http://www.themoscowtimes.com/article/600/42/376107.htm
Survey: Bad Loans May Increase 400%
10 April 2009 Bloomberg
Russian banks' bad loans will quadruple to $70 billion this year,
according to a Bloomberg survey.
Nonperforming loans will increase to 12.8 percent of the 18.4 trillion
rubles ($549 billion) that is owed by Russian companies and individuals by the
end of this year, from 3.2 percent in March, according to the mean estimate of
17 banking analysts polled by Bloomberg in the past week. HSBC Holdings,
Europe's biggest bank, expects delinquencies to reach 23 percent, Europe's
highest rate after Hungary at 25 percent.
"Many small and medium-sized Russian businesses will end up defaulting,
and that will slow down the recovery," said Aybek Islamov, a London-based bank
analyst at HSBC.
Sberbank's bad debt will more than triple to 8.9 percent in 2009,
according to the survey.
Bad Loans Estimates
Investment bank Total Est. Sberbank VTB
Alfa Bank 15 n/a n/a
Citigroup 20 15 15
Daiwa 12.5 n/a n/a
Deutsche Bank 10 6 8
Fox-Pitt Kelton 12.5 n/a n/a
HSBC 23 8 13.5
ING 10 6.9 n/a
JPMorgan Chase 12.5 11 13
Metropol 6.5 6 7
Morgan Stanley 22.5 11 11
Rye, Man & Gor 10 9.5 10.25
Sovlink 12.5 8.5 n/a
Troika Dialog 9 7.5 9
UBS 13 13 10
UniCredit 9.5 8 10
UralSib 9.7 7 9
VTB 9 7.7 n/a
Average 12.8 8.9 10.5
Source: Bloomberg
Loans in arrears at VTB Group, Russia's second-largest lender, may jump
to 10.5 percent, exceeding the loan-loss reserves of 8 percent that is planned
by chief executive Andrei Kostin. Yelena Litovchenko, a VTB spokeswoman, said
the bank expects the reserves to be enough to cover nonperforming loans.
Leonid Slipchenko, a UralSib analyst, predicts that Russian bad loans
will rise to 9.7 percent. UralSib's commercial bank reported a net loss of 1.7
billion rubles for the first quarter because of provisions for bad loans.
Bad debt makes state-controlled VTB a "candidate to lose its
investment-grade rating, which would mean dilution for equity shareholders and
depreciation for its bonds," said Zina Psiola, who manages about $220 million
in Russian equities at Clariden Leu in Zurich. VTB is rated Baa1 by Moody's
Investors Service, three levels above junk, while Standard & Poor's rates the
bank two levels higher than junk at BBB.
"How high nonperforming bank loans will go, and the contagion to the rest
of the economy, is critical and is likely to provide a scary backdrop to the
market," said Chris Weafer, UralSib's chief strategist.
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