Moody’s saw the bottom in the deterioration of asset quality of Russian banks


The deterioration in asset quality of Russian banks have reached the bottom this year, in 2017, the assets will be improved as Russia’s economy out of recession, believe in Moody’s.

Now the growth rate of the deterioration of Bank loans slowed, according to a review. Analysts refer to the Central Bank data, according to which in the first half of 2016 the growth rate of problem corporate loans declined below pre-crisis levels, which was not since the beginning of 2014. The growth rate of problem loans started to slow in the second quarter of 2015, the report said.

In the rating Agency believe that Russian banks have already identified their most problematic corporate clients, so the Agency does not expect the emergence of new problem loans, ceteris paribus.

As for the growth rate of the economy, the forecast of the Agency, in 2017 there will be GDP growth of 1.5%, and contribute to the improvement of corporate borrowers.

Problematic phenomenon in the corporate and retail portfolios decline, according to analyst NRA Karina Artemyev. “Banks with the onset of the crisis tightened approaches to potential corporate borrowers. Retail banks focused on payroll clients,” she says. During the crisis, banks worked actively with their inherited collateral from corporate borrowers,” adds Artemyev. Up to this point was also dissolved some reserves, indicating a restoration of the situation, she said.

However, the analyst of rating Agency Fitch Alexander Danilov believes that the decrease in the rate of growth of bad debts suggests that the situation has improved as problem assets do not become less. “We must remember that in 2015, operated concessions, giving banks the ability to restructure the loans, including potential problem, without creating additional reserves and thus delay the recognition of problems. In my opinion, the peak volume of problem assets in the banking sector has not been realized”, he concluded.

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