Many Russian banks required additional capitalization in 22, among them relatively large ones – the Central Bank.

(Additional comments from Head of CBR Department)

MOSCOW, Jan 27 (Reuters) – The Central Bank forecast an increase in the balance sheet capital of the Russian banking sector by 424 billion rubles in December 2022, more than the profit (342 billion rubles) made by banks this month, as follows From regulatory review.

The CBR combined this capital increase with additional capitalization of a number of banks, as well as positive revaluation of valuable securities through other comprehensive income (plus 91 billion rubles), for a total of 92 billion rubles.

“Individual players need to recapitalize. The process is under control, it does not carry systemic risks, ”said Alexander Danilov, head of the CBR banking regulation and analytics department, at a briefing on Thursday.

He declined to name the banks recapitalized by 92 billion rubles in December, noting that there were “relatively large banks” among them.

“There are some other issues, they are decided by the shareholders,” Danilov said.

In general, in 2022, the sector’s balance sheet capital remained almost unchanged (increased by 84 billion rubles, or + 0.7%).

The included financial result (+0.6 trillion rubles) led to an increase in regulatory capital by 3.1% in 11 months to 2022, which is higher than net profit due to the use of regulatory easing by a number of credit institutions (including exchange rate fixing ) .

“While the growth of regulatory capital lagged far behind the growth of the loan portfolio (mainly corporate and mortgage), the total capital adequacy ratio (H1.0) also increased by 0.5 ppt in 11 months to 2022 to 12.8%,” CBR said.

The regulator explained this dynamics with support measures, including unlimited ones. Thus, the dissolution of the accumulated macroprudential buffer allowed banks to release capital of about 0.9 trillion rubles.

The latest CBR stress tests have shown that the banking system does not need systemic additional capitalization, but some banks may need additional capitalization by the end of 2023, if sanctions pressure continues and borrowers’ credit quality deteriorates. Could: its total volume is estimated at 700 billion rubles. (Edited by Elena Fabrichnaya. Marina Bobrova and Dmitry Antonov)