OREANDA-NEWSThe Russian banking sector in recent years has become more stable and protected from the outflow of liquidity due to the concentration on domestic funding sources. This is stated in the assessment of industry and country risks of the Russian banking sector S&P Global Ratings.

"The funding base of the Russian banking sector has become more stable and is supported by stability and an increase in domestic deposits over the past three years. The volume of external financing of the banking sector is small and continues to decline gradually. We believe that the Central Bank of the Russian Federation can use a number of tools and mechanisms to stabilize the volume liquidity in the sector, if individual banks have a corresponding problem. The effectiveness of such measures is proved by the example of the past 10 years", noted in the report of the rating agency.

It is noted that despite the unstable market situation, a significant amount of domestic deposits, which account for about 70% of total funding, has shown significant stability. These deposits serve as a reliable and stable source of funding for Russian banks, agency experts noted. S&P Global Ratings experts also indicate that support from the Bank of Russia in the form of liquidity is available to banks if necessary.

A few years earlier, analysts noted the consistently high performance indicators of the Russian financial business, including high asset quality, high profitability, high liquidity and capital buffers. The potential for upgrading ratings is limited, the agency notes, and will require the expansion of the branch network while maintaining high profitability, asset quality and capital indicators. A sharp decrease in the quality of assets can lead to a downgrade.

“Such support from the regulator was one of the important factors that ensured the stability of the banking sector during the outflow of deposits in 2014-2015”, the report says.