Banks can increase lending to the economy: the data for the 2019

Banking sector assets grew 2019 5.2%, mainly due to the increase of the credit portfolio, reported in the information-analytical material “On the development of the banking sector of the Russian Federation in 2019”.

The growth of retail lending for the year amounted to 18.6% against 22.8% in 2018, with a marked inhibition occurred for the last four months. The decrease in growth rate was observed in the segment of unsecured consumer loans (due to the use by the Bank of Russia regulatory measures to curb this segment) and mortgage loans (partly of a technical nature associated with the conduct of securitization transactions). The quality of retail loans while not alarming, although the growth of unsecured loans is happening in the context of continued smooth increase of the debt burden.

Corporate loans grew almost in November and December, largely influenced by seasonal factors. And overall, in 2019 the increase in corporate lending (+4,5%) was slightly lower than in 2018 (+5,8%), due to weak demand from companies, including by reason of the active involvement of bond loans.

The inflow of individuals ‘ deposits in December under the influence of seasonal factors, amounted to +4.0% while total inflows in 2019 amounted to 10.1%, which is significantly higher than in 2018 (+6,5%), despite a significant reduction in Deposit rates.

The December increase in deposits and loans associations was the highest in 2019 (+3,1%) exclusively under the influence of seasonal factors. In General over the past year the volume of deposits and funds on accounts of organizations increased by 4.4%.

Despite a slight decrease in December has maintained the high level of structural surplus liquidity, (2.8 trillion rubles). In addition, banks have a large volume of market collateral, the security of which it is possible to obtain additional refinancing if necessary. Reserves foreign currency liquidity (about 43 billion U.S. dollars on January 1, 2020) is also quite comfortable.

In December, pre-tax profit of the banking sector amounted to 166 billion rubles (net profit of 129 billion rubles). By the end of 2019, banks have earned RUB 2.0 trillion before taxes, net profit of 1.7 trillion rubles (+73% by 2018). However, excluding technical income from the implementation of IFRS 9 and the result of banks managing PCBS, net profit declined slightly – to 1.3 trillion roubles (from 1.5 trillion rubles in 2018).

Regulatory capital increased by 5.5%, as assets under risk grew more slowly than retained earnings. The current stock of capital enables us to expand lending to more than 20 trillion rubles. In addition, the introduction from 1 January 2020, a new approach to credit risk assessment, involving the allocation of categories of borrowers with lower risk factors (as part of the requirements to subjects of small and average business, the borrowers are investment grade), will help to free up Bank capital and provide additional opportunities for lending.

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28 Jan 2020