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 February 2016, as well as changes during January 2016
- Charts illustrating balance sheet changes in January 2016 for the main state-related, privately-owned, foreign-owned and retail banks

Fitch notes the following key developments in January 2016:

Sector corporate loans nominally increased by RUB863bn (2.3%) or by a lower RUB394bn (1%) after adjusting for 3% rouble depreciation against the dollar during the month. Significant real growth was reported by Sberbank (RUB462bn, 3.7%), Credit Bank of Moscow (RUB63bn, 8.4%), Alfa (RUB42bn, 3.2%) and Rosbank (RUB30bn, 10.8%), while large decreases were seen in VTB (RUB161bn or -3.1%) and Bank FC Otkritie (Otkritie) (RUB83bn, -3.7%).

Retail lending slightly contracted by RUB42bn (-0.4%) or by RUB54bn (-0.5%) after adjusting for FX effect. Among specialised retail banks, only Tinkoff grew, by around 2%, while other retailers (Russian Standard, OTP, RenCredit and Orient Express) deleveraged by a moderate 0.3%-2%.

Customer funding (excluding that from government entities) increased by RUB327bn in nominal terms (0.6%), but decreased by RUB326bn (-0.6%) if adjusted for the rouble depreciation. The latter figure is a combination of RUB550bn ( 2.4%) outflow of retail funding and RUB224bn (0.5%) increase of corporate accounts. The biggest RUB402bn (4%) decrease of retail funding was seen in Sberbank (this partially offset a large RUB931bn inflow in December, which Fitch believes is seasonal due to salary bonuses payments and pension pre-payments for January made in December) and almost fully compensated by RUB312bn (4%) inflow of corporate deposits. Notable increases of corporate accounts were also seen in Citibank (RUB80bn, 35% monthly increase), Credit Bank of Moscow (RUB42bn, 5%), Unicredit (RUB30bn, 4%) and VTB (RUB67bn, 2%), while significant outflows were seen in Gazprombank (RUB81bn, -3%) and Ak Bars (RUB20bn, -9%).

State funding further decreased by RUB210bn (-3%), or by RUB260bn (-4%) net of rouble depreciation impact. The latter figure consists of RUB823bn (of which RUB691bn were in rouble and RUB132bn in FX) repayment of Central Bank of Russia (CBR) funding (-15% of end-2015 balance), partially offset by borrowings of RUB325bn from regional and federal budgets, RUB236bn from Finance Ministry and RUB2bn from other government entities. Largest repayments of CBR rouble funding were made by VTB (RUB531bn) and its subsidiary Bank of Moscow (RUB135bn). Outstanding CBR FX funding was USD20bn, utilised mainly by Otkritie (USD13bn).

The sector reported a RUB27bn net profit in January (4.4% annualised ROAE), but an underlying loss of RUB27bn due to a RUB54bn negative adjustment to last year's earnings recognised in equity. Sberbank reported solid RUB28bn net income (14% annualised ROAE); however, this would be only RUB7bn (3% annualised ROAE) after a negative RUB21bn adjustment to last year's earnings. VTB reported a large RUB18bn profit (17% annualised ROAE), probably helped by a miniscule reserve charge despite a significant RUB172bn spike in overdue loans (the nature of this is uncertain), while its retail arm VTB24 earned RUB4bn entirely due to a one-off gain from the sale of 50% minus one share of Leto-bank to the Russian Post.

Considerable losses were reported by Gazprombank (RUB8bn, -1.8% of end-2015 equity), and B&N group (RUB15bn), of which RUB10bn was impairment-driven loss in rescued ROST-Bank (equity was already negative) and RUB4bn loss in B&N Bank itself (-10% of equity). Among specialised retail banks only Tinkoff reported sound net profit of RUB0.7bn (42% annualised ROAE), Orient Express broke even, while others (Russian Standard, Home Credit, OTP and RenCredit) lost 3%-6% of end-2015 equity.

As expected, the average capital ratios of sampled banks decreased in January due to withdrawal of FX forbearance previously allowing the banks to calculate foreign currency risk-weighted assets (RWAs) at a preferential rate of 55 RUB/USD compared with end-January rate of 75 RUB/USD. Core tier 1 (N1.1) dropped 40bps to 9.3% (minimum 4.5%), tier 1 (N1.2) 20bps to 9.7% (minimum 6%) and total capital ratio (N1.0) 10bps to 14.7% (minimum 8%). These ratios are somewhat higher than those reported for the sector by CBR, mainly because they are calculated based on a simple, rather than weighted average; however, the direction of the ratios provides useful information about capital trends prior to CBR's publication of sector metrics.

Notable increases of capital ratios were reported by Bank of Moscow (3ppt increase across all ratios), due to RUB43bn of new equity injected by VTB; by VBRR (tier 1 and total ratios increased by, respectively, 19.8ppt and 17.5ppt) due to new RUB14.5 subordinated debt being accounted as additional Tier 1 capital; and by ING Bank (3.5%) due to a sound RUB2.6bn profit in January (11% of end-2015 equity).

We estimate that current capital buffers (excluding potential profits) of 52 out of the sampled banks (excluding already failed and rescued banks, and those not reporting capital ratios) are sufficient to absorb potential loan losses equal to less than 5% of loans, and 14 could absorb less than 1%. The latter are VTB24, Leto Bank, Sviaz, Globex, RosCap, MDM, IBA-Moscow, Orient Express, Rencredit, JUGRA, UBRIR, Novikom, MTS-Bank and Rosinterbank.