result, total government funding reached a new record of RUB7.1trn or 13.7% of total sector liabilities. - Profitability was poor with the sector reporting only RUB37bn of net income (annualised ROE of only about 7%), dampened by FX losses in many cases. The bulk of income was earned by Sberbank (RUB36bn) and Alfa (RUB9bn), while 42 of the sample 100 banks showed losses, including VTB Group (RUB7.8bn loss), Promsvyaz (RUB2.9bn loss) and Credit Bank of Moscow (RUB1.5bn loss). Among major specialised retail banks only OTP had a notable positive RUB1bn net result, Tinkoff and Svyaznoy were marginally above break-even and Russian Standard, Sovcombank, Home Credit, Orient Express and Rencredit were loss-making. - Capitalisaiton remains moderate. As of 1 August, 13 banks from the sample had a total capital ratio (N1, 10% required minimum) below 11%, including four below 10.5%. These were Rencredit (10.2%, a monthly drop of 0.1% due to losses), Moscow Industrial Bank (10.2%, roughly stable), Fondservicebank (10.1%, a drop of 1.1%) and Bank Trust (10.3%, roughly stable). Contact: Anton Lopatin Director +7 495 956 70 96 Fitch Ratings CIS Limited 26 Valovaya Street Moscow 115054 Alexander Danilov Senior Director +7 495 956 24 08 James Watson Managing Director +7 495 956 6657 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com; Julia Belskaya von Tell, Moscow, Tel: +7 495 956 9908, Email: julia.belskayavontell@fitchratings.com. Additional information is available on www.fitchratings.com. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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