S&Ps: Russian banks to start 2013 well-off.

By bne IntelliNews December 5, 2012
Standard &Poors issued a report on Russian banking sector, according to which the agency believes that Russian banks will start the 2013 financial year relatively well-off, although the recovery of the financial indicators is being held back by insufficient capital and limited sources of funding. The sources of funding alternative to deposits are scarce due to limited access to foreign capital markets, and weak domestic market lacking long-term financial resources. Insufficient capital and funding are the main factors limiting the banking sector growth, according to S&Ps. Agency expects the crediting growth to slow down to 18%-20% in 2012 and 2013, as compared to 30% growth in 2011. The banking sector asset quality is likely to remain stable in 2013, however external shocks might stop the improvement of the asset quality and harm profits. Two main risk factors that might lead to negative actions, according to S&Ps are refinancing risks (due to high dependency on short-term liquidity instruments of the Central Bank of Russia) and stronger credit risks (due to rapid growth of unsecured consumer loans coupled with profits insufficient to increase reserves). Previously Moodys expected crediting growth to decline to less than 15% in 2013 due to the weakening of the capital base. First deputy head of CBR Alexei Simanovsky expected crediting growth of 20% in 2013 (15% corporate crediting growth and 25%-30% for retail segment).

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