TEXT-Fitch: Russian Banking Sector Stable; But Some Risks Growing

(The following was released by the rating agency)

Link to Fitch Ratings' Report: Russia's Banking Sector: Stable at Present, But Some Risks Are Growing

MOSCOW/LONDON, October 08 (Fitch) Fitch Ratings says in a new report that its outlook for the Russian banking sector is stable. This reflects the still reasonably benign operating environment, the system's generally satisfactory performance and stable asset quality, and limited refinancing risks given the sector's predominantly deposit funding.

At the same time, Fitch comments that some risks are growing in the system. The agency is concerned that rapid retail loan growth could lead to asset quality problems, in particular at banks with less experience in this segment. In addition, higher funding costs, due to greater competition for deposits, coupled with a normalisation of provision expenses, are likely to dampen profitability, and capital and liquidity levels have moderated as a result of overall credit growth.

The report is a slightly modified version of a presentation initially delivered at Fitch's IX Annual Conference on Russia held in Moscow on 25 September 2012.