Investor Contacts and Regular Meetings Schedule

Bank of Russia RUSSIAN MACRO UPDATE The Central Bank of the Russian Federation 23 FINANCIAL STABILITY Macroprudential policy aimed at Identifying and preventing potential systemic risks Credit activity As the pace of recovery remains inconsistent across lending segments in Russia, credit-to-GDP gap (a difference between the actual credit-to-GDP ratio adjusted to currency revaluation, and the long-run trend) is still estimated as negative. This shows that lending remains below the long-term trend. Retail lending risks Non-collateralised consumer loans grow at a high pace, and surveys among Russian banks show that they plan a higher debt growth rate for 2018. However, as the inflation rate is decreasing, the Bank of Russia key rate and the market interest rates are cut as well. Provided that the credit institutions' funds collected are cheaper, the same effective interest rate will mean a higher credit risk for the borrower. In other words, if the credit risk ratio scale was not adjusted to the new context, the regulations would have automatically become laxer. Therefore, on 23 March 2018 the Bank of Russia Board of Directors agreed upon a draft ordinance providing for an increase in risk weight for consumer credits bearing an FCC of 15 - 25% to be issued after 1 May 2018. Mortgage loans grow at a steady rate, however, borrowers' debt burden remaining at the same level show that the current growth does not present any significant risk to the financial stability. The Bank of Russia aims to prevent the build-up of risks related to loans with a high loan-to-value ratio and secure sustainable development of the mortgage lending segment. Capital adequacy The capital adequacy ratio for the banking sector overall decreased over 12 months from 13.1% to 12.4% as of 1 February 2018. Decision The Bank of Russia keeps the countercyclical capital buffer (CCYB) rate for Russian credit institutions at 0% of risk-weighted assets as of March 29, 2018. Rising risk weights for specific credit requirements results in banks increasing their capital reserves to cover potential losses. Therefore considering the uneven recovery of lending, there is no need for a positive countercyclical buffer for credit institutions yet.

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