OREANDA-NEWS. September 28, 2015. 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 issue (available at www.fitchratings.com or by clicking the link above) includes:
- Balance sheet numbers as of 1 September 2015, as well as changes during August 2015 and since 1 January 2015

- Charts illustrating balance sheet changes in 8M15 for the main state-related, privately-owned, foreign-owned and retail banks

Fitch notes the following key developments in August 2015:

-Sector nominal corporate loan growth of RUB1.6trn (4.7%) was almost entirely driven by 12.7% rouble depreciation against the dollar. Net of the currency effect real growth was only RUB59bn (0.2%), which was mainly achieved by Sberbank (RUB54bn, 0.5%), ROST (RUB35bn, 27%, the nature of growth is unclear) and Home Credit (RUB11.5bn, 86%; of this half is exposure to a related party and the remainder are short-term reverse repos with a few Russian financial companies), although this was offset by decreases, most notably in Alfa-bank (RUB25bn, -1.9%), Promsvyazbank (RUB15bn, -1.9%) and Uralsib (RUB10bn, -10%).

-Retail lending growth was flat if adjusted for the FX effect. Among retail banks, lending at Tinkoff and Rencredit grew by 1%, OTP was roughly stable, Svyaznoy, Russian Standard and Home Credit deleveraged by 2%-4% on average, while Orient Express saw its loan book decreasing by 8%, mainly due to the sale of overdue loans.

-Customer funding (excluding that from government entities) nominally increased by RUB2.6trn (6%), but net of FX revaluation growth was a lower RUB523bn (1.1%). The latter figure comprised inflows of both corporate and retail funding of, respectively, RUB478bn (1.9%) and RUB45bn (0.2%). The largest corporate funding inflows were to Sberbank (RUB231bn, 3.7% of end-July balance), VTB Group (RUB145bn, 3%), ING Bank (RUB94bn, 88%) and Promsvayzbank (RUB54bn, 10.6%). At the same time considerable outflows were seen at Gazprombank (RUB124bn, -3.9%) and Rosbank (RUB32bn, -11.3%). Retail deposits continued to grow at state banks (by RUB64bn) and were roughly stable in other sampled banks, but leaked from smaller banks outside of the sample.

-State funding decreased by RUB242bn, net of the FX effect. This included repayments of RUB401bn (mainly rouble-denominated) to the Central Bank of Russia (CBR) and borrowings of RUB154bn from Finance Ministry, while deposits from regional and federal budgets and other government-related entities were almost unchanged. The volume of FX funding from the CBR in banks' publishing regulatory forms decreased by USD1bn to USD31bn, mainly due to a USD0.6bn repayment by VTB.

-The sector reported a RUB49bn net profit in August, but net of RUB23bn of deferred tax asset recognition, the result would have been a lower RUB26bn (annualised ROAE 4.4%). Large losses were recorded by Promsvyazbank (-RUB3.2bn, 4.7% of end-July equity, due to impairment charges), the rescued ROST (-RUB6.6bn) and Mosoblbank (-RUB4bn) - both of which have negative equity, and the troubled Investtorgbank (-RUB5.4bn, 50% of end-July equity). Significant profits were reported by Sberbank - RUB19.6bn, although RUB11.4bn of this was due to a deferred tax gain and by Alfa-Bank - RUB26.2bn, mainly due to FX gains. Of the retail banks, only Tinkoff and OTP were profitable, earning about RUB0.5bn, while losses were reported by Russian Standard (0.3% of end-July equity), Home Credit (1.2%), Rencredit (10.1%; as a result, the bank is on the brink of breaching the minimum Tier 1 ratio) and Svyaznoy (20.9%, core Tier 1 capital ratio decreased to only 2.2%).

- The average total capital ratios (N1 - 14.9% vs. 10% required minimum) and core tier 1 (N1.1 - 10.4% vs 5% required minimum) of the sampled banks (excluding those rescued and those not reporting capital ratios) decreased by 42bps and 16bps, respectively, presumably due mainly to inflation of foreign currency-denominated risk-weighted assets. Sizable capital contributions were received by Gazprombank - RUB126bn (2.7ppts uplift to core Tier 1 capital ratio) under a state recapitalisation programme by way of a preferred share issue acquired by the Deposit Insurance Agency, and by AK Bars Bank - RUB9.8bn (1.4ppts) of new equity from the Republic of Tatarstan-controlled Presidential State Housing Fund.

- Some banks' capital ratios benefit from regulatory forbearance, with the uplift estimated at around 80-100bps. In September, the CBR extended exchange rate forbearance until end-2015 (originally this was planned to expire by end-3Q15), although the favourable USD/RUB rate will be increased to 55 from 45 to bring it closer to the current market rate of around 66. Therefore capital ratios of banks relying on this measure may take a moderate hit of up to 50bps.

- We estimate that current capital buffers (excluding future potential profits) of 56 of the sampled banks (excluding the already failed and bailed-out ones) were sufficient to absorb potential loan losses equal to less than 5% of loans, and 14 could absorb less than 1%. The latter are VTB24, Bank of Moscow, Leto Bank, Globexbank, Roscap, Krayinvest, Zenit, Credit Europe, Orient Express, Rencredit, UBRIR, Novikom, Moscow Industrial Bank and Rosinterbank.

Russian Standard does not report capital ratios, but its capital position is also weak.