Bank assets shrank in February for the first time since the beginning of the crisis, the Central Bank admitted. For many banks the trend continued into March. Nevertheless, the Government still pins its hopes on banks in combating the crisis, Prime Minister Putin said.
The growing losses and shrinking business of Russian banks have not undermined Mr Putin's trust in them. The Government will allocate them credit resources and hopes they will cut their rates, the Prime Minister said.
Growth has stopped
In February 2009 the assets of the banking system shrank by 1.9% to 29.2 trillion roubles compared with January, says an express release of the banking sector review by the Central Bank. In February, the crediting of companies dropped by 0.4% to 13.32 trillion roubles and of individuals by 1.6%. Loans to individuals were diminishing in November-December 2008, but the sector's assets as a whole registered the first drop since the beginning of the crisis. Outstanding arrears on all debts increased from 2.3% to 2.8%.
Company assets kept in banks dropped by 1.5% to 3.4 trillion roubles in February. Based on February's results, banks reported a loss of more than 1 billion roubles throughout the system. However, only one in every six banks (197 out of 1,098) reported losses.
The only positive result was deposits from individuals which increased by 1.7% to 6.2 trillion roubles in February from the beginning of the year, exceeding the pre-crisis level for the first time.
Things will have to get worse
Credit portfolio assets for most banks that published their results did not grow in March. Thus the assets of the VTB dropped by 5.2% to 2.8 trillion roubles, and the credits extended to companies dropped by 3.7% to 1.4 trillion roubles in March. The assets dropped because of the currency reevaluation, there were major debt payments in March (LPN worth 1 billion euros), and so newly issued loans did not translate into growth, the bank's spokesman Maxim Lunyov explains.
The assets of Alpha-Bank dropped by 2.6% to 743 billion roubles and its loans to the companies in the non-financial sector by 3% to 410.8 billion roubles in March. The corresponding figures for Raiffeisen Bank were 4.2% and 7%. UniCredit Bank assets increased by 0.5%, loans to legal entities dropped by 4.2% and the assets of Nomos Bank dropped by 6% with corporate credits issued dropping by 3.8%.
Bank profits were nothing to write home about. The VTB reported losses of 15.6 billion roubles, mainly due to the increase in reserves, Mr Lunyov notes. However, Nomos Bank earned 330 million roubles, UniCredit 560 million roubles and Raiffeisen Bank 181 million roubles in March.
Early in the year most banks' profits were chiefly due to devaluation, Uralsib Capital analyst Leonid Slipchenko notes. Bank assets are unlikely to grow this year, thinks the Chairman of the Board of VTB-24, Mikhail Zadornov.
Get ready to issue loans
The banking system will tackle "serious tasks" in the second half of the year, Prime Minister Vladimir Putin promised. "Please, dear colleagues, do not be too harsh on bankers when you discuss the budget. You can call them what you like, insult them (‘fat cats', etc.), but it is an important sector of the Russian economy," the Prime Minister said. He promised to expand the resource base for banking and create conditions that would make loans more accessible. Mr Putin said the Central Bank was likely to cut the refinancing rate within a month, adding, however, that the decision rests with the regulator.
The anti-crisis plan earmarks 225 billion roubles to support the banking sector, but Government support "will be tied to the crediting of the real sector". The Government will hear reports from the banks which it has supported, they must provide information on the amount and the terms of loans issued, Mr Putin stressed.
The banks will also support the borrowers who find themselves in difficulty by restructuring their credits: Mr Putin promised to speed up the adoption of the law on the restructuring of the debt of individuals. The deputies whom Vedomosti contacted yesterday were not familiar with the project.
Not all the banks are critical: problem banks will have to be weeded out of the system, according to Vladimir Putin. The Government's anti-crisis plan published yesterday says it will, together with the Central Bank, seek to consolidate the banking sector to encourage the creation of large and stable structures, competitive internationally and capable of ensuring long-term project financing. Mr Putin noted, however, that the state should encourage consolidation without making abrupt moves.
Anna Khutornykh