VTB and Gazprombank entered the top 5 banks with the lowest capital adequacy

Two systemically important banks — VTB and Gazprombank (GPB) — remain anti-leaders in terms of capital adequacy with one of the lowest levels in this indicator. In 2023, the regulator allowed not to comply with capital allowances. At the same time, from 2024, banks will have to comply with an increased level of the standard. Its values ​​will gradually rise to pre-crisis thresholds until 2028.

VTB and Gazprombank entered the top 5 banks with the lowest capital adequacy, follows from the reporting data at the beginning of July 2023, which was studied by Kommersant. Their equity capital adequacy ratio (N1.0) as of the last reporting date was 9.4% and 9.6%, respectively.

Among systemically important banks, only these players have indicators below 10%. The gap from the arithmetic mean for other SICIs (systemically important credit institutions) was 9.1–9.3 percentage points (p.p.). The range of H1.0 value for systemically important banks in June was 12.1–40.8%. The minimum temporarily set by the Central Bank is currently 8% for banks.

From March 2022 to May 2023, the figures were not published. The Central Bank, as part of one of the easing measures, allowed not to comply with allowances to this standard during 2023 (total 3.5 percentage points over 8%). We are talking about the capital adequacy maintenance premium for banks with a universal license (2.5%) and the premium for systemic importance (1%). According to the Central Bank, the measure “gives banks the opportunity to lend to projects that are significant for the economy.” The surcharges will be gradually restored by January 1, 2028. From 2024 to 2028, banks will have to restore the level of allowances within five years, in the first year the standard will increase to 8.25%.

In June, VTB was able to increase the standard (by 0.13 p.p.), while at GPB it decreased (by 0.1 p.p.) The current values ​​are also lower than as of February 2022 (by 1.6 p.p. for GPB and 0.8 p.p. for VTB). Historically, the capital buffer of both GPB and VTB has been maintained at a relatively low level, said Vladimir Teterin, Senior Director for Banking Ratings at Expert RA. At the same time, “a low capital position is not a threat to the creditworthiness of these banks due to their systemic importance,” he says.

VTB did not answer “Kommersant”. The GPB clarified that the “slight decrease” in the standard “is due to an increase in the share in some markets of presence, as well as the current dynamics of the ruble exchange rate.” At the end of May, the Expert RA agency noted a decrease in capital adequacy ratios and the GPB loss absorption buffer against the backdrop of a strong growth in corporate lending in 2022. The bank explained that they will comply with both intermediate and full increased requirements by the time they are introduced.

The level of regulations may influence the decision on dividends. Banks are not limited in the distribution of profits for dividends, provided that after that the minimum value of H1.0 will not be lower than 10.5%, for systemically important banks – not lower than 11.5%. And there are already such examples. In particular, Bank Saint Petersburg (N1.0 – 22.6%), which paid dividends for 2022, will consider paying dividends for the first half of 2023 in September. Rosbank (N1.0 – almost 16%) distributed more than half of its profits (RUB 4.5 billion) as dividends for 2022. As for banks with low standards, according to the results of 2022, VTB does not pay dividends due to a loss, the decision of GPB on dividends for 2022 was not made public.

Denis Taradov, a partner at the Unicon auditing and consulting group, notes that in order to be able to distribute dividends, the bank needs to have some margin in excess of the required minimum so as not to break through the threshold value. In general, the increase in the values ​​of the standards should be planned – this is a certain strategy for changing the structure of the bank’s balance sheet.

Roman Kenigsberg, Director of the Internal Audit and Risk Management Department at FBK, notes that the lower the H1.0 standard for banks, the greater the “leverage”, that is, most of the assets are financed from borrowed funds, respectively, such banks with a reasonable approach to management credit risks have the opportunity to obtain a greater return on capital.

Olga Sherunkova