Measured by the final balance sheet total, Russia’s banking sector grew by 12.5 % last year, clearly higher growth than in 2019. Growth in total assets has been largely supported by growth in the volume of housing loans and loans granted to small and medium-sized firms (SMEs). This growth has been underpinned by government interest subsidies to borrowers and other subsidy programmes (BOFIT Weekly 35a/2020 and 35b/2020). Despite the economic recession, payment defaults scarcely increased and non-performing loans for the credit stock of the banking sector overall remained steady at 6.1 %. On the other hand, many loans were restructured already at the end of spring (BOFIT Weekly 29/2020). At the end of last year, over 5.1 trillion rubles in loans of large firms were restructured, i.e. more than 14 % of the corporate lending portfolios of Russia’s largest banks. Corporate troubles are expected to show up as eroding the quality of bank lending portfolios this year at the earliest. However, the banking sector at this point is still well capitalised and rather well positioned to absorb potential credit losses.
Despite a significant decline in real incomes, household bank deposits grew by 4.2 % last year, which was only a tad lower than the inflation rate (4.9 %). Household assets represent about a third and corporate assets about 31 % of the banking sector’s total liabilities. These shares have remained fairly steady, but over the past year the structure of savings shifted a bit. Despite ruble devaluation, the popularity of foreign currency accounts has diminished. Rising uncertainty and the drop in deposit interest rates are reflected in the increasing popularity of keeping money on current account. At the end of December, assets held in household accounts were up 50 % y-o-y. The volume of household term deposits, in contrast, contracted slightly, reflecting the increased enthusiasm of households to invest in the stock market last year (BOFIT Weekly 3/2021).