Moody's: ruble depreciation to put pressure on Russian banks' capital
The ruble depreciation, which accelerated in January 2016, will put pressure on Russian banks' capital and loan quality, Moody's Investors Service's report says.
"We expect Russian banks' capital ratios and loan performance to bear the brunt of the country's falling currency and economic contraction," Moody's Vice President Irakli Pipia said. "We also envisage a detrimental impact on bank profitability, as rising problem loans will likely lead to higher loan-loss provisioning expenses for banks," he added.
According to Moody's analysts, a 10% ruble devaluation could lead to a 30 base point negative impact on capital ratios.
In addition, the rating agency estimates that problem loans will rise to 14%-16% in 2016 from an estimated 11%, TASS reports.
Currency depreciation may also prevent the Central Bank of Russia from lowering its key interest rates (currently at 11%).