Fitch: CIS Banking Sectors to Remain Under Pressure
OREANDA-NEWS. The 2016 outlooks for banking sectors in Russia and most other countries of the Commonwealth of Independent States (CIS) are negative, Fitch Ratings says. This reflects the agency's view that lenders' financial metrics are likely to weaken further, as slower economies, weaker currencies and higher interest rates continue to hit asset quality, profitability and capital.
However, we forecast at least moderate positive economic growth across most of the region in 2016, which limits downside risks. Capital cushions are also significant in some markets and banks, providing meaningful buffers to absorb larger loan losses.
The Rating Outlooks across most regional banking sectors are Stable, reflecting low rating levels - which already largely capture the downside risks to banks' financial metrics - and Stable Outlooks on the majority of sovereign ratings. The Negative Rating Outlook on the Russian banking sector reflects the high proportion of bank ratings linked to the Russian sovereign (BBB-/Negative) and the higher level of bank ratings, as reflected in the sector's 'bb' banking system indicator.
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