OREANDA-NEWS. Fitch Ratings has published the latest edition of the 'Russian Banks Datawatch', a monthly publication of spreadsheets with key data from Russian banks' statutory accounts. The latest issue includes balance sheet figures as of 1 December 2014, as well as changes in November 2014. In addition, charts indicate changes in the last month for Russia's main state-related, privately-owned, foreign-owned and retail banks.

Fitch notes the following key developments in November 2014 with some commentary extending to December 2014:
- Corporate loans increased by RUB1.5trn (5.1%) in nominal terms in November. However, adjusted for 17.5% rouble depreciation against the US dollar, growth was only 0.2% (RUB62bn), consisting of a RUB264bn drop in foreign currency denominated loans and growth of RUB326bn rouble denominated exposures
- Retail lending increased by a moderate RUB126bn (1.1%) in nominal terms, or RUB74bn (0.6%) adjusted for rouble depreciation. State banks accounted for 66% of November's growth. Among specialised retail banks, OTP, Rencredit and Tinkoff demonstrated positive dynamics (3%, 1.4% and 1.3%, respectively), while Russian Standard, Home Credit, Orient Express, Sovcombank and Svyaznoy moderately deleveraged;
- Customer funding grew by RUB1.8trn (4.9%) in nominal terms, but after adjusting for rouble devaluation there was a moderate RUB419bn outflow (-1.1%), of which RUB302bn was from retail and RUB117bn from corporate (excluding government entities) accounts. Judging by the interim data from some Fitch-rated banks, outflows intensified in the first half of December triggered by the sharp drop in the rouble exchange rate. Banks have increased deposit rates and cut new lending to retain customers and preserve liquidity. The authorities also doubled the limit for insured deposits to RUB1.4m from RUB0.7m to restore customer confidence. The situation has eased somewhat closer to year-end as the rouble somewhat rebounded, but remains potentially volatile;
- Trust Bank (number 32 by assets) failed in December as a result of outflows, but due to its large depositor base will be rescued with the support of the authorities despite the large hole in the balance sheet subsequently identified by the Central Bank of Russia (CBR). FC Otkrytie has been chosen as a new investor and will reportedly get a RUB28bn 6-year loan from the Deposit Insurance Agency (DIA) to manage the bailout. Trust Bank itself will also receive a RUB99bn 10-year stabilisation loan;
- The sovereign continues to be the main source of additional liquidity to the banking system, covering customer funding outflows and financing loan growth. In November, the CBR injected a further RUB586bn and further RUB145bn came from the Ministry of Finance, while government bodies/regional administrations' funding reduced by a moderate RUB59bn. As a result, the share of government financing reached 14.8% of sector liabilities at 1 December, and was an even higher at 18.9% for state-related banks. After the CBR increased the base rate by 6.5pts in December, banks may be less willing to use this source of funding in the longer term, although Fitch are not expecting significantly lower utilisation in the short term due to the risk of deposit outflows;
- The sector reported only RUB28bn net income in November (4.7% annualised ROE, down from 13.3% in 9M14), which to a large extent was due to Sberbank's lower profit (RUB1bn compared with a RUB32bn monthly average for 9M14), affected by the reserving of FX-denominated loans and extra-provisioning of Ukrainian risks. Among the top private banks, only Alfa showed a solid profit. Most retail banks were either loss-making or around break-even;
- Capitalisation is moderate. As of 1 December, 21 banks from the sample had a total capital ratio (N1, 10% required minimum) below 11%, including eight below 10.5%. These were VTB (10.2%, up from 10.1% a month previously thanks to RUB10bn profit), Bank of Moscow (10.2% down from 11% a month previously), AK Bars (10.5% almost unchanged), Uralsib (10.4% down from 10.7% due to loss), Moscow Industrial Bank (10.1%), Fondservisbank (10.2%) ROST-Bank and Kedr (both below 5%). The last two were subsequently put under temporary administration by the CBR with B&N Bank selected as an investor in charge of their financial rehabilitation. The prospect of more banks breaching the ratios in December due to sizable mark-to-market losses on bond portfolios and an upward revaluation of foreign currency risk-weighted assets forced the CBR to introduce considerable regulatory forbearance, which although reducing near-term pressure, will make local accounts less representative and reliable;
- The authorities also announced recapitalisation measures, including RUB400bn of subordinated loans from National Wealth Fund to systemically important banks with at least RUB100bn of equity (major state banks, Alfa, Otkrytie and larger foreign-owned banks would qualify), of which a RUB100bn loan to VTB has already been approved; and up to RUB1trn of non-cash subordinated loans and preference shares via DIA, although it is not yet clear which banks will be eligible for this.