As little as 9 percent of Russian households’ available income is borrowed, compared to 26 percent in China and 94 percent in OECD countries.
Photo: Gennadiy Gulyaev
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Overseas Banks Don’t Rush to Russia
Russia’s banking market is the most lucrative compared to countries like Brazil, India and China, a report of the Merill Lynch investment bank says. Russia has an edge not because its market is more developed. Quite on the contrary, the low degree of development and cheap prices on banking assets make it so attractive to overseas companies.
A very small percentage of the population uses banking services in Russia, compared to the ratios in other emerging nations. As little as 9 percent of Russian households’ available income is borrowed, compared to 26 percent in China and 94 percent in OECD countries. Only 18 percent of adult Russians have bank accounts, compared to 28 percent in Brazil or 50 percent in Turkey, Merrill Lynch estimated. According to the World Bank, 23 bank offices accounted for 1 million Russians in 2005 against 96 for 1 million Brazilians.
The growth of the banking sector is rapid. The amount of consumer loans doubles every year, according the Bank of Russia. Personal incomes are growing almost as fast, the nominal wage climbing 24.5 percent in 2006.
Debt servicing in an average Russian household amounted to 1 percent of the available income at the end of 2005, against 1.5 percent in China and 10 percent in Brazil.
However, one should not expect that overseas banks will soon make up for the whole potential demand. Russia as well as other BRIC countries (Brazil, Indian and China) has extremely high administrative barriers in the banking sector.
www.kommersant.com
All the Article in Russian as of Mar. 09, 2007
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