Russian banks’ overdue loans in March rose to 3.7 percent of the total as the deteriorating economic outlook and a drop in personal incomes stifled growth.
The banking sector’s non-performing loans from corporate and retail clients grew to 636.1 billion rubles ($19.4 billion), or 3.7 percent, from 3.4 percent in February, the central bank said on its Web site today. The system’s entire bad loans, including overdue payments from banks, were at 3.1 percent.
Russia’s banking assets fell 2.3 percent in March after a 1.9 percent drop a month earlier, according to the Moscow-based Bank Rossii. The country’s 1,094 lenders boosted the amount of money set aside to cover delinquent debt by 6.4 percent in March to 1.14 trillion rubles.
“Russia’s banking system will post a lost this year as banks increase reserves to cover overdue loans,” Mikhail Shlemov, banking analyst at VTB Capital, said in a phone interview today.
Banks lost 7.2 billion rubles in March, compared to February’s net loss of 1.3 billion rubles, the regulator said. The number of loss-making banks fell to 110 in March from 197 the previous month.
“We believe that the risk that non-performing loans may reach 10 percent by the end of the year is still high and this could threaten the capital adequacy of Russian banks even on the back of an assets contraction,” Leonid Slipchenko, a banking analyst at UralSib, said in a report today.
To contact the reporter on this story: Paul Abelsky in St. Petersburg at firstname.lastname@example.org.
To contact the editor responsible for this story: Chris Kirkham at email@example.com