Companies and banks to remain stable amid higher interest rates
The real and financial sectors of the Russian economy have accumulated sufficient safety cushions, which will enable them to remain financially stable in the conditions of tight monetary policy, according to the findings of the Bank of Russia’s analysis.
Outstanding debt of the largest companies in the real sector has been increasing, including because of shrinking exports. Nevertheless, they are generally stable enough owing to a relatively small debt amount. Banks’ high interest margin and capital buffer will help them properly manage interest rate risk. Having good capital adequacy ratios and profit, non-bank financial institutions have been able to absorb the negative effects of higher interest rates.
However, there is still a number of vulnerabilities in the economy, including its exposure to sanction risks, individuals’ investment in foreign instruments, imbalances in the housing market, and risks of households’ over-indebtedness.
More details are available in the new issue of the Financial Stability Review.