Financial Sector Overview slide image

Financial Sector Overview

Bank of Russia RUSSIAN MACRO UPDATE The Central Bank of the Russian Federation 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 for both corporate and retail lending 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 Unsecured consumer lending continued to grow at a high pace. Outstanding loans increased 25.3% in year-on-year terms in April 2019 to the amount of RUB 7.9tn. The Bank of Russia's Board of Directors has decided to increase add-ons to the risk weights for unsecured consumer loans bearing an effective interest rate of 10-30% by 30bps for loans extended from 1 April 2019. Mortgage loans grow at a steady rate, however, borrowers' debt burden remaining at the same level shows 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, thus the risk weights for such loans issued after 1 January 2019 were raised from 150% to 200%. These measures are aimed at sustainable development of the mortgage lending segment. Capital adequacy The capital adequacy (Basel III N1.0 ratio) for the banking sector remains at comfortable level of 12.1% as of 1 May, 2019. Decision The Bank of Russia's Board of Directors has decided to keep the countercyclical capital buffer (CCB) rate for Russian credit institutions at 0% of risk weighted assets 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. 34
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