Moody's: 2012 survey shows Russian bank CFOs are cautiously optimistic

29 March 2012 — Daniela GHETU
In its second survey of the Chief Financial Officers (CFOs) of Russian banks, the views of 80 CFOs reveals broadly credit-positive expectations, says Moody's Investors Service in a new Special Comment published on March 27th. "Bankers are cautiously optimistic about the Russian economy and expect asset quality, profitability and capitalisation to remain stable. Although we share CFOs expectations on certain topics, the ongoing euro area crisis has the potential to exacerbate volatility in banks' performance and affect Russian GDP growth dynamics," explains Eugene Tarzimanov, a Moody's Vice President - Senior Analyst and author of the report.

The new report, "Russian Banks: 2012 CFO Survey Shows Cautious Optimism", is now available on www.moodys.com. Moody's subscribers can access this report via the link provided at the end of this press release. The survey covers the views of 80 CFOs on the domestic operating environment and the expected financial performance of their banks in 2012, and compares those views with those of Moody's.

The main findings of the survey are:
  • CFOs expect lending growth to slow down, and do not plan to relax their credit standards. Slower and more controlled growth is positive for banks, in Moody's view.
  • Most banks anticipate that their non-performing loans (NPLs) will remain stable in 2012, at 8%. Moody's generally concurs on this point, although macro uncertainties pose downside risks to NPL stability. 
  • Bankers expect that capitalisation levels will remain stable in 2012, with total CAR at around 15%; we disagree and expect CAR to decrease to around 13%. However, we agree with most CFOs that profitability is likely to remain high, with return on average assets exceeding 2%. Margins are expected to remain flat, at around 4%. 
  • Banks do not plan to decrease their existing liquidity buffers. Moody's views this as credit positive, as it increases banks' resilience to market shocks. 
  • The CFOs believe that competition from state banks has increased somewhat, whilst competition from foreign-owned banks has decreased.

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