Add to favorite
 
123
Subscribe to our Newsletters Subscribe to our Newsletters Get Daily Updates RSS
russian visa


Moody's Hails Stronger Russian Banks
May 18, 2016 16:45


Photo Credit: Safron Golikov / Kommersant
Russian banks are now stronger than those in most of the other major emerging markets in terms of their market funds ratio, says a new report by Moody's Investors Service.
“Improved funding and liquidity metrics for Russian banks are likely to persist in 2016 as government spending increases money supply and stimulates deposit inflows,” reads the paper.
Moody's report, entitled "Banks -- Russia: Funding profiles boosted by increasing money supply," is available on www.moodys.com. Moody's subscribers can access this report via the link provided at the end of this press release. The rating agency's report is an update to the markets and does not constitute a rating action.
"Russian banks are now stronger than those in most of the other major emerging markets in terms of their market funds ratio, which has improved significantly for rated Russian banks to -8% as of year-end 2015 from 8% as of year-end 2014," says Svetlana Pavlova, an Assistant Vice President at Moody's. "This means that Russian banks have generally become more resilient to refinancing risk, with enough liquid assets to potentially repay all their market funding."
Other key funding metrics for Russia's banking sector have also improved: gross loans/customer deposits ratio was down to 110% as of April 1, 2016, from peak levels of 120% in mid-2014; and the share of Central Bank of Russia (CBR) funding has decreased to 5% as of April 1, 2016 from peak levels of 12% as of year-end 2014.
"These improved funding profiles are driven by strong deposit growth -- 20% in 2015 -- which exceed loan growth -- 8% in 2015 -- and allow banks to reduce reliance on CBR funding," explains Ms. Pavlova.
In 2016, Russian banks' strong funding and liquidity metrics are likely to continue, with deposit growth likely to outpace loan growth again, according to the rating agency.
"Government spending increases money supply and stimulates deposit inflows, while the high cost of risk at 3-4% and high interest rates limit loan growth potential," adds Ms. Pavlova. "As a result, in 2016, deposit growth is likely to again outpace loan growth."
In addition to improving banks' resilience to refinancing risk, Moody's expects the increasing money supply to have a positive impact on funding costs, which are likely to reduce for all banks, as they replace the relatively expensive CBR funding with deposits and lower the deposit interest rates.
Moody's notes, however, that the effects of absorbing additional liquidity differ between large and small institutions. While all groups of banks, in terms of size, have increased the proportion of liquid assets on their balance sheets in the past 12 months in response to deposit inflows, this trend tends to get stronger as banks become smaller. More liquid balance sheets make small and mid-sized and banks less exposed to the potential of deposit runs. For the larger banks, the benefit the additional liquidity flowing into the system mainly takes the form of reduced reliance on the relatively expensive CBR funding.

Nevertheless, while Moody's acknowledges the positive trend in the Russian banking system's funding and liquidity profile, its outlook for the system remains negative, primarily driven by the rating agency's expectation of asset quality deterioration and downward pressure on capital amid the protracted economic downturn. 




Author: Mikhail Vesely

Tags:      

Next Previous

You might also find interesting:

In 2014-2016 Russia Spent 965 US Dollars Per Person To Manage the Risks Of the Devaluation Of the Ruble Criminal Case Against FIFA Moscow's Cap's Blown Away The heroes of Great Patriotic War (partII) Who'll Be Russia's New Coach?









Comment on our site


RSS   twitter   facebook   submit

Bookmark and Share

search on the map
TAGS:
Literary Meetings  Burial Grounds  Russian tourism  Architecture Monuments  Eurasian Economic Space  Russian oligarchs  Sex Pistols  Innovations  Solovki  New Films  Historical Buildings of Moscow  terrorism  Greece  Censorship  education and training  Russian regions  Russian sportsmen  Moscow  Capital Partners  Donald Trump  Exhibitions in Moscow  National University of Science and Technology MISiS  Moscow State University  Buryat Republic  Ufa  Festivals in Moscow  Demi Lovato  meteorite rain  Russian Cinema  Navalny  Old Moscow  rouble  Exhibitions in St. Petersburg  travel to Russia  Mercedes-Benz Fashion Week Russia  Arts and Crafts  Russian business  Victor Borisov-Musatov  Awards  Sheremetyevo Airport  Khabarovsk  Meridians of the Pacific" Film Festival   Moscow Philharmonic Hall  Alyonka chocolate  Kazan night life  Chukotka  Ukraine crisis  Trofim Borisov  St. Petersburg  Shukhov Tower 


Travel Blogs
Top Traveling Sites