Moody's and Fitch predict losses of Russian banks

the International rating agencies Moody’s and Fitch would expect difficulties in the banking system of Russia.

According to Moody’s, about 10% of Russians who took the earlier loans may qualify for vacation credit – the deferred payments. This will lead to losses in the banking sector of about 100 billion rubles in interest income, or 5% of annual income.

in addition, about 20% of small and medium business can receive vacation credit. It will cost the banks another 50 billion rubles in interest income.

Economic losses due to coronavirus and lower oil prices may affect the volume and quality of banks ‘ loan portfolios in Russia and neighboring markets of the former USSR countries. This may lead to a rating downgrade, says Fitch Ratings.

Therefore, Fitch downgraded the banking sector to “negative” for seven of the eight markets in the region — Russia, Ukraine, Kazakhstan, Armenia, Azerbaijan, Belarus and Georgia. The prospects of the banking sector in Uzbekistan remains stable.

24 Mar rating Agency “national credit rating” assessed the stability of the Russian banking system in deteriorating conditions due to pandemic coronavirus and lower oil prices.

Economists have performed a stress test taking into account the conditions of the two credit shocks in 2008-2009 and 2014-2015.

the Most difficult period of the crisis of 2008-2009. In 2009, Russia’s GDP decreased by 7.8%, and the crisis in 2015 decreased by only 2.3%.

the repetition of peak stress of 2008-2009, the Russian banking system will show a loss of 800-900 billion rubles., but are stable, according to the study of the NKR.

In any scenario, some banks may need recapitalization. Recession in the major economies and predicted a recession in the world economy because of the pandemic, “it looks inevitable at least in the second quarter”, predicts the NKR.

pre-tax profit of the Russian banking sector in 2019 increased by 1.5 times to 2 trillion rubles, net profit increased by 1.7% to 1.7 trillion rubles, said earlier the Central Bank of the Russian Federation.

the Profit of Russian banks by the end of 2020 will decrease by at least 20% for coronavirus and low oil prices, economists predict “Expert RA”.

the assessment of the profits made with the “moderately bearish scenario”. This preserves the average price of Brent crude oil at $40-45 per barrel, reduced exchange rate, inflation exceeds the level of 4%, previously taken by the Bank of Russia for the target.

In the end, the Bank of Russia will raise its key interest rate by 1-1. 5 percentage points to the end of 2020.

It can lead to slowdown in lending, the negative revaluation of securities and deterioration in the quality of loans, economists predict “Expert RA”.

the heaviest decline in consumer lending, lending for car purchase. About 40 banks in Russia are at risk of bankruptcy this year.