Large business adapted to current economic conditions, but several sectors have problems - Gref

VLADIVOSTOK. Sept 4 (Interfax) - Large Russian businesses have been able to adapt to the new economic conditions, including high rates, but several sectors are having problems and insolvency is increasing, Sberbank CEO Herman Gref said.

"Large businesses adapted to these conditions. Companies drastically cut costs, started raising less capital and are trying to repay as much debt as possible. And this is good news. Though there are problems in a whole range of sectors. We are now seeing a wave of insolvency in various sectors and companies going bankrupt, but on the whole, I will reiterate that business has been able to adapt," Gref told the Vesti Information System in an interview at the Eastern Economic Forum.

He said that a negative trend was that companies had been reducing costs by making cuts to investment programs.

"They have, of course, practically wound down investment programs fully. Why are we voicing these concerns? Because we can see that project financing as a method of funding - investing in companies' development - has become practically exotic. In terms of the future of the economy, these are alarm bells. We are seeing investments decline this year and, of course, we will definitely see this process reflected in economic growth rates in the years to come," Gref said.

He said that real rates needed to be lowered to support businesses.

Sberbank expects the Central Bank will continue lowering the key rate in increments of 25-50 basis points (bps) and forecasts the rate at 13%-13.5% at the end of 2026 and 11%-11.5% at the end of 2027, Gref said.