OREANDA-NEWS. October 1, 2009. The Russian banking sector will end FY 2009 with a profit, said CBR Chairman Sergey Ignatiev who expects some banks which offer unreasonably high interest rates on private deposits to face problems in the coming years. “I think so”, replied Ignatiev when asked whether Russian banks will report profit in FY 2009.

“Although I do not believe this is the most critical issue”. “If banks form adequate reserves in accordance with their documents, this is better than reporting a profit. It is better to have reserves... this is more important than reporting profit once and then having problems to deal with”, CBR’s Chairman said. He expects NPL growth to slow down.

“Bad debts will most likely continue to grow in the coming years, but it will slow down and a lot depends on the situation in the real sector of the economy and on state support mechanisms”. Ignatiev pointed to the state guarantee mechanism, the second tranches of subordinated loans from VEB, which many large banks have yet to receive and discount auto financing. “All these decisions were been adopted long ago, but implemented slower than we’d like”.