OREANDA-NEWS. Fitch Ratings has published the latest edition of the 'Russian Banks Datawatch', a monthly publication of spreadsheets with key data from Russian banks' statutory accounts.

The issue (available at www.fitchratings.com or by clicking the link above) includes:
- Balance sheet numbers as of 1 December 2015, as well as changes during November 2015 and since 1 January 2015
- Charts illustrating balance sheet changes in 11M15 for the main state-related, privately-owned, foreign-owned and retail banks

In December Uralsib and Krayinvest did not disclose regulatory accounts at Central Bank of Russia's (CBR) website, therefore commentary is based on system data excluding these two banks.

Fitch notes the following key developments in November 2015:
- Sector corporate loans nominally grew by RUB656bn (1.8%), but by lower RUB280bn (0.8%) if adjusted for the moderate 3% rouble depreciation against the dollar in November. Large FX-adjusted corporate lending increases were in VTB (RUB187bn, 4.2%, mainly through reverse repos with foreign counterparty(s)), Sberbank (RUB151bn, 1.3%) and Credit Bank of Moscow (RUB48bn, 8.4%).

- Retail loans fell slightly by RUB20bn (-0.2%) in nominal terms or by RUB30bn (-0.3%) if adjusted for FX effect. Among retail banks only Tinkoff marginally grew, by 0.6% in November; Rencredit was stable; while Russian Standard, Home Credit, Orient Express and OTP slightly deleveraged by 0.5%-3%.

- Customer funding nominally increased by RUB815bn (1.8%) or by RUB273bn (0.6%) if adjusted for FX effect. The latter figure comprised inflows of corporate and retail funding of, respectively, RUB143bn (0.6%) and RUB130bn (0.6%). Retail funding grew mainly in state-related banks: Sberbank (RUB85bn, 0.9%), VTB24 (RUB28bn, 1.6%) and Rusag (RUB16bn, 3.6%), reflecting continuing flight to quality.

- Large decreases in corporate funding (excluding FX effects and one-offs) were seen in Promsvyaz group (RUB49bn, -7.7%), RusAg (RUB47bn, -4.2%) and Otkritie group (RUB34bn, -3.5%), while notable inflows were in VBRR (RUB193bn, 411% - probably temporary placements by a large corporate, as the bank put money in short money market), Sberbank (RUB87bn, 1.3%) and Gazprombank (RUB51bn, 1.8%).

- Some banks' corporate funding numbers were distorted by one-offs, including i) a RUB40bn technical decrease related to a change of accounting treatment of government Tier 2 capital injections, which are now reflected off-balance sheet (RUB30bn in Promsvyaz and RUB10bn Zenit), ii) USD0.5bn (RUB33bn equivalent) increase in Alfa from eurobond placement and iii) USD0.5bn (RUB33bn equivalent) decrease in AK BARS due to eurobond redemption

- State funding nominally decreased by RUB570bn (-7%) or by RUB618bn (-8%) net of exchange rate movements. Of this, RUB567bn was repaid to CBR, of which RUB359bn was rouble (of which RUB243bn were repaid by Sberbank) and RUB208bn FX funding (mainly by Otkritie, Credit Bank of Moscow and Russian Standard). A further RUB71bn and RUB19bn were repaid to regional budgets and Ministry of Finance correspondingly, but partially offset by RUB39bn borrowings from other government entities. The outstanding volume of CBR FX funding was USD23bn, mainly used by Otkritie (USD15bn).

- The sector showed a RUB55bn net profit in November (9% annualised ROAE), which was mainly due to Sberbank and Gazprombank who each reported RUB24bn net income. In Gazprombank this was partially due to a RUB11bn gain on deferred tax asset recognition, while the nature of remaining profit is unclear. Considerable losses were reported by B&N group (RUB9bn) and Alfa-Bank (RUB3.5bn, although solely due to a RUB6.5bn deferred tax loss). Among retail banks only Tinkoff was moderately profitable (RUB0.5bn, 2.3% of end-October equity). Other retail banks (Russian Standard, Home Credit, OTP, Orient Express and Rencredit) were loss-making to the tune of 1%-6%, of equity.

-The average total capital (N1 - 16% vs. current required minimum of 10% set to be reduced to 8% from 2016) and core tier 1 (N1.1 - 11% vs. current required minimum of 5% set to be reduced to 4.5% from 2016). The average core tier 1 ratio of sampled banks was almost unchanged in November, while the total ratio increased modestly by 17bps. The biggest increase in total capital ratio of 2.6ppts was reported by RusAg, which received RUB68.8bn of new equity in November from Deposit Insurance Agency in the form of preference shares. We expect banks utilising CBR FX forbearance (previously extended to year-end and favourable USD/RUB rate increased to 55) would report capital ratios 40-60 bps lower if forbearance is abolished and FX-denominated risk-weighted assets (RWAs) are revalued at the current rate of around 70.

- We estimate that current capital buffers (excluding future potential profits) of 50 of the sampled banks (excluding the already failed and bailed-out ones and those not disclosing capital ratios) were sufficient to absorb potential loan losses equal to less than 5% of loans, and 12 could absorb less than 1%. The latter were VTB24, Bank of Moscow, Leto Bank, Globexbank, SMP, Orient Express, Rencredit, UBRIR, Novikom, JUGRA, Moscow Industrial and Rosinter. Failed Vneshprombank breached all three capital ratios at end-November.