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Belarusian Banks Efficiency Rating over 9 months of 2015: reserve requirement strengthening and ruble devaluation

Ratings
17:46 | 12.11.2015 | Business-News

In Q3, the banking sector operated under the conditions of further impact of the National Bank on the credit policy of the banks for the purpose of decrease of the credit pressure on the economy sectors, strengthening of the reserve requirement and liquidity outflow against the sudden weakening of the Belarusian ruble.

 

Changes in the profit performance under the influence of different factors defined the movements in the Belarusian Banks Efficiency Rating occurred over Q3 in many ways.

 

Following the results of 9 months, the first place in the Belarusian Banks Efficiency Rating was taken by Belgazprombank. According to the results of Q3, Belgazprombank took the second place by the realized profit indicator (BYR 244.4 billion). According to Q3 2014, the bank's profit increased by BYR 24.0 billion as compared to Q2 2015 when it increased by BYR 6.8 billion.

 

Commenting on the activity results in Q3, it was reported at Belgazprombank that in July-September, the bank was primarily affected by the macroeconomic factors. The economic downturn, the main partner countries included, and tough monetary policy caused the deterioration in demand for the credit resources and decrease in the bank's assets.

 

The credit portfolio of the corporate business in Belgazprombank over Q3 2015 increased by 11%, and the number of credit contracts increased by 1%. The ratio of the problem debt insignificantly increased by 0.58% and amounted to 1.46% as of October 1, 2015. At the same time, the ratio of the problem debt decreased by 0.27% as compared to the beginning of the year.

 

Priorbank which was the leader in the Efficiency Rating according to the results of Q2 moved to the second place. The bank recorded the decrease in the number of points in the subratings as well as in the total rating as compared to Q2.

 

In July-September, Priorbank was among the banks recorded the decreasing net profit as compared to Q2; meanwhile, the decrease was the highest in absolute terms – minus BYR 274.5 billion. In Q3, the allocations to reserves increased 5-fold as compared to Q2 – from BYR 175.0 billion to BYR 901.4 billion. This adversely affected the changes in the net profit.

 

According to the results of Q3, TK Bank joined Top 3. TK Bank took the fifth place among all banks by the net profit realized in Q3 (profit amounted to BYR 119.8 billion) with the bank's profit increased by BYR 106.8 billion as compared to Q2. Only Belarusbank's net profit was higher.

 

BNB-Bank joined Top 5 in the Efficiency Rating according to the results of Q3 that rose by four points at once. It was thanks to improvement of the net profit-assets ratio subrating. Over Q3, the bank's assets increased by BYR 580.0 billion. For comparison, the assets increased by BYR 202.1 billion in Q2.

 

Following the results of Q3, BNB-Bank increased the profit by more than twice as compared to Q2 (from BYR 18.9 billion to BYR 45.4 billion). The net profit growth was provided at the expense of the net income on transactions with foreign currency (2.5-fold as compared to Q2) and of the growth in net interest income (by 31.6%).

 

"The bank was conservative in estimating credit, currency and commodity risks during provision of financing and solution of problem assets. Also, the bank actively worked with the customer base in order to increase the scope of currency exchange transactions," the Deputy CEO of BNB-Bank Siarhei Sabuk marked in the comments to Business News agency.

 

Following the results of Q3, BelVEB Bank left Top 5 having moved from the 4th place to the 6th one. But it is not due to the degradation of the bank's performance but to more intense movement in the Rating of the banks from Top 5.

 

BelVEB Bank joined Top 3 by the amount of profit realized in Q3 together with Belarusbank and Belgazprombank. As compared to Q2, the profit of BelVEB Bank increased by BYR 24.5 billion.

 

In Q3, BelVEB Bank recorded the growth in the credit portfolio (legal entities and individuals) by more than BYR 0.5 trillion that is connected with the increase in the ruble equivalent of the credits in foreign currency due to devaluation of the Belarusian ruble. At the same time, the reduction of credit rates for the population allowed the bank increasing the credit portfolio of the individuals by almost BYR 0.1 trillion.

 

The attracted funds of the clients (legal entities and individuals) over July-September increased by almost BYR 2.0 trillion with the assumption that 75% of the increase was provided by the growth in the ruble equivalent of the deposits in foreign currency due to the ruble devaluation.

 

"In Q3, the cross flow of the resources from the ruble deposits to the currency ones was observed in the structure of the attracted assets that led to the reduction of the share of the national currency in the total amount of the attracted funds," the Deputy Chairman of the Management Board of BelVEB Bank Siarhei Zelianko marked.

 

The greatest breakthrough in the Efficiency Rating was made by Idea Bank that moved by 8 points at once – from the 17th place to the 9th one. It was thanks to improvement of the positions in the profit-assets ratio subrating (from the 16th place to the 10th one) and in the profit-capital ratio subrating.

 

In Q3, Idea Bank increased its assets by BYR 352.6 billion after the decrease in Q2 by BYR 47.3 billion. The equity capital of the bank grew by BYR 43.3 billion in Q3 after insignificant decrease (by BYR 0.05 billion) in Q2.

 

The worst dynamics of movement in the Rating was demonstrated by Moscow-Minsk Bank that lost 11 positions at once. It dropped from the 3rd place to the 14th one. According to the results of July-September, the loss of Moscow-Minsk Bank amounted to BYR 10.6 billion. For comparison, following the results of Q2, the bank gained the profit amounting to BYR 35.2 billion.

 

The bank made loss in Q3 due to the significant growth in allocations to reserves. As against Q2, the allocations to reserves increased 2.5-fold in Q3 (from BYR 62.9 billion to BYR 154.5 billion). In addition, the bank made loss on transactions with derivative financial instruments amounting to BYR 26.3 billion according to the results of nine months.

 

Bank VTB (Belarus) moved by 5 positions in the Rating – from the 13th place to the 18th one. Following the results of July-September, the bank recorded the loss amounting to BYR 40.8 billion resulted from the two-fold growth in allocations to reserves in Q3 as compared to Q2 (from BYR 200.1 billion to BYR 385.8 billion). For comparison, the bank gained the profit amounting to BYR 36.9 billion in Q2.

 

As it was noted at Bank VTB (Belarus), the weakening of the Belarusian ruble to the US dollar in Q3 together with the worsening of the financial state of the enterprises resulted from the currency and credit risk increase. In its turn, the currency risk increase brought pressure on the amount of the regulatory capital adequacy.

 

"There were difficulties with creation of the stable resource base because the volatility of the bank deposits was high, the external financing availability decreased, the normative standard of transfers of all currency assets reserve requirement to the fund increased from 7% to 8%. Taking into account the policy of the National Bank regarding limitation of the level of the national currency credit rates, in September of the current year, a range of the banks made the one-time credit reservation not connected with the level of the bank's credit risk that had an effect on the bank's profit. Bank VTB (Belarus) was among these banks," the representative of Bank VTB (Belarus) commented the activity results in Q3.

 

Belinvestbank moved from the 23th place to the 21st one in the Rating. Although the bank reduced the amount of the gained profit by BYR 18.6 billion in Q3 as compared to Q2. The growth in allocations to reserves by almost BYR 100.0 billion in Q3 as compared to Q2 (from BYR 269.0 billion to BYR 366.4 billion) influenced in the changes in the profit.

 

As was noted by the Deputy Chairman of the Board Sergei Dubkov in the comments to Business News, the activity of the bank and banking system in Q3 had been forming under the influence of the changes in the economic and legal environment.

 

"The indicated factors caused the deterioration of the credit portfolio of Belinvestbank, the growth in overdue and unpaid interests for the credit use, the cost escalation connected with the reserve formation that had an effect on the bank's overall performance," Mr. Dubkov said.

 

According to the results of Q3, Paritetbank, BTA Bank and Trustbank remained the outsiders having taken the 24th, the 25th and the 26th places respectively. In July-August, all three banks recorded the net profit growth as compared to Q2. The maximum growth in relative terms was demonstrated by Trustbank. Its profit over Q3 increased 5-fold from BYR 0.3 billion to BYR 1.6 billion. The net profit growth is connected with the income on transactions with foreign currency that increased 5-fold (from BYR 3.0 billion to BYR 15.7 billion).

 

In Q4, the banks don't expect significant changes in the economy that can have a significant effect on the banking system.

 

The Belarusian Banks Efficiency Rating according to the results of 9 months of 2015

 

Place in the rating

Bank

Assets rating, number of points

Net profit-assets ratio rating, number of points

Net profit-capital ratio rating, number of points

Total rating, number of points

1

Belgazprombank

21 (↓4)

20 (↓2)

25 (↓4)

66 (↓10)

2

Priorbank

20 (↓4)

21 (↓5)

24 (↓6)

65 (↓15)

3

TK Bank

15(↓4)

22 (↓1)

23 (↑3)

60 (↓2)

4

BSB Bank

8 (↓4)

24 (↓1)

26 (↑1)

58 (↓4)

5

BNB-Bank

14 (↓3)

19 (↑1)

22 (↓2)

55 (↓4)

6

BelVEB Bank

22 (↓4)

13 (↓3)

17 (↓4)

52 (↓11)

7

HCBank

12 (↓4)

18 (↓2)

20 (↓2)

50 (↓8)

8

Zepter Bank

3 (↓4)

25 (↓3)

21 (↓5)

49 (↓12)

9

Idea Bank

13 (↓5)

16 (↑5)

18 (↑3)

47 (↑3)

10

MTBank

16 (↓4)

14 (0)

16 (↓1)

46 (↓5)

11

Belarusbank

26 (↓4)

7 (↑2)

11 (↑3)

44 (↑1)

12

N.E.B. Bank

1 (↓2)

23 (↓1)

19 (↑5)

43 (↑2)

13

Absolutbank

2 (↓4)

26 (↓3)

15 (↓8)

43 (↓15)

14

Moscow-Minsk Bank

17 (↓4)

12 (↓7)

14 (↓13)

43 (↓24)

15

Alfa-Bank

18 (↓4)

10 (↓5)

13 (↓6)

41 (↓15)

16

Fransabank

7 (↓4)

17 (0)

12 (↓1)

36 (↓5)

17

Belagroprombank

25 (↓4)

4 (↓4)

5 (↓6)

34 (↓14)

18

Bank VTB (Belarus)

19 (↓4)

5 (↓8)

8 (↓10)

32 (↓22)

19

BPS-Sberbank

24 (↓4)

2 (↓1)

6 (↓4)

32 (↓9)

20

RRB-Bank

9 (↓4)

11 (↑1)

10 (↑1)

30 (↓2)

21

Belinvestbank

23 (↓4)

3 (↓1)

4 (↓3)

30 (↓8)

22

Technobank

11 (↓3)

9 (0)

9 (↑3)

29 (0)

23

Eurotorginvestbank

4 (↓4)

15 (↓6)

7 (↓5)

26 (↓15)

24

Paritetbank

10 (↓5)

8 (↑1)

2 (↓2)

20 (↓6)

25

BTA Bank

5 (↓5)

6 (0)

3 (↓2)

14 (↓7)

26

Trustbank

6 (↓3)

1 (↓1)

1 (↓1)

8 (↓5)

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