Govt measures to support businesses could cost banks 400 bln rubles - VTB head
MOSCOW. April 20 (Interfax) - The Russian government's set of measures to support companies hit by the coronavirus pandemic could cost the country's banking sector about 400 billion rubles, but this is a burden that banks can carry, the head of state lender VTB , Andrei Kostin said in an interview with RBC.
"When there's a crisis situation, banks are the first to feel it, like birds before an earthquake. We felt this in 2008, 2014 long before other sectors. But right now the reason for the crisis is not in the economy and so we are not yet experiencing a big negative impact. The country has been in a relative quarantine for less than three weeks. Neither mass layoffs nor lengthy delays of wages have begun. Even speaking with the owners of businesses that have suffered most of all, I hear from them 'we'll last another month somehow,'" Kostin said.
"But we can already report an estimate of the crisis to the current moment. The set of measures passed by the government - these are zero-interest loans and deferrals on loan payments - could cost the banking sector about 400 billion rubles. This is a doable burden for banks, considering that the banking sector's net profit last year was 1.7 trillion rubles. But we understand that the main risk is credit risk. The Russian banking sector has given out 3 trillion rubles for sectors that have already been deemed harmed, and another 1.5 trillion rubles for leasing companies in the area of heightened risk, such as aircraft, the railcar fleet and so on. Therefore, when these companies are unable to pay loans on time, the blow will be serious. We understand all this," Kostin said.
According to the most pessimistic estimate, Russia's banking sector could lose 2.5 trillion rubles, Kostin said.
"This is a major blow. But I still hope for a more favourable outcome and that we will manage to handle it. This will depend on how quickly production recovers, including in sectors that are currently under particular pressure," Kostin said.