Latest news with #DmitryPyanov
Reuters
24-07-2025
- Business
- Reuters
Russian rate cuts to ease banks' concerns over rising bad debt
MOSCOW, July 24 (Reuters) - After recording record profits thanks to robust demand for loans even at sky-high interest rates, Russian banks are now hoping a cycle of rate cuts will nip concerns about rising overdue consumer debt in the bud. Analysts polled by Reuters expect the Bank of Russia to slash borrowing costs by 200 basis points to 18% when it meets on Friday in what would be its deepest cut since 2022, as an easing cycle after nearly two years of monetary tightening gathers pace. With such high rates, credit risk is currently the main concern among banks, Renaissance Capital economist Andrei Melashchenko told Reuters, something that a mere 1% cut would not fundamentally change. "But if the (easing) cycle towards the end of the year we will see lower spending on reserves by banks," Melashchenko said. "And as the growth of the loan portfolio recovers, the share of problem debt will decrease." Russian banks' combined profits of 1.7 trillion roubles in the first half of this year have enabled them to build up capital reserves as loan servicing has deteriorated with the central bank holding its key rate steady at a more than 20-year high of 21% from October to June. State-owned VTB Bank ( opens new tab told Reuters this month that every 1% interest rate cut gave it an extra 20 billion roubles in profit. CFO Dmitry Pyanov said VTB stands to benefit above all others because its high proportion of loans at floating rates carries greater risks of defaults and debt restructurings. "What can undermine a bank's financial sustainability?" Pyanov said. "It is the default of corporate clients, because problematic retail will hardly cause significant harm." Overdue consumer loans are nevertheless on the rise, even as rates have eased, although Central Bank Governor Elvira Nabiullina has sought to quash rumours of a looming crisis and said all bad debt is provisioned for. A source close to the central bank told Reuters that a rate cut will boost banks' profits and strengthen the sector's capital position. German Gref, CEO of Russia's largest lender Sberbank ( opens new tab drew attention to the growth of overdue consumer loans earlier this month but said everything was covered by reserves. Sberbank is majority-owned by the Russian state and its shareholders, most of whom are in Russia and cut off from Western capital since the imposition of sanctions over the conflict in Ukraine, last month approved a record $10 billion dividend payout. Some of Russia's major lenders slumped to sanctions-induced losses in 2022, but with limited foreign competition and helped by two years of economic growth fuelled by defence spending, Russian banks reported record profits in both 2023 and 2024. Bad consumer debt now accounts for 4.5% of banks' overall retail loan portfolio, the central bank said in a review last week, up from 3.7% in December, since which time consumer deposit rates have been falling. "Russian banks are managing to maintain margins, despite a noticeable increase in provisioning due to the deteriorating quality of the retail portfolio," the central bank said. "We see, indeed, that bad debts are gradually increasing," Melashchenko said. "But for now, we still believe these values are controllable." Analysts also expect any outflow of depositors' funds to the stock market to cause limited harm as the central bank has promised a smooth reduction in rates. As bad debts have grown, the central bank has raised macroprudential limits, forcing banks to increase reserves to cover possible credit risks. Well-capitalised banks can expand their loan portfolios as credit risks decrease, said Melashchenko, while others are reducing lending rates and rebalancing assets towards less capital-intensive ones to build up a capital cushion. The growing accumulation of bad debt is unlikely to bring down any major banks, Olga Naidenova, senior analyst at Sinara Investment Bank, told Reuters. "Even if we look at systemically important banks, I think there is no chance that the state will allow them to default or anything like that," said Naidenova. "They will find a way to support or recapitalise them."
Reuters
10-07-2025
- Business
- Reuters
Russian central bank sees no risk of looming banking crisis
ST PETERSBURG, Russia, July 3 (Reuters) - The Russian central bank sees no risk of a looming crisis in the country's banking system as rising bad debts are well covered by banks' $100 billion in capital, Governor Elvira Nabiullina said on Thursday. The share of bad and restructured loans in Russian banks' portfolios has been rising, as more companies struggle to refinance their debts at interest rates that have jumped above 30% as a result of the central bank's tight monetary policy. Some economists and bankers have recently raised concerns about the health of the banking system in light of the growing share of bad debts. The last time the central bank had to bail out a major Russian bank was in 2017. "Having full information about the banks, as the authority overseeing them, I can state with complete confidence that these concerns are absolutely unfounded," Nabiullina told reporters. "The banking system is well capitalized, despite the fact that this capital is unevenly distributed across the banking sector. The capital buffer is substantial at 8 trillion roubles ($101.18 billion)," Nabiullina said. Russia's second-largest bank, VTB, reported that the share of non-performing loans (NPLs) in its portfolio that have not been serviced for over 90 days reached 5% in May. During the financial turbulence of 2014-16, VTB's share of such loans was as high as 10%. VTB's First Deputy CEO, Dmitry Pyanov, said the share of NPLs could rise to between 6% and 7% within the next few months, but stressed that this was still far from peak levels. VTB estimated the share of restructured corporate loans at 3%. Nabiullina said the continued strong profits reported by the banking sector this year indicate that banks have not been forced to increase provisions to cover the rising share of bad loans. "Banks are not significantly increasing provisions. If the share of bad loans were rising, the share of provisions would also increase, which would lead to a decrease in profits. But banks' profits are comparable to last year's," she said. The central bank introduced an additional requirement on provisions, called a "countercyclical buffer", at 0.25% of total assets in February and raised it to 0.5% from July 1. It is considering a further increase to 1%. ($1 = 79.0705 roubles)
Reuters
04-07-2025
- Business
- Reuters
Exclusive: Russia's VTB to gain billions of roubles if interest rates come down, CFO says
ST PETERSBURG, Russia, July 4 (Reuters) - Every 1% cut in central bank interest rates gives Russia's VTB Bank an extra 20 billion roubles ($250 million) in net profit, CFO Dmitry Pyanov told Reuters, which benefits the government as the state-owned lender plans to distribute 50% of its profits via dividends - half of it to the state. Russia's benchmark interest rate remains extremely high at 20%, discouraging borrowers and hurting banks' loan books. While the central bank cut the rate last month from a more than 20-year-high of 21%, pressure is growing on it to bring rates down faster, with government officials and business leaders fretting over the risks of a recession. Among Russian banks VTB ( opens new tab has the highest proportion of loans on floating rates, so high official rates raise the risk it faces of more defaults or debt restructuring moves, which in turn can push up its capital requirements, while lower rates stand to benefit the bank's bottom line. "VTB Bank is a main beneficiary of the key rate cut," Pyanov told Reuters on Thursday at a financial forum in St Petersburg. "We suffer most of all during a period of its increase and will realise positive interest rate risk when the rate decreases." "A one percentage point rate cut gives us 20 billion roubles of net profit." President Vladimir Putin in June ordered that VTB's dividend payments be used to finance United Shipbuilding Corporation, which has been under VTB's management since 2023, and has state contracts in the defence sector. The state owns more than 60% of VTB. High interest rates have indeed stalled investment and encouraged companies and consumers to hold money on deposit. Corporate and consumer lending is slowing and the central bank has noted a deterioration in credit quality, although it says the situation is not yet critical. A survey of participants at a financial congress in St Petersburg this week pinpointed the key risk factors as corporate credit concerns and interest rate risks for banks. Pyanov said he did not expect a banking crisis and saw no banks in need of a bailout. Dividends from state companies are a major source of revenues for Russia's budget, which is operating at a deficit of 1.5% of GDP as Moscow diverts vast sums to the defence sector for its conflict in Ukraine and grapples with reduced energy revenues from lower oil prices this year and a strong rouble. Shareholders of top lender Sberbank ( opens new tab approved a $10 billion dividend payout this week. VTB surprised the market in April by announcing its first dividend since the start of the conflict in Ukraine, having slumped to a $7.7 billion sanctions-induced loss in 2022. The total payout of 275.75 billion roubles comes on the back of record profits in 2024 and though a decline is expected this year, profits could once again surpass 500 billion roubles, Pyanov said. Depending on capital adequacy rules that the central bank may adjust, Pyanov said VTB would work hard to keep dividend payments at 50% of net profit for the years to come. Pyanov also noted how the departure of Western capital and the emergence of retail investors as a dominant force in the Russian stock market since the start of the conflict in Ukraine had influenced VTB. Dividends are now key to maintaining shareholder value in Russia, he said. "With such a dominant retail investor, everyone wants dividends," Pyanov said. ($1 = 79.0000 roubles)
Yahoo
04-07-2025
- Business
- Yahoo
Exclusive-Russia's VTB to gain billions of roubles if interest rates come down, CFO says
By Elena Fabrichnaya ST PETERSBURG, Russia (Reuters) -Every 1% cut in central bank interest rates gives Russia's VTB Bank an extra 20 billion roubles ($250 million) in net profit, CFO Dmitry Pyanov told Reuters, which benefits the government as the state-owned lender plans to distribute 50% of its profits via dividends - half of it to the state. Russia's benchmark interest rate remains extremely high at 20%, discouraging borrowers and hurting banks' loan books. While the central bank cut the rate last month from a more than 20-year-high of 21%, pressure is growing on it to bring rates down faster, with government officials and business leaders fretting over the risks of a recession. Among Russian banks VTB has the highest proportion of loans on floating rates, so high official rates raise the risk it faces of more defaults or debt restructuring moves, which in turn can push up its capital requirements, while lower rates stand to benefit the bank's bottom line. "VTB Bank is a main beneficiary of the key rate cut," Pyanov told Reuters on Thursday at a financial forum in St Petersburg. "We suffer most of all during a period of its increase and will realise positive interest rate risk when the rate decreases." "A one percentage point rate cut gives us 20 billion roubles of net profit." President Vladimir Putin in June ordered that VTB's dividend payments be used to finance United Shipbuilding Corporation, which has been under VTB's management since 2023, and has state contracts in the defence sector. The state owns more than 60% of VTB. High interest rates have indeed stalled investment and encouraged companies and consumers to hold money on deposit. Corporate and consumer lending is slowing and the central bank has noted a deterioration in credit quality, although it says the situation is not yet critical. A survey of participants at a financial congress in St Petersburg this week pinpointed the key risk factors as corporate credit concerns and interest rate risks for banks. Pyanov said he did not expect a banking crisis and saw no banks in need of a bailout. DIVIDENDS PLAY KEY ROLE Dividends from state companies are a major source of revenues for Russia's budget, which is operating at a deficit of 1.5% of GDP as Moscow diverts vast sums to the defence sector for its conflict in Ukraine and grapples with reduced energy revenues from lower oil prices this year and a strong rouble. Shareholders of top lender Sberbank approved a $10 billion dividend payout this week. VTB surprised the market in April by announcing its first dividend since the start of the conflict in Ukraine, having slumped to a $7.7 billion sanctions-induced loss in 2022. The total payout of 275.75 billion roubles comes on the back of record profits in 2024 and though a decline is expected this year, profits could once again surpass 500 billion roubles, Pyanov said. Depending on capital adequacy rules that the central bank may adjust, Pyanov said VTB would work hard to keep dividend payments at 50% of net profit for the years to come. Pyanov also noted how the departure of Western capital and the emergence of retail investors as a dominant force in the Russian stock market since the start of the conflict in Ukraine had influenced VTB. Dividends are now key to maintaining shareholder value in Russia, he said. "With such a dominant retail investor, everyone wants dividends," Pyanov said. ($1 = 79.0000 roubles) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
04-07-2025
- Business
- Yahoo
Exclusive-Russia's VTB to gain billions of roubles if interest rates come down, CFO says
By Elena Fabrichnaya ST PETERSBURG, Russia (Reuters) -Every 1% cut in central bank interest rates gives Russia's VTB Bank an extra 20 billion roubles ($250 million) in net profit, CFO Dmitry Pyanov told Reuters, which benefits the government as the state-owned lender plans to distribute 50% of its profits via dividends - half of it to the state. Russia's benchmark interest rate remains extremely high at 20%, discouraging borrowers and hurting banks' loan books. While the central bank cut the rate last month from a more than 20-year-high of 21%, pressure is growing on it to bring rates down faster, with government officials and business leaders fretting over the risks of a recession. Among Russian banks VTB has the highest proportion of loans on floating rates, so high official rates raise the risk it faces of more defaults or debt restructuring moves, which in turn can push up its capital requirements, while lower rates stand to benefit the bank's bottom line. "VTB Bank is a main beneficiary of the key rate cut," Pyanov told Reuters on Thursday at a financial forum in St Petersburg. "We suffer most of all during a period of its increase and will realise positive interest rate risk when the rate decreases." "A one percentage point rate cut gives us 20 billion roubles of net profit." President Vladimir Putin in June ordered that VTB's dividend payments be used to finance United Shipbuilding Corporation, which has been under VTB's management since 2023, and has state contracts in the defence sector. The state owns more than 60% of VTB. High interest rates have indeed stalled investment and encouraged companies and consumers to hold money on deposit. Corporate and consumer lending is slowing and the central bank has noted a deterioration in credit quality, although it says the situation is not yet critical. A survey of participants at a financial congress in St Petersburg this week pinpointed the key risk factors as corporate credit concerns and interest rate risks for banks. Pyanov said he did not expect a banking crisis and saw no banks in need of a bailout. DIVIDENDS PLAY KEY ROLE Dividends from state companies are a major source of revenues for Russia's budget, which is operating at a deficit of 1.5% of GDP as Moscow diverts vast sums to the defence sector for its conflict in Ukraine and grapples with reduced energy revenues from lower oil prices this year and a strong rouble. Shareholders of top lender Sberbank approved a $10 billion dividend payout this week. VTB surprised the market in April by announcing its first dividend since the start of the conflict in Ukraine, having slumped to a $7.7 billion sanctions-induced loss in 2022. The total payout of 275.75 billion roubles comes on the back of record profits in 2024 and though a decline is expected this year, profits could once again surpass 500 billion roubles, Pyanov said. Depending on capital adequacy rules that the central bank may adjust, Pyanov said VTB would work hard to keep dividend payments at 50% of net profit for the years to come. Pyanov also noted how the departure of Western capital and the emergence of retail investors as a dominant force in the Russian stock market since the start of the conflict in Ukraine had influenced VTB. Dividends are now key to maintaining shareholder value in Russia, he said. "With such a dominant retail investor, everyone wants dividends," Pyanov said. ($1 = 79.0000 roubles) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
