The XXI International Banking Forum recently featured a speech by Elvira Nabiullina, where she addressed several pressing issues in the banking sector. She began by discussing the overall situation in the industry, highlighting its contribution to economic development and investment processes in Russia. Despite challenges, she noted that "the banking sector itself also feels confident owing to a large capital cushion and profits."
Nabiullina pointed out that the increase in the key rate has influenced credit activity but will not halt lending. She mentioned that "corporate lending expanded by 21.4% year-on-year" as of August 2024, indicating significant growth in certain segments like housing construction and machine building.
Mortgage lending has slowed down but remains at a balanced growth pace, with an expected expansion of about 12% by year-end if current trends continue. Consumer lending also saw a slowdown due to macroprudential measures and key rate increases but is projected to grow by 17% for the year.
In terms of monetary policy, Nabiullina emphasized that "the overall growth of credit in the economy should be moderate" to maintain low inflation rates. The Bank of Russia aims to reduce inflation to 4% by next year.
She also discussed plans for modifying banking regulations, focusing on concentration risk and standardizing syndicated lending rules. New initiatives include introducing a foreign currency liquidity ratio and developing subordinated instruments of a new type.
Nabiullina raised concerns about mortgage lending practices following the termination of subsidized programs, citing creative schemes that could pose risks to consumers. She stressed the importance of adhering to newly approved mortgage lending standards.
Car lending was another area requiring attention due to complaints about coercive tied selling practices. Nabiullina called for standardization in this segment as well.
On digital innovations, she highlighted progress with the digital ruble project, aiming for extensive introduction by July 2025. The first stage of pilot testing was successful, with more banks preparing to join.
Nabiullina concluded her speech on a positive note regarding innovations within the Russian banking sector, stating that it is among global leaders in this field.