The Financial institution of Russia Board of Administrators has determined to retain the countercyclical capital buffer price for Russian credit score establishments at zero per cent of risk-weighted belongings and to depart unchanged the macroprudential risk-weight add-ons utilized to calculate capital adequacy ratios.
Making its resolution to protect the nationwide countercyclical capital buffer andrisk-weight add-ons, the Financial institution of Russia Board of Administrators relied on the following components.
Lending exercise and credit score dangers
The progress price of financial institution lending to the economic system stays excessive. This pattern is pushed by accommodative financial coverage, the regulatory easing granted by the Financial institution of Russia, and authorities lending help programmes. Nonetheless, lending progress is uneven throughout segments. The improve in lending to non-financial organisations is regular, whereas retail lending progress is accelerating, primarily owing to mortgage loans.
The company loan portfolio expanded by 9.9%1 in 2020, which is almost two occasions greater than in 2019 (5.8%). Lending continued to develop in 2021, with the annual improve in the portfolio of excellent company loans reaching 11.4% as of 1 March 2021.
The phase of unsecured shopper lending continues to recuperate after the decline in the first months of the pandemic. The annual progress of excellent loans equalled 8.6%2 as of 1 February 2021. General, banks preserve their lending requirements. Households’ common debt burden on newly issued unsecured shopper loans totalled 62%3 in 2020 This autumn (vs 61% in 2020 Q3). The slight rise in the common debt burden per borrower in 2020 This autumn entails no menace to fiscal stability and was as a result of particular person banks returned to lending requirements that they had utilized earlier than the outbreak of the pandemic.
The annual progress of excellent loans in the housing mortgage phase stays excessive, with the rise in ruble-denominated mortgage loans reaching 22% as of 1 February 2021.4 The growth of the mortgage loan portfolio is largely pushed by lending in the major housing market. The annual improve in excellent ruble-denominated mortgage loans secured by claims beneath fairness development contracts equalled 41.9% as of 1 February 2021. Regardless of the vital rise in lending, banks modified their lending requirements in This autumn solely barely. The payment-to-income ratio on mortgage loans granted in This autumn averaged 56% (vs 54% in Q3). The proportion of mortgage loans with the down settlement of 10% to 20% in the complete quantity of issued mortgage loans remained nearly the similar, particularly 31.8% in This autumn (vs 31.7% in Q3).
The high quality of the mortgage loan portfolio additionally largely is dependent upon how balanced the progress of actual property costs is. In 2020, actual property costs in the major market surged by 12%.5 If the rise in actual property costs continues to pace up, this may increasingly improve the amplitude of the credit score cycle and entail elevated demand for mortgage loans and, subsequently, a extra vital lending contraction.
If actual property costs proceed to develop quick and this pattern persists, the Financial institution of Russia might think about the difficulty of tightening the macroprudential measures in mortgage lending in order to preserve the high quality of banks’ mortgage loan portfolios.
Banking sector stability and measures to help households and companies
The banking sector has a appreciable security cushion in the type of the gathered capital buffer of 5.8 trillion rubles,6 in addition to the macroprudential capital buffer amounting to 0.6 trillion rubles which can solely be launched based mostly on the related resolution of the Financial institution of Russia. As the non permanent easing enabling banks to postpone loss provisioning for restructured loans is progressively terminated, in 2021 Q2 the Financial institution of Russia will think about the difficulty relating to the launch of the gathered macroprudential buffer for unsecured shopper loans, given the stage of potential losses on such loans.
The measures supporting households and companies proceed to be efficient; subsequently, it is unreasonable to change the nationwide countercyclical buffer and risk-weight add-ons.
The Financial institution of Russia Board of Administrators will maintain its subsequent assembly to assessment the nationwide countercyclical capital buffer and risk-weight add-ons in Might 2021.
1 In keeping with Reporting Kind 0409101. Adjusted for forex revaluation.
2 In keeping with Part 3 of Reporting Kind 0409115. For credit score establishments working as of the newest reporting date, together with earlier reorganised banks.
3 In keeping with Reporting Kind 0409704.
4 In keeping with Reporting Kinds 0409316 and 0420863 together with data on securitised mortgage loans, internet of acquired claims.
5 In keeping with Rosstat.
6 In keeping with Reporting Kind 0409135. Calculated as of 1 February 2021 because the minimal buffer to take in losses estimated based mostly on three ratios, considering the unaudited revenue reclassified to widespread fairness Tier 1 capital and the constructive impact of loss on risk-weighted belongings.
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