RIA NOVOSTI. Assets at Russian banks will rise 2% to nearly Rub 81.95 tln in 2017, Analytical Credit Rating Agency (ACRA) said in a research note.
"The banking system of Russia will resume growth in 2017. After a record decline last year (this decline was last recorded in 1998) banking assets will grow 2% this year. Faster growth will be seen in retail lending, in particular, mortgage lending," said the note.
Experts believe that the share of bad debt in 2017 will remain fairly high, at least 14% (15% last year). Meanwhile, as ACRA thinks, retail deposits will increase by 9%, and corporate deposits will jump 12%. Growth will be driven by the Bank of Russia's policy of encouraging saving and restoration of economic activity after weak performance in 2016, analysts are confident.
The economy will gradually shift towards recovery amid stabilization in the financial performance of banks. Competition for liabilities, coupled with falling interest rates on loans, will put pressure on net margin, and rates of return at Russian financial institutions will remain relatively low (with ROAA no higher than 1.5%).
In 2016, the Russian banking system's net profit rose sharply to 1.1% against the banking sector's assets (0.4% in 2015). However, net of Sberbank's net profit rates of return came in at 0.7% which "reflects the real state of affairs at most Russian banks", ACRA noted.
According to the agency's data, net profit rose on the back of one-off drawdown of provisions against possible corporate loan losses that the country's biggest banks carried out in December 2016. Excluding this factor, rates of return on assets would have been 0.8% and net profit in the banking sector would have been around Rub 654 bln (meanwhile in December the banking system would have posted losses). By end 2016 capital adequacy would have decreased from 10.8% to 10.4%.
Tighter regulation and supervision on the part of the Bank of Russia will contribute to toughening operating conditions in the banking market. In particular, ACRA expects the number of lending institutions to decline and changes in operating terms for small banks because of a shift towards proportional regulation.
