Читать книгу Putin's Russia - Группа авторов - Страница 42

Key macroeconomic indicators of the banking sector in recent years have been significantly affected by the ruble foreign exchange fluctuations, license revocations and reorganisation of credit institutions. Banking sector assets from 2014 to 2018 increased by 72% and amounted to RUB 85 billion rubles (Figure 3). The growth was attributed mainly to the growth in ruble assets rather than assets in foreign currency. The ratio of the banking sector total assets to GDP has declined from a maximum of 99.5% in 2016 to 92.6 in 2018 due to the fast growth of nominal GDP. Banking sector total capital increased by 33% during the years 2014–2018 to RUB 9.4 trillion (10.2% in GDP). The growth of corporate loans (47.3%) outperformed that of loans to individuals (22.3%). Corporate loans reached RUB 30.2 trillion in 2018, while loans to individuals were RUB 12.2 trillion. As for banking sector liabilities, individual household deposits increased by 53.2% (RUB 25.9 trillion) and deposits and funds increased by 47% (RUB 24.8 trillion).

Figure 3:Macroeconomic indicators of the banking sector (billion rubles).

Source: Compiled by the author with data from the Bank of Russia (2019).

The banking sector assets and liabilities structure in 2018 is presented in Table 1. The liabilities structure is balanced and is mainly comprised of household deposits (30.5%), deposits and funds on accounts of non-financial and financial organisations (29.2%), and funds and profits of banks (10.5%). The share of loans, deposits and other funds raised from non-resident banks has shrunk from 3.9% to 1.1% for the years 2014–2018. Russian banks apparently are still facing difficulties in accessing foreign funding sources. The banking sector is attracting financing primarily from domestic sources. The structure of deposits by maturity in 2018 was as follows: long-term deposits (more than 1 year) — 52.0%, short-term deposits — 48% (including, deposits for the period of 181 days–1 year — 25.7%; 91–180 days — 20.6%; 1–90 days — 1.8%). A total of 87.4% of household deposits are in amounts ranging from RUB 100,000 to RUB 1 million. The interest rate on ruble-denominated household deposits for more than one year decreased from 11.7% to 6.4%, 2014–2018.

As for the firm deposits, their structure by maturity has switched from long term (53.1% share in total corporate deposits) to short term (56.5%). Interest rates for both short-term and long-term deposits have declined from 8.0% to 6.6%, respectively. State-controlled banks remain the largest providers of total banking sector liabilities with a 66.5% share in household deposits and 62.0% in firm deposits, followed by private banks with capital of more than RUB 1 billion, and foreign-controlled banks (Table 2).

Table 1:Banking sector assets and liabilities structure in 2018 (%).

Source: Compiled by the author with data from the Bank of Russia (2018). Banking Supervision Report 2017.

Table 2:Share of different groups of banks in deposits and loans as of January 1, 2018 (%).

Note: Firm deposits include deposits and funds on accounts of non-financial and financial organisations (other than credit institutions).

Source: Compiled by author with data from the Bank of Russia (2018). Banking Supervision Report 2017.

The total assets of the banking sector are comprised of loans and other placed funds provided to resident non-financial institutions (30.5%), households (14.3%) and securities (14.5%). Securities are an attractive instrument for many Russian banks and their relatively high share in total banking assets structure is explained by their profitability and relatively low risks, especially considering the fact that about 40% of such instruments are issued by government authorities and 6.5% by the Bank of Russia.

The shares of both corporate and household loans slightly declined during the years 2014–2017. Corporate loans in 2017 were allocated to manufacturing (22.3%), retail estate (17.1%) and wholesale and retail trade (13.9%) (Figure 4). In 2018, the share of manufacturing dropped to 15.1%, while that of wholesale and retail trade increased to 21.9%. Loans to the manufacturing sector were mostly allocated for the production of food and beverages (19.6%) and petroleum products and nuclear materials (18.8%). Thus, the role of banks in providing long-term manufacturing investment crucial for Russia’s modernisation remains limited.

State-controlled banks continued providing the majority of loans to both the individual households (67.3%) and the corporate sectors (69.7%). Weighted-average interest rates on ruble loans declined: long-term interest rates now are 9.4% for non-financial organisations and 10.8% for SMEs, while short-term interest rates are 9.4% and 12.2%, respectively. These interest rates are high particularly for SMEs.

Figure 4:Banking sector’s corporate loans portfolio by sector in 2017 (%).

Source: Compiled by the author with data from the Bank of Russia (2018). Banking Supervision Report 2017.

Overall, individual household loans comprise 14.3% of the total banking assets and 13.2% of GDP. The shares of corporate loans are 35.4% and 32.8%, respectively. Generally, banks loans account only for 11.2% of investments into fixed assets, including 5.4% of investments from foreign banks. Pertinent data on the financing of new fixed capital are provided in Table 3. They show that new fixed capital formation is funded mostly by equity financing (51.3%). The share of debt-financing is 48.7%. Bank loans are traditionally the most important source of long-term finance, but were surpassed by federal and municipal budget funds (16.3%). The subsidiary role of banks in providing long-term loans is confirmed by related statistics.

Previous studies have demonstrated that Russia’s banking sector does not adequately service the financial needs of the real sector due to its institutional flaws, high domestic interest rates and relatively low national savings (Gorshkov, 2018a, 2018b). According to the World Bank data, in 2017, the national savings — GDP ratio is 29.634%. This is lower than the pre-2008 financial crisis (33.924%) and that of the year 2000 (38.721%).

The present structure of financing is to a great extent explained by Russia’s financial market architecture. It is a bank-based financial system, heavily dependent on bank financing instead of stock and insurance markets, non-government pension funds and mutual funds (Gorshkov, 2018b).

Overall, the banking sector’s financial resources are too limited to foster vibrant corporate development. In such conditions, foreign banks, particularly those located in Europe, have seemed to some to be viable supplementary sources of finance. The scope of foreign bank activities in Russia is small and they cannot compete effectively with state giants.

Table 3:Investments into fixed assets by sources of financing (%).

Source: Compiled by the author with reference to the Federal State Statistic Service (www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/en/main/).

The share of profit-making institutions of the banking sector in January 2018 was 75% (421 banks), while 25% of banks generated significant losses (140 banks). Profits were mostly generated by net interest income (67%), net commission income and premiums (24%) and income from securities trading (7%). Net income from foreign currency and precious metal transactions had significantly declined in the years 2014–2017. The structure of expenses has remained unchanged. They are primarily operational and administrative expenses and net additional provisions (Table 4).

In terms of financial performance, state-controlled and foreign-controlled banks were the most profitable: the return on their assets (ROA) was 2.1% and 2.4%, return on equity (ROE) was 16.1% and 13.8%, respectively. Thus, it can be assumed that state-controlled commercial banks in Russia operate efficiently. The state development bank, Vneshekonombank is an exception. Its financial results have been negative since 2014. In the years 2016–2017, its uncovered losses doubled, reaching RUB 543.7 billion mostly due to increased impairment provisions (Vneshekonombank, 2018).

Table 4:Financial performance of the banking sector from 2014 to 2017 (RUB billion).

Source: Compiled by the author with reference to the Bank of Russia (2016). Banking Supervision Report 2015, Bank of Russia (2017). Banking Supervision Report 2016, Bank of Russia (2018). Banking Supervision Report 2017.

Figure 5:Bank non-performing loans to gross loans ratio in Russia during 2008–2017 (%).

Source: https://www.statista.com/statistics/460896/non-performing-bank-loans-in-russia/.

The share of non-performing loans in gross loans ratio in 2017 surpassed the peak of 2009 (9.53%) and reached 10.0% (Figure 5). Non-performing loans remain one of the major concerns for many banks in Russia. In fact, some banks deprived of banking licenses tried to hide the actual level of non-performing loans to improve their asset structures. Non-performing loans for individual households are greater than those of the corporate sector.