Table The structure of incomes and expenses of the banks as a percentage of their assets in Banks whose loans An to physical average biggest persons Indicators, in percentage of the assets across banks Sberbank Vneshtorgbank amount to the except 50% and sample Sberbank more of the assets net financial income 7.8 5.2 9.8 3.2 20. net interest income 4 3 4.4 1.9 8. interest incomes 7.5 6.4 7.9 4.3 13. interest expenses 3.5 3.4 3.5 2.4 net noninterest income 3.9 2.2 5.4 1.3 11. commission earnings 1.8 1 1.9 0.6 9. from transactions on financial markets 0.3 0.5 0.7 1 -0. with foreign exchange 0.3 0.3 0.1 0.3 0. with precious metals 0 0 0 0 from fixed-date transactions with foreign exchange and derivatives 0 0.2 0 0.4 -1. with securities 0 0 0.5 0.3 0. from revaluation of funds in foreign exchange and securities 0.7 0.4 0.2 -0.4 1. from revaluation of funds in foreign exchange -0.1 -0.3 -0.1 -0.7 1. from revaluation of securities 0.7 0.8 0.3 0.3 from leasing 0 0 0 0 0. other operating incomes 1.1 0.4 2.6 0.2 1. administrative expenses 4.4 2.6 5.9 1.4 10. personnel expenses, including social insurance contributions 1.9 1.3 2.1 0.6 4. depreciation deductions 0.2 0.1 0.3 0.1 0. rent 0.3 0.2 0.1 0.1 0. taxes charged to costs 0.2 0.2 0.2 0.1 0. other 1.8 0.9 3.3 0.5 3. net operating income 3.5 2.6 3.8 1.8 9. (-) change in reserves 0.8 0.8 0.6 0.1 3. net result of irregular transactions 0 0 0 0 -2. pretax profit 2.6 1.8 3.3 1.7 4.For reference:
Pretax profit to capital balance ratio 20.3 13.7 24.4 7.3 31. Number of banks in group 959 10 1 1 Source: calculated by the Bank of Russia’s and the MBK Center’s databases. The ratios to assets and capital are as of the end of the period.
In this connection, just as in the previous years, Sberbank’s indices were above the average. An analysis of the indices of 10 biggest banks by the size of assets has demonstrated that in that group the profit to assets ratio at a level lower than the entire banking sector’s average was largely determined by lower interest in The sum of net interest and noninterest incomes.
comes (6.4 % against 7.5 % on the average) and by net non-interest income (2.2 % against 3.9 %). The lower level of administrative expenses (2.6 % against 4.4 % across the entire sample) does not make it possible to fully compensate for the lower incomes, and the profit to assets ratio is this lower than the banking sector’s average. The highest percentage in this group is represented by Vneshtorgbank, whose structure of incomes and expenses is displays an even greater difference both from the average value and from Sberbank’s similar indices. Thus, the sum of the net interest and noninterest incomes of this bank was only 3.2 %, or less than a half of the average amount. The bank is characterized by a very low level of interest expenses (4.3 %) and interest incomes (2.4 %), the other operating incomes being also low (0.2%). However, it displays a very low (for Russia) level of administrative expenses (1.4 %). As a result, the profit to assets ratio falls behind the average by 35 % (1.7 % against 2.6 %).
Of especial interest in the structure of incomes and expenses of the banks specializing in crediting physical persons. As the criterion for placing a bank in this group we selected the ratio of loans to physical persons to assets equaling 50% or more. As of the end of 2007 this group consisted of the 61 banks complying with that criterion. By their profit to assets and profit to capital ratios this group displays levels above the average across our sample (4.3 % against 2.6 %, and 31.3 % against 20.3%, respectively). At the same time both the net interest income and the net noninterest income of these banks are several times higher than the average values. Within the structure of noninterest incomes the level of their commission earnings indeed stands out (being 9.4 % against the average 1.8 %, which is only slightly lower than their interest incomes (13.7 %). However, the development of retail business is associated with considerable costs, and by the level of administrative expenses (10.4 %) this group is ahead of the average index by 2.4 times, and of the similar index of Sberbank – by 1.8 times. Personnel expenses account for 46 % of their net expenses. The net operating income in this group is nearly threefold higher than the average (9.9 % against 3.5 %), but substantial growth of reserves and the losses incurred by some bank against their non-regular operations resulted in that group’s profitability indices becoming rather near the average level.
Meetings of the Government of the Russian Federation M. Goldin Among the most important issues at the meetings of the Government of the Russian Federation the following was considered: tariffs for services of natural monopolies for 2009 and for the plan period of and 2011; scenario conditions and main parameters of the forecast for social and economic development of the Russian Federation for 2009 and for the planned period of 2010 and 2011.
At the meeting of the Government of the Russian Federation on 6 May the issue “On maximum levels of prices (tariffs) for products (services) of natural monopolies in 2009 and in the plan period of 2010 and 2011” was discussed.
Establishment of such maximum levels is necessary to develop scenario conditions for economy’s functioning for the forthcoming mid-term period, which are approved by the Government of the Russian Federation in order to develop the forecast for socio-economic development and federal budget parameters for three-year period. The following prices and tariffs were discussed at the meeting:
- for electricity and other services of natural monopolies in the sphere of electric power industry;
- for heat energy;
- for natural gas;
- for railway transportation.
It is forecast that average prices for electricity in regulated sector will grow by 2.1 times in 2008-2011.
The share of electricity, supplied at free (unregulated) prices, will increase from 22% of the total amount of electricity supplies in 2008 to 44% in 2009 and 78% in 2011.
At the moment method for regulating of economically grounded investments’ profitability is being introduced in the sphere of electricity transmission by distribution nets.
It should be noted that so as not to increase cross subsidizing of population and other consumers in connection with pries and tariffs for electricity growth parameters in 2009-2011, tariffs for population will increase by 25% annually as to the previously accepted forecast.
In 2009 the maximum increase of tariffs for heat energy is supposed to be 18.5% on average throughout Russia, in 2010-2011tariffs will grow by 18% and 20%, respectively, which will enable increasing profitability of heat supplying organizations in 2009 up to the level of no less than 5-6% (estimation for 2008 – less than 1.5%), and in 2010-2011 – up to 8-9%. The mentioned growth in tariffs will allow covering of the increase in expenditures for fuel and other material resources as well as labor remuneration, taking into account inflation, corrected by the growth of real wages.
Parameters of wholesale prices for gas growth are reconsidered towards their increase due to the transfer to equal profitability of gas supplies to internal and external markets in 2011, maintaining regulated prices for gas for population.
In this connection as well as due to the necessity to reduce cross subsidizing of prices for gas supplied to the population, the prices will be increased on average over a year: in 2008 - by 25%, in 2009 - by 25%, in 2010 - by 30% and in 2011 - by 40%. These growth rates of prces for gas will allow elimination of cross subsidizing at the wholesale market of gas between the population and other consumers and fulfill programs for the improvement of equipment of the internal market with the systems of instrumentation control (account) over the gas consumption.
For other groups of consumers the growth of regulated wholesale prices for gas in 2008-2010 is envisaged within the limits established earlier. In 2011 the growth of regulated priced for gas will be no more than 40% for all categories of consumers, including population.
In 2009-2011 wholesale prices indexation will be made twice a year at the rate securing the average annual growth mentioned.
It is also planned to continue the work on elimination of cross subsidizing in gas distribution and supply also by leveling the regulated priced for liquefied gas sold to the population up to the level of market prices in order to create conditions to liberalize this sector of liquefies gases.
Stage-by-stage change in approaches to regulate tariffs on services for gas transportation along the main gas pipelines as to introduction of single dependence of change in gas cost (taking into account transportation costs) from the distance of transportation (distance from the territory of gas production to the region of consumption).
In 2008 the increase in tariffs in the sphere of railway freight transportations is suggested to be 21.1%, in 2009 – 12.5-14%, in 2010 – 9.7-13.7% and in 2011 – 10-14%.
The following increase for available electrical communication and post is expected in the sphere of tariffs regulations:
- by 25% annually for telegraph services;
-by 20% for sending of internal postal correspondence in 2009-2010, by 15% in 2011. The forecast losses from these services rendering will be equal to RUR 4.0 bln in 2009, RYR 3.1 bln in 2010, RUR 1.1 bln in 2011;
- by 15% in 2009, 6.5% in 2010 and 6.5% in 2011 for communication services of TV and radio programs broadcasting of all-Russian TV and radio companies;
-for telephone connections: by 7.5% in 2009, 6.0% in 2010, 6.0% in 2011 for local telephone connections;
tariffs unchanged for international telephone connections; decrease of tariffs by 3% annually for intrazonal connections; decrease of tariffs by 10% annually for giving access to the local telephone communications.
Changes of tariffs for these services are supposed to be made in the second half of a year, preceding the regular period of regulations.
At the meeting of the Government of the Russian Federation on 15 May the report of the Minister for Trade and Economic Development of the Russian Federation “Scenario conditions and main parameters for forecast of socio-economic development of the Russian Federation in 2009 and in the plan period of and 2011” was discussed.
The project for scenario conditions and macroeconomic parameters for 2009-2011 was developed basing on the tasks set by the President of the Russian Federation in the speech at the meeting of the State Council of the Russian Federation on 8 February 2008, guiding lines and priorities for socio-economic development, envisaged by the Concept for long-term socio-economic development of the Russian Federation, as well as taking into account the results of socio-economic development of the country in 2007 and the first quarter of 2008, estimation of condition and forecasts of world markets.
Development of scenario conditions and forecast parameters proceeded along two main variants – inert and innovation. It is the second variant of the forecast that is offered as the main for the development of federal budget parameters for 2009-2011.
It is underlined in the report that the forecast variants mentioned contain the same forecast estimations of world prices for oil – moderate decrease of average price for oil grade Urals from USD 92 per barrel in to USD 72 in 2011.
Differences in variants are primarily accounted for by:
• the change in the dynamics of Russian business competitive ability;
• efficiency of fulfillment of government measures to innovation nature of Russian economy and its diversification;
• the level of social development support.
The parameters stated in this document will form the basis of country’s budget planning for mid-term prospect.
At the meeting of the Government it was the scenario of conditions and main parameters of forecast for 2009 and for the plan period of 2010 and 2011, which envisages the fulfillment of measures aimed at the increase in competitive ability of the Russian economy and guaranteeing its transfer for innovational way of development, that was decided to take as the basic for the work on the forecasts for socio-economic development of the Russian Federation and federal budget’s projects for 2009 and for the plan period of 2010 and 2011.
Review of Economic Legislation over May I. Tolmacheva The following changes were made to the legislation in May: a procedure for voluntary payment of insurance premiums for accumulative part of labor pensions is approved; new procedure for making cash payments without use of cash registers is established; the value of minimum life subsistence level for 4th quarter 2007 was defined; rules for allocation of subsidies from the federal budget for non-profit-making nongovernmental organizations that take part in the development of civil society’s institutions were determined.
I. Federal Laws of the Russian Federation 1. “ON ADDITIONAL INSURANCE PREMIUMS TO ACCUMULATIVE PART OF LABOR PENSIONS AND ON GOVERNMENT SUPPORT TO PENSION SAVINGS ” from 30.04.2008 No 56-FZ.
The law, except for some statements, comes into effect on 1 October 2008. Regulations concerning the procedure for payment and transfer of insurance premiums, period and amount of contributions for government co-financing of pension savings and some other regulations of the law will come into effect on 1 January 2009.
The Federal Law in question was adopted to stimulate formation of pension savings and to increase the level of citizens’ provision with pensions. The law established the possibility and procedure for voluntary payment of additional insurance premiums for pension’s savings part as well as the procedure for cofinancing of additional insurance premiums for savings part of labor pensions from the federal budget means.
Persons, voluntary starting legal relations on pension insurance paying additional insurance premiums will have the right to define the rate of these premiums, interrupt or resume their payments, pay the premiums mentioned on their own or through credit organizations, or through the employer. Application on voluntary entry in legal relations on compulsory pension insurance in order to pay additional insurance premiums for savings part of the labor pension can be submitted to the regional body of the Pension Fund of the Russian Federation by a citizen in person by the place of residence or through the employer.
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