Nabiullina says Russia's banking system is safe

Nabiullina says Russia's banking system is safe

"The Central Bank is doing a lot to strengthen the national currency, or at least to keep it stable and maintain the stability of our financial system in general," President of Russia Vladimir Putin said at a meeting with the head of the Central Bank, Elvira Nabiullina.

The key indicators of the Russian banking system show that it is stable and is in a safe area, Nabiullina said.

"The situation in the banking sector is in many ways mirroring what is happening in the economy. Of course, external events inevitably have an impact on the banking sector’s development. Looking at the basic indicators for the system as a whole, though, the banking sector is in the safe zone and is stable," Nabiullina said, explaining that the regulator expects that the Russian financial system will maintain this stability and perform its basic role of lending to and financing the economy.

According to her, the second quarter was better than the first quarter, the result for the six months as a whole is a profit of 51 billion rubles.

"This cannot compare to last year’s result of 600 billion, of course, or the 1 trillion rubles that we had the year before that, but it is nonetheless a positive result, and we hope that the sector will finish the year with a profit of around 100 billion rubles," she suggested.

Nabiullina also said that the outflow of deposits from Russian banks is fully compensated for. "Yes, household deposits in banks increased by 7.2%. Three quarters of these deposits are in rubles. There was an increase in dollar deposits, but it has fallen," the chair of the Central Bank said.

Putin also asked about the size of the average rates on deposits. "The average rate has been changing quite fast following the decrease in the key interest rate, and is now around 10–11%, perhaps even higher," Nabiullina said, adding that it’s advantageous for citizens to keep money in bank deposits.

"Over the first half-year lending fell by 0.5%, but if we take a closer look, and take the indicators free of exchange rate fluctuations, we see that lending to business fell by 1% in the first quarter, but rose by 0.9% in the second quarter," the head of the Central Bank stressed.

"We are monitoring the top 20 banks, keeping watch on the rates at which they lend to manufacturers and industry. In January, the interest rate on loans was 25–27%, while now, more than half of loans are made at an interest rate of between 14 and 18%," she said.

"We understand that this rate is still rather high for most companies, however, the rate is coming down after its peak increase. We expect that the financial system will maintain this stability and perform its basic role of lending to and financing the economy," the head of the Central Bank continued.

Nabiullina told the president that they plan to issue around 30 million 'Mir' national payment cards in the next year. Also, she said that they are already concluding co-badging agreements with international payments systems.

The Bank of Russia considers the creation of the National Rating Agency as part of the work on the formation of the infrastructure of a financial market that will be independent of the situation on foreign markets and the geopolitical situation, the head of the Central Bank concluded.

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