Fast Market Research recommends "Russia Commercial Banking Report Q3 2012" from Business Monitor International, now available

Boston, MA -- (SBWire) -- 08/10/2012 --BMI View: A major infrastructure investment push and efforts by the incoming Russian president to invite foreign investment into the country should stand the Russian banking sector in good stead. We see plenty of room for client loan growth to remain firmly in the double digits, and for total assets as a share of GDP to grow in size over the coming years, as Russia's banking sector currently lags behind most major banking sectors in emerging Europe, in relative terms. Russia's banking sector is well placed to benefit from government plans for large-scale investment into infrastructure, another scheduled round of privatisations of state assets, and efforts by the Russian authorities to diversify the economy away from the hydrocarbons sector over the coming years. Both public and private sector investment into roads, railway links and housing will help to drive overall balance sheet expansion across Russia's banking sector. The prospect of greater private sector involvement in Russia's infrastructure push and acquisition of state assets will increase demand for new credit over the coming years. While we currently see client loan growth slowing to 16.0% by end-2012 from 26.4% at the end of 2011, we expect client loan growth to pick up again by end-2013, to 21.0%. For now, we believe that a higher base set against a more challenging financing environment in Europe may prevent a more robust expansion in new loans over the course of this year. That said, elevated oil prices and our expectation for further monetary easing by the Bank of Russia suggest considerable upside risks to this view. Indeed, investor appetite for Russian assets has been on the ascendancy lately, allowing government borrowing costs to head towards new lows. For example, the Russian government's 2018 Eurobond was yielding a record-low of 3.54% at one point on March 5, shortly after Prime Minister Vladimir Putin was confirmed the victor of Russia's presidential election the previous day. Similarly, we currently retain a bullish key market view on Russian local debt in anticipation of growing investor appetite for Russian government debt, and soon-to-be improved access to Russia's domestic bond market, with future payment to be settled via Euroclear Bank. This should help to keep appetite for government borrowing elevated in the months ahead, and increase public sector investment. However, although political risk in Russia could remain elevated for a little longer after Putin's re-election on March 4, we believe that the overall investment profile of Russia is set to improve in the near term. Elevated oil prices will complement an increasingly reform-minded administration under the leadership of Putin. Despite outgoing President Dmitry Medvedev's pledge to 'modernise' Russia, we believe that investors will attribute more credibility to plans by Putin himself to help stimulate investment into the non-oil sector of the economy. Plenty Of Room To Grow T

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