By Ivan Anderzhanov in Moscow
The analyst community fretted as they poured over the news yesterday that Raiffeisen non-performing loans in Russia have jumped from to 7.2% by the end of June from 2% at the end of 2009.
The interim report shows that the Austrian bank earned almost nothing in Russia during the second half of the year, posting a €23m in post-tax profit for the six months with just €9m for the last second quarter. The main reason for the weak results was the ongoing growth of bad loans and increased provision charges for loans, which increased by 37% from €110m in the first quarter to €151m.
Leonid Slipchenko, an analyst at UralSib, said and provision charge are likely to put substantial pressure on Russian banks’ bottom lines.
Slipchenko is forecasting that NPLs may double to 7% of gross loans for Sberbank and more than 8% for VTB. He said: “Russian banks will post either no net income or losses in 2009, and clearly show that their 30-40% discount to EM peers – especially those in Eastern Europe – is justified. In addition, we consider Raiffeisen to be a high-quality credit institution, and such weak results indicate that we may see even worse second quarter results from Russian banks.”
Still the figures are far better than the forecasted NPL range of 15-30% being bandied about ratings agencies and bearish banking commentators.
Maxim Rakosnov, a fixed income analyst at Renaissance Capital, was more bullish and said the figures published by Raiffeisen confirm Rencap’s positive view on the credit fundamentals of the Russian banking system. He said: “The revealed indication of bad loans increase in the Ukrainian segment signals the necessity of significant recapitalisation of the Ukrainian banking system in order to cope with asset quality problems, in our view, and this problem has yet to be solved.
In Ukraine and Belarus, which have been severely hit by the crisis, the loan default rate at Raiffeisen shot up to 15.5 %.
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