The topic of the banking system has recently become increasingly popular due to the ongoing changes in the world. In March 2021, the 22nd All-Russian Banking Conference dedicated to this topic was held, and experts are also talking about this. To learn more about the current situation and predictions, continue reading the article.
Economy and banks
The crisis that Russia faced in 2020 did not shake the country’s banking system. Although the pandemic has had a significant impact on people’s lives, banks have successfully passed this test thanks to their accumulated capital reserves and timely regulatory measures. That is why, despite the difficulties, the service and the process of lending to customers took place as usual.
At the beginning of 2021, the Bank of Russia canceled the vast majority of regulatory eases, thereby switching to a neutral monetary policy-the key rate rose from 4.25% per annum to 4.5%. This niche faces several challenges at once: lower margins, rising costs, and the difficult macroeconomic situation in the world.
The particularly popular program of preferential mortgages at 6.5% per annum is an anti-crisis solution that will not be extended on a similar scale further. However, residents of the country who want to get a loan will also not lose out — the Ministry of Finance has amended the resolution on preferential mortgages, now subsidizing the interest rate will begin to apply to individual housing construction programs.
Now it is difficult to talk about the state of the Russian banking system, since the regulatory easing will cease to be fully effective only in the next 2-3 quarters. Rapid growth in lending volumes this year is not expected, so the probability of bubbles in the market is minimized.
Today, most of the benefits are canceled, and the remaining ones will cease to operate from July 1. Regulators already understand how the cancellation of benefits will affect specific banks. One thing can be said: those institutions that have accumulated a stock of capital before the pandemic will not have critical problems. Banks that have had problems before will need a longer recovery.
Plans and forecasts
In general, the vector of changes has already been identified – improving banking control, so that its settings would make it possible to assess the situation and support the development of credit business. There are several stages of improvement:
- active introduction of the updated Basel 3 approach to loan risk assessment;
- improving approaches to determining the danger of a loan to provide assistance to small and medium-sized businesses, for housing construction and the issuance of mortgages (the announced changes should take effect from October this year);
- lowering the thresholds on the size of assets to 150 billion for unauthorized use by banks of the approach based on data from internal separation;
- continuation of work on the principle of transition of banks, which are mandatory for the system, to IRB;
- introduction of a new formula for calculating risks;
According to forecasts, by the end of 2021 the share of overdue debt will increase, non-financial companies – at 9% and retail users – at 6%.
Despite a number of problems that the banking system will face throughout 2021, experts’ forecasts are positive. In addition, the planned implementation is designed to improve the condition of banks, and the growth of the real estimated income of the population by about 3% will help to support the solvency of borrowers.