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The Belarusian Banks Efficiency Rating in Q4 2014: the system endurance trial

Ratings
17:47 | 15.04.2015 | Business-News

Q4 2014 proved to be the most dramatic for the Belarusian banking system. The panic that spread rapidly both among the individuals and legal entities in connection because of the Russian ruble devaluation led to strict market regulation by the National Bank and, eventually, to the Belarusian ruble devaluation.

 

In Q2 2015 already, four banks (InterPayBank, BIT Bank, Eurobank and N.E.B. Bank) faced the suspension of licenses by the National Bank for carrying out certain types of banking operations. Delta Bank that was affected most of all in Q4 by the processes taking place in the Belarusian economy and problems in Ukraine was deprived of the banking license, which led to the need to resort to the Agency for guaranteed compensation of bank deposits to fulfill the obligations of Delta Bank to depositors-individuals.

 

The banking system that existed in the conditions of liquidity surplus in the previous periods of 2014 faced in Q4 the shortage of funds. This caused a rise in interest rates on the deposit market for individuals in late November – early December to 30% per annum; some banks raised the deposit rates by 1 to 6 percentage points at once. A sharp outflow of funds from the bank accounts in mid-December has led to an enormous liquidity deficit of about BYR 8-9 trillion.

 

On December 19, the National Bank has made a number of important decisions for the banking system, which allowed to pillow the panic within a short period of time, but in the end did, they didn’t prevent the Belarusian ruble devaluation.

 

The interest rates on standing and bilateral bank liquidity support operations were increased on December 19 from 24% to 50% per annum. At the same time, the interest rates on standing operations for the liquidity withdrawal were left unchanged at the level of 17% per annum. In agreement with the National Bank, major commercial banks have introduced fixed-term deposits with the indexing mechanism of ruble savings with changing Belarusian ruble exchange rate in order to prevent amplification of funds outflow from the banking system. The upper limit of deposits for the individuals in late December 2014 was at a level of 50-55%, which allowed to gradually stop the outflow of deposits from the banking system together with the limitations in the field of currency circulations.

 

Over the last 10 days of December, Belarus was in the conditions of actual multiplicity of the Belarusian ruble exchange rates. The Presidential Decree #607 dated December 20 introduced a temporary tax on stock deals for the purchase of foreign currency. The initial tax rate was set at 30% of the cash amount in Belarusian rubles paid for the purchase of foreign currency. At the same time, an identical amount of fee was introduced for the purchase of foreign currency by individuals (both cash and non-cash). The payment of fees by the population occurred in the form of charging the commission fee by commercial banks, and this fee remained at the disposal of banks. The tax rate on purchase of foreign currency was reduced from 30% to 0% in three stages from December 2014 to January 2015, which allowed in early 2015 to get rid of multiple exchange rates. However, the decree #607 wasn’t canceled.

 

According to the Decision of the National Bank №788 dated December 19, there were suspended operations of purchase and sale of foreign currency by resident business entities on the OTC market. This Decision of the National Bank was cancelled in February 2015. In accordance with the Decision of the National Bank #796 dated December 20, the compulsory sale rate of foreign exchange earnings coming into the country has been increased from 30% to 50%. From February 25, this rate was reduced from 50% to 40%.

 

The National Bank also recommended the commercial banks to prevent the growth of claims to borrowers in Belarusian rubles till 1 February 2015 and not to change currency of monetary liabilities of borrowers under loan agreements. As per the recommendations of the National Bank, the banks could provide new loans only within cash flows from repayment of previously open credit lines.

 

In addition, the Regulator decided not to apply supervisory measures to the banks action for failure to comply with the requirements in the Decision of the National Bank #260 from 18 December 2014 to 1 January 2015. This document as in force till 1 January 2015 and determined the condition that the maximum interest rate on ruble loans to resident legal entities to be limited by the amount of the average interest rate on new ruble loans to legal entities decreased by 1 percentage point. Moreover, the Decree #260 was amended on November 18, according to which the formula for determining the maximum interest rate on ruble loans for enterprises covered not only the newly signing credit agreements, but also the contracts concluded before the entry into force of the decree.

 

The crisis in December 2014 led to the actual termination of business entities lending. On the one hand, the banks have been restricted by the recommendations of the National Bank for the growth of the loan portfolio until February 2015, and on the other hand, they were forced to significantly increase the rates on granted loans, because of the increased cost of the resource base. making them unsuitable for business entities.

 

Q4 2014 turned out to be remarkable in terms of the banking sector transactions. On October 28, there was signed an agreement for the purchase and sale of shares of CJSC ‘Moscow-Minsk Bank.’ The buyers of 100% of the bank shares became the National Bank and OJSC ‘Paritetbank.’ The bank was bought from OJSC ‘Bank of Moscow’ (Russia), which owned 99.75% of the shares, and form the company ‘BM Holding AG’ (Switzerland), which owned 0.25% of the shares. Both the companies are part of the VTB Group (Russia).

 

In October, the share in the BIT Bank authorized capital of Cypriot company ‘Lakrouz Investment,’ the ultimate beneficiary of which is the citizen of Belarus Tatiana Bertosh, was diluted. The transactions amounted to BYR 53.6bn.

 

Also in October, the main shareholders of Absolut Bank – Cypriot companies ‘Teocritos Enterprises Limited,’ ‘Estudes Trading Limited,’ and the Belarusian CPUE ‘Contekhimpex’ sold their stakes at LLC ‘Interservice’ for EUR 5.27 million.

 

Taking into account that one of the three-stage Belarusian ruble devaluation stages took place in December 2014, it affected the increase in profits of most banks, which is almost not related to the actual situation, as the financial standing of almost all the banks deteriorated in Q4.

 

The leader in the Belarusian banks efficiency rating in Q4 2014 remained Priorbank. The Bank was not an absolute leader in any of the indicators, but the presence in the top five banks in terms of profit as well as the ratio of profit to assets and profit to capital allowed Priorbank to retain the leadership. Priorbank managed to show in Q4 a record-high increase in the net revenue from the operations with derivative financial instruments, the maximum size of the net commission revenue over all the periods and the net interest revenue.

 

MTBank improve its rank by one position rating, having moved from the 3rd to the 2nd place. The gap between the laeding Priorbank and MTBank totaled 4 points. MTBank showed the greatest profit to assets ratio.

 

Belgazprombank in Q4 is ranked the third. The backlog from MTBank totaled 2 points, although in Q3 Belgazprombank was ahead of his ‘rival’ by 3 points. The reduction of the bank's position was due to deterioration in the profit to assets ratio. In terms of profit, the bank scored the same number of points, as in Q3.

 

TC Bank has appeared to be ranked the fifth in the efficiency rating. In Q3 2014, the bank was at the 13-15 positions, and over October- December, the bank managed to break into the top ten for the first time.

   

The position in the Belarusian banks efficiency rating was a little improved by BPS-Sberbank. In Q3, it occupied the 7th-8th places, whilst in Q4 it was at the 6th place.

  

Among the state-owned banks, the highest position in the ranking over Q4 2014 was occupied by Moscow-Minsk Bank (the 9th place against the 6th position in Q3 2014). Belagroprombank was at the 15th place (minus 3 positions), Belinvestbank – the 16th place (plus 2 positions), Belarusbank – the 19th place (plus 1 position), Paritetbank – the 28th place (minus 1 position). 

 

The greatest decrease in the Rating in Q4 2014 as compared with the Rating in Q3 was shown by Eurotorginvestbank (minus 7 positions), whilst the largest increase – by InterPayBank (plus 8 positions).

 

Absolutbank, in Q3 2014, closed the Belarusian banks efficiency rating for Q4 2014. Absolutbank and Delta Bank (the 27th place, minus 4 positions) received losses over the entire year of 2014.

 

Rank

Bank name

Rating in assets, number of points

Rating in ratio of net profit to assets, number of points

Rating in ratio of net profit to
capital,
number of points

Total rating,
number of points

1

Priorbank

26 (0)

26 (↓1)

29 (↑1)

81 (0)

2

MTBank

21 (0)

25 (↑4)

31 (0)

77 (↑4)

3

Belgazprombank

25 (0)

22 (↓2)

28 (↑1)

75 (↓1)

4

BSB Bank

13 (0)

30 (0)

30 (↑1)

73 (↑1)

5

TC Bank

17 (0)

29 (↑7)

23 (↑7)

69 (↑14)

6

BPS-Sberbank

29 (0)

14 (↑1)

25 (↑3)

68 (↑4)

7 

BNB Bank

16 (0)

23 (↓2)

27 (↑1)

66 (↓1)

8

Technobank

15 (0)

27 (↓1)

22 (↑2)

64 (↑1)

9

Moscow-Minsk Bank

22 (0)

17 (↓2)

21 (↓4)

60 (↓6)

10-11

Alfa-Bank

23 (0)

16 (↓1)

20 (↓4)

59 (↓5)

BelVEB Bank

27 (0)

15 (0)

17 (↓2)

59 (↓2)

12

N.E.B. Bank

1 (↓1)

31 (0)

26 (↓4)

58 (↓5)

13

RRB-Bank

12 (0)

20 (0)

24 (↑1)

56 (↑1)

14-15

Idea Bank

19 (↑1)

18 (↑2)

18 (0)

55 (↑3)

Belagroprombank

30 (0)

11 (↓3)

14 (↑2)

55 (↓1)

16

Belinvestbank

28 (0)

10 (↑2)

16 (↑3)

54 (↑5)

17

BBSB Bank

3 (↓2)

28 (↓1)

19 (↓2)

50 (↓5)

18-19

VTB Bank (Belarus)

24 (0)

8 (↓1)

15 (↓2)

47 (↓3)

Belarusbank

31 (0)

5 (↑1)

11 (↑2)

47 (↑3)

20

HCBank

18 (↓1)

9 (↑2)

13 (↑3)

40 (↑4)

21

Zepter Bank

8 (0)

19 (↑1)

10 (↑3)

37 (↑4)

22

InterPayBank

4 (↑1)

24 (↑21)

8 (↑5)

36 (↑27)

23

BIT Bank

5 (↑1)

21 (↓5)

9 (↑1)

35 (↓3)

24

BTA Bank

11 (0)

7 (↓5)

12 (↓2)

30 (↓7)

25

Fransabank

10 (0)

12 (↑2)

7 (↑1)

29 (↑3)

26

Eurotorginvestbank

7 (↑1)

13 (↓10)

6 (↓9)

26 (↓18)

27

Delta Bank

20 (0)

2 (↓4)

1 (↓10)

23 (↓14)

28

Paritetbank

14 (0)

4 (↓1)

4 (0)

22 (↓1)

29

Trustbank

9 (0)

3 (↑1)

3 (↑1)

15(↑2)

30

Eurobank

2 (↑1)

6 (↓5)

5 (0)

13 (↓4)

31

Absolutbank

6 (↓1)

1 (0)

2 (↑1)

9 (0)

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