Russia 110217 Basic Political Developments
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- Russia to auction off Dagestan Airlines on Thursday
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National Economic Trends17 Feb, 2011, 02.34PM IST,REUTERS Russian rouble at new 9-month high on rising oilhttp://economictimes.indiatimes.com/markets/forex/russian-rouble-at-new-9-month-high-on-rising-oil/articleshow/7514640.cms MOSCOW: The Russian rouble firmed on Thursday, approaching a nine-month high versus the dollar as oil rebounded from an 11-week low. Brent crude oil traded at its highest level since 2008 at $104.11 a barrel, promising higher budget revenues and stronger economic growth for Russia, the world's top crude producer. The unrest in the Mideast pushed Russia's Urals export blend up past the $100 per barrel mark for the first time since the 2008 pre-crisis peak. As the euro-dollar cross strengthened, the dollar lost nearly 0.3 percent against the rouble reaching 29.23 roubles at 0718 GMT, while the euro added 0.4 percent and traded at 39.65. "If trading volumes are significant (because of expensive oil and upcoming taxes), the basket quotes may fall," said Andrey Mishko from Nomos Bank. Against the basket, comprised of 0.55 dollars and 0.45 euros, used to guide the exchange rate policy, the rouble lost 5 kopecks to 33.94. "By the end of today's trading, the euro will fall against the dollar, prompting sales in the currency basket," said Anton Zakharov, analyst at Promsvyazbank. He said this will keep the rouble on the rise, trading within a band of 33.98-33.82 against the basket. Weekly inflation slows to 0.2% http://www.bne.eu/dispatch_text14247 Renaissance Capital February 17, 2011 According to Rosstat, weekly consumer inflation slowed to 0.2% in the period 8-14 February. Consumer inflation has hit 2.9% since the start of the year, implying that the annual CPI is approximately 9.7-9.8% at the moment. A detailed breakdown shows that a number of state non-monetary measures (including state grain interventions and investigations into fuel price setting) have already had an impact on the CPI, with gasoline prices unchanged and other food items slowing the inflationary pace. We are not sure that these data have set a new price trend and will have a significant impact on Central Bank of Russia (CBR) decisions. The CBR has recently been focusing on inflation in the non-food segment and monetary pressures in this segment, rather than headline inflation. Nevertheless, CBR Chairman Sergey Ignatiev has previously remarked that the CBR hoped for inflation to decelerate as a result of non-monetary actions - and this is what is happening now. Hence, it is likely that any increases during the CBR meeting in February will be less hawkish.
The Russian Federal Agency for State Property Management will hold an auction on Thursday to sell 100% of shares in Dagestan Airlines at an initial price of 790 million rubles ($26.77 million), the agency said in a statement. The agency closed the bid book on February 10. The bid increment is set at 8 million rubles, the agency said. Dagestan Airlines' short-term debt amounted to 442.444 million rubles, including 273.926 million rubles in accounts payable as of September 30, 2010, the company's balance sheet showed. The company runs a fleet of 11 aircraft. One of its Tu-154M airliners was destroyed in a crash on December 4 at Moscow's Domodedovo airport after an engine failure. MOSCOW, February 17 (RIA Novosti) Business, Energy or Environmental regulations or discussionsBRIEF-Moody's:Russian banks' profitability likely to be restoredhttp://www.reuters.com/article/2011/02/17/idUSWLB448620110217 Thu Feb 17, 2011 1:51am EST Feb 17 (Reuters) - Russian banks * Moody's: Russian banks' sound profitability likely to be restored in 2011. Russian banks' sound profitability likely to be restored in 2011 http://www.bne.eu/dispatch_text14247 Moody's
Following a decline in loan-loss charges, improved loan growth and stabilising net interest margins, Russian banks' net profits are likely to improve in 2011, says Moody's Investors Service in a Special Comment. The report explores the sector's profits in light of declining credit costs, examines the current trends and presents Moody's profit outlook for the sector in 2011. In the report, Moody's also notes that the ratings of Russian banks continue to be constrained by a number of key credit weaknesses and any improvement in profitability alone is not likely to lead to upward rating movement. Moody's says that the anticipated improvement in the banks' bottom-line performance contrasts with the difficult 2009 and marginally positive 2010. During these two years, very high credit costs continued to impair Russian banks' bottom-line performance. "Profitability improvements are most likely to stem from a contraction in cost of credit risk," explains Semyon Isakov, a Moody's Assistant Vice President, Analyst and author of the report. "Moody's expects Russian banks to report a return on average assets of above 2% for 2011, which is on par with pre-crisis levels. Declining loan-loss provisioning charges will be the main cause of this, because in Moody's view, banks have bolstered their loan-loss reserves to levels commensurate with the impairments in their loan portfolios," adds Mr Isakov. Moody's report notes that credit charges are likely to decrease to 100-200 basis points (bps) of gross loans in 2011, compared with 200-400 bps in 2010 and a very high 500-700 bps in 2009, given the recession and global financial crisis. In addition, Moody's outlook on the earnings performance of Russian banks is underpinned by the assumption that banks will, on average, be able to maintain recurring earnings power (pre-provision earnings/average assets) of 4% in 2011. "We expect pre-provision income to stabilise at the level reported in Q3 2010, because the recovering growth in gross loans, accelerating inflation and stabilising loan rates should underpin net interest margins; these margins account for over 70% of the sector's revenues," explains Mr Isakov. Moody's also notes the high correlation between the performance of the Russian banking system and the health of the domestic economy. As a result, the sector is vulnerable to external shocks, particularly as Russia is highly sensitive to fluctuations in global commodity prices. Although Moody's main scenario envisages a return to profitability, exposure to event risks continues to constrain the ratings assigned to Russian banks.
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