Russian Banks Significantly Scaling Back Loans to Firms

Russian lending growth to companies has slowed “fairly significantly” since September, a stumble that shouldn’t be attributed to higher rates the central bank set that month, First Deputy Chairman Alexei Simanovsky said.

Loans to companies excluding the financial industry grew 0.7 percent in December compared with the previous month and 12.7 percent in 2012 on an annual basis, Simanovsky told reporters in Moscow today. The slowing economy may be partly to blame, he said.

“So far it’s not easy to explain the trend,” Simanovsky said while attending the Gaidar Forum in the Russian capital. Companies are blaming excessively high rates, while the banks counter that they can’t find reliable borrowers.

Russia, the world’s largest energy exporter, is looking for ways to reignite the economy as growth slows to the weakest pace since a recovery began in 2010. Bank Rossii unexpectedly raised interest rates in September as inflation breached the 6 percent upper limit of the central bank’s target range after a poor harvest fanned price growth.

Lending to companies grew 26 percent in 2011, near the top of the central bank’s “comfort zone,” Simanovsky said last year. Policy makers from Bank Rossii and the government sparred publicly yesterday over whether monetary easing is needed to spur growth.

The Micex Index (INDEXCF) of 50 stocks rose 0.2 percent to 1,517.74 as of 12:09 p.m. in Moscow. OAO Sberbank, the state-run lender headed by former Economy Minister Herman Gref, climbed 0.5 percent to 100.41 rubles. The lender said yesterday that full- year profit rose 11 percent, while lending to companies increased 17 percent under Russian accounting standards.

5% Target

Russia will seek to grow at a stable rate of no less than 5 percent and must modernize companies and diversify the economy to accomplish that goal, Prime Minister Dmitry Medvedev said in a speech in Moscow yesterday. Gross domestic product expanded 3.5 percent last year after rising 4.3 percent in each of the previous two years, according to Deputy Economy Minister Andrei Klepach.

Gref said today that the government doesn’t need to help the biggest financial institutions. Last year he joined calls by Andrei Kostin, chief executive officer of Russia’s second- biggest lender VTB Group, for the central bank to extend longer loans to banks,

“The new players are the ones who need help,” he said during a panel discussion at the Gaidar Forum in Moscow. “The big players don’t need help.”

Loans to households advanced 39.3 percent last year compared with 2011, while banking sector assets grew 18.9 percent and retail deposits advanced 19.9 percent, Simanovsky said. According to preliminary data, banks earned more than 1 trillion rubles ($33 billion) last year, he said.

To contact the reporters on this story: Olga Tanas in Moscow at otanas@bloomberg.net; Scott Rose in Moscow at rrose10@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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