Russia’s Banks Most Promising in BRIC
The state of Russia’s banks is the best in BRIC (Brazil, Russia, India, China), while the bank system development and penetration of financial services into economy are nearly the lowest in the group, signaled the comparative report of Merrill Lynch.
Amid BRIC and some other emerging nations, Russia is the best choice for investors, concluded Merrill Lynch analysts in the last week’s report. Russia looks the most promising in the mid-term future and is forecasted to have the highest acceleration of credit and other services.
But all attractiveness of the bank market in Russia is mostly ensured not by some comfortable business environment but rather by the underdeveloped state of financial services in the country and the relatively low use of such services by the population. In Russia, for instance, only 18 percent had bank accounts in 2005 vs. 50 percent in Turkey. The gap is particularly wide in the mortgage loans, which accounted for 0.6 percent of Russia’s GDP in 2005, while China benefited from 10 percent and the Republic of South Africa enjoyed 26 percent.
At the same time, the growth of consumer credits has been steadily highest in Russia, and the country shows the greatest penetration of mobile telephony and Internet in the group. So the overtaking acceleration of penetration of financial services could be the world highest in Russia in the following few years.
Moreover, despite green years and relative underdevelopment of Russia’s bank sector, its efficiency and asset quality are higher than in BRIC on average. Russia’s banks have the lowest cost to revenues ratio (40 percent) in BRIC, while Brazil has 47 percent in Brazil and India posts 49 percent.
Unlike Eastern Europe and Mexico, where the foreign capital share exceeds 60 percent, BRIC averages no more than 10 percent and even 6 percent if Brazil isn’t taken into account. So, Merrill Lynch forecasted the inflow of direct foreign investments for the bank sector of those countries.
www.kommersant.com
All the Article in Russian as of Mar. 12, 2007
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