The stability of the Belarusian baking sector is under threat amid the global financial crisis, the National Bank of Belarus said in its report on the operation of the sector in 2008.
The percentage of credit-risk-weighted assets in the banking sector increased from 47.5 percent on January 1, 2008 to 62.2 percent on November 1, dropping to 53.7 percent by the end of the year. The National Bank linked the growth to the worsening financial circumstances of companies, the non-financial sector and households in the latter half of 2008. The growth of credit-risk-weighted assets was accompanied by the increasing amount of problem loans, the National Bank noted. Problem loans owned by legal entities, excluding banks, increased by 180 billion rubels, or 29.4 percent, and the loans owned by individuals by 48.6 billion rubels, or 2.6-fold. The manufacturing industry accounted for loans totaling 121 million rubels and the agriculture sector for 45 billion rubles.
The sector’s assets deteriorated sharply in quality at the end of 2008, according to the National Bank. The amount of distressed assets increased by 125 billion rubels between November and December, which was a bigger increase than in the first three quarters combined. Their amount reached 873 billion rubels at the beginning of 2009, rising by 34.5 percent in 2008 compared with 0.3 percent in 2007.
Among factors behind increased risks facing the country’s financial market, the National Bank cited inflation that accelerated last year against the backdrop of loan and deposit interest rates remaining relatively unchanged, and a "high concentration of borrowers".
It warned that the currency exposure of the banking sector might grow as increasingly more individuals opt for foreign-currency deposits and outstanding foreign-currency loans are growing.