Financial Stability in the Republic of Belarus 2010 · Belarus was characterized by decreasing...

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NATIONAL BANK OF THE REPUBLIC OF BELARUS

FINANCIAL STABILITY

IN THE REPUBLIC OF BELARUS

2010

MINSK, 2011

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This publication has been prepared by the Banking Supervision Directorate in concert

with the Monetary Policy and Economic Analysis Directorate,

Banking Operations Regulation Directorate, Monetary Operations Directorate,

Balance of Payments and Banking Statistics Directorate,

and Payment System Directorate of the National Bank of the Republic of Belarus

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CONTENTS EXECUTIVE SUMMARY

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CHAPTER 1. EXTERNAL AND INTERNAL MACROECONOMIC RISKS

6

CHAPTER 2. NON-FINANCIAL SECTOR

13

CHAPTER 3. FINANCIAL SECTOR

20

3.1. BANKING SECTOR

20

3.2. INSURANCE SECTOR

37

CHAPTER 4. FINANCIAL MARKETS

43

CHAPTER 5. PAYMENT SYSTEM OF THE REPUBLIC OF BELARUS

52

APPENDICES

55

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EXECUTIVE SUMMARY

In 2010, the economy of the Republic of Belarus was developing in the environment of

recovering global economy and economies of the country’s main trade partners. At the same

time, an adverse impact of external shocks that manifested themselves in the increased prices for

energy for the Republic of Belarus and persisting aftereffects of the global financial and

economic crises was still in place.

Notwithstanding the gradual recovery of external demand for the products of the

Belarusian enterprises and improvement in the conditions of foreign trade, the imbalance of

foreign trade operations of the Republic of Belarus expanded in 2010 compared with 2009.

External financing was carried out, mainly, at the expense of growing external public

debt and foreign credits of the Belarusian banks. As a result, a relative level of the country’s

gross external debt approached the threshold of economic security.

One of the factors contributing to the increase in deficit of foreign trade in goods and services

was outstripping growth of domestic demand compared with the rise in labor productivity,

resulting from the increase in households’ incomes and high rates of lending to households and

enterprises of the real sector of the economy with a view to speeding up the economic growth

under inadequate measures aimed at restructuring the economy.

Households’ credit amounts owed were growing faster than income, with a relative

decrease in the propensity to make financial savings, that gave rise to a further increase in the

households sector’s debt burden.

In 2010 compared with 2009, financial condition of the sector of non-financial

institutions was characterized, for the most part, by a positive dynamics. The improved situation

in the domestic and external markets was conducive to the growth of proceeds from the sale of

goods and services, decrease in the finished-goods inventories of industrial enterprises, increase

in the profitability of sold products and sales, and decline in the number of loss-making

enterprises and amounts of losses. High rates of banks’ lending to the institutions as well as an

increase in the receivables and payables were the most important sources of financing of

production and economic activities as well as of monetary funds growth on the economic

entities’ accounts. The debt burden of non-financial enterprises continued to grow.

Financial sector of the Republic of Belarus was rather stable in 2010, with the majority of

indicators of its stability being within the safe ranges.

Additional investments of the state in the authorized capital of core state-owned banks at

the end of 2010 increased the banking sector’s “safety cushion”, contributing to the capital

adequacy growth and increase in the banking sector’s liquidity ratios.

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The situation in the deposit market during 2010 remained, on the whole, stable, though it

was somewhat vulnerable due to the growth of inflationary and devaluation expectations at the

end of the year. Maintenance of the stable exchange rate of the Belarusian ruble and attractive

interest rates on ruble deposits ensured continuous higher return on ruble savings.

In the year under review the development of the securities market of the Republic of

Belarus was characterized by decreasing share and volume of government securities in

circulation, significantly increasing volume of corporate bonds and bonds of local borrowings,

and a debuting issue of government bonds of the Republic of Belarus in foreign markets.

Notwithstanding the growing volumes of securities in circulation, the securities market in 2010

was still characterized as being at the initial stage of development due to low functionality and,

as a result, non-liquidity of the majority of its segments.

In 2010, a sustainable and fail-safe functioning of the payment system was ensured and

the work aimed at minimizing the risks in the payment system continued.

CHAPTER 1. EXTERNAL AND INTERNAL MACROECONOMIC RISKS

In 2010, the economy of the Republic of Belarus was developing in the environment

of recovering global economy and economies of the country’s main trade partners. At the

same time, an adverse impact of external shocks that manifested themselves in the

increased prices for energy for the Republic of Belarus and persisting aftereffects of the

global financial and economic crises was still in place.

According to the assessment of the International Monetary Fund (IMF) published in the

World Economic Outlook in January 2011, the volume of the global economy’s output grew in

2010 by 5% after its drop in 2009 by 0.6%. Economic growth recovered in the majority of the

industrialized and developing countries. GDP grew in the euro-area countries by 2%, in the

USA by 2.8%. In Russia, GDP went up in 2010 by 4%, industrial output by 8.2%, in Ukraine –

by 4.2% and 11% respectively. The highest rates of economic growth were observed in China

and India (110.3% and 109.7% respectively).

Recovered demand for the Belarusian products in the external markets along with the

economic policy measures designed to stimulate internal demand led to the acceleration of the

growth rates of the volumes of output, consumption, and investments.

Real growth rates of the GDP amounted in 2010 to 107.6% (100.2% in 2009), of

industrial output to 111.3% (98%), and of agricultural output to 102% (101.3%).

Investments in fixed capital went up by 16.6% (by 4.7% in 2009). Investments in

nonproduction facilities (121.2%) grew faster than investments in production facilities (113.9%),

with the trend towards the reduction of the share of investments in the assets component of fixed

capital in its total volume continuing. Credit support was the key factor contributing to the

growth of investments in fixed capital (accounted for more than two-thirds of growth in this

indicator). In the structure of the sources of financing investments in fixed capital the share of

banks’ credits grew by 5.7 percentage points, with the share of budgetary funds and own funds

of the organizations being reduced. There was no significant advance in the attraction of direct

foreign investments.

An increase in the production growth rates against background of active Government

measures aimed at stimulating domestic demand led to the accelerated growth of household’s

income. Real wages and real disposable monetary income grew in 2010 compared with 2009 by

14.9% (in 2009, real wages dropped by 0.4%, with real disposable monetary income growing by

3.7%) resulting in increased consumer demand. Retail turnover grew over 2010 by 17.1% (by

3.2% in 2009); paid services provided to households - by 11.5% (by 2.8% in 2009).

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Notwithstanding the fact that in 2010 inflation was at the level of 2009 (in January-

December 2010 consumer price index grew by 9.9% against 10.1% in January-December 2009),

certain inflationary potential accrued at the year-end. The crucial factors that contributed to the

acceleration of inflation processes in 2010 H2 were: an increase in prices for certain foodstuffs in

the foreign markets due to the low crop yield in 2010, growth of imported inflation, increasing

devaluation and inflationary expectations of households, as well as an outstripped growth of the

households’ real monetary incomes compared with labor productivity. The outstripping growth

of industrial producers’ prices compared with the inflation rates is evidencing the growth of

inflation potential. In January-December 2010 they went up by 18.8% against 11.1% in the

previous year.

In addition to the measures designed to stimulate domestic demand the state was

actively involved in liberalizing the economy and improving institutional environment with

a view to improving the efficiency of use of the production factors, increasing labor

productivity, and razing competitiveness of the economy.

A milestone event in this field was drafting and adoption of the Directive of the President

of the Republic of Belarus No. 4 “On Developing Entrepreneurial Initiative and Stimulating

Economic Activity in the Republic of Belarus” dated December 31, 2010 that provides for

fundamental reforms of economic relations in the country. But the measures that were actually

implemented in 2010 proved to be insufficient for creation of the basis for stable and well-

balanced economic growth. The structure of the economy did not undergo significant changes,

the forecasted reduction of material consumption, power consumption, and import capacity of

industrial output and the economy as a whole was not achieved. Material consumption in

0.2-2.0

1.3

4.7

-0.4

3.2

7.6

11.3

2.0

16.9

14.9

17.1

GDP

Industrial output

Agricultural output

Investments

Salaries

Retail turnover

Changes in the key macroeconomic indicators of the Republic of Belarus in 2009-2010 in comparable prices (% on the previous year)

2009

2010Source: the Belstat

8

industrial output went up in 2010 by 1.1% compared with 2009 (the forecasted decrease being

0.7-1.2%), energy consumption went down by 0.6% (the forecasted decline being 0.7-1.2%),

energy consumption in production dropped by 0.6% (the forecasted decline being 8-10%).

Besides, inadequate progress in attracting direct foreign investments in the country and low

ranking scores assigned to the country’s institutional environment in the majority of international

social and economic ratings were observed as well.

Execution of the state budget in 2010 was characterized by the considerable slowdown of

the rates of formation of its revenues side, primarily, due to the decline in revenues from foreign

economic activities and non-tax revenues. In 2010, the revenues of the consolidated budget of

the Republic of Belarus amounted to 29.9% of GDP (34.0% in 2009)1, expenditures – 32.5% of

GDP (35.8% in 2009). As a result, the deficit of the consolidated budget went up from 1.8% of

GDP in 2009 to 2.6% of GDP in 2010.

Attraction of external financing, including for the purpose of covering the current account

deficit and maintaining the country’s gold and foreign exchange reserves, contributed to the

growth of external public debt from 16.4% of GDP as at early 2010 to 17.8% of GDP (USD9.7

billion) as at January 1, 2011. The ratio of internal government debt (excluding the local

governments’ and self-administration authorities’ debt) to GDP did not change in 2010 amounting

as at January 1, 2011 to 5.7% of GDP.

Notwithstanding the gradual recovery of external demand for the products of the

Belarusian enterprises and improvement in the conditions of foreign trade as well as

implementation of a number of measures aimed at increasing the export and decreasing the

import capacity of production, the imbalance of foreign trade operations of the Republic of

Belarus expanded in 2010 compared with 2009.

In 2010, the balance of payments was under the impact of multidirectional conditions. On

the one hand, the impact of external shock related to the global financial and economic crisis was

weakening through the trade channel due to the recovery of business activities and prospects for

economic growth in the countries - main trade partners of the Republic of Belarus and growing

demand for potash fertilizers, that contributed to the increase in physical volumes of non-energy

export.

1 Excluding the funds of the state non-budgetary Social Protection Fund of the Ministry of Labour and Social Protection of the Republic of Belarus.

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On the other hand, the impact of the permanent energy shock related to the change in

prices and conditions of energy imports from the Russian Federation intensified. Besides, an

active stimulation of domestic demand in 2010 led to the increasing expenditures for domestic

consumption and investments and, as a result, contributed to the growing imports of goods and

services, external imbalance, and a gap in financing.

As a result, the deficit of foreign trade in goods and services exceeded in 2010 the

forecasted indicator 1.6 times (or by USD2.8 billion) amounting to USD7.4 billion. The

imbalance reached the critical level (the negative balance of current account grew from 13% in

2009 to 15.6% in 2010, including in 2010 Q4 the deficit amounted to 20.4% of GDP having

reached its historical maximum.

The state of the current account worsened due to the growth by 31.1% (or by USD2.2

billion) compared with 2009 in the deficit of foreign trade in goods that amounted to USD9.1

billion. At that, the deficit of foreign trade in energy goods went up by USD1.7 billion to USD5

billion, export of potash fertilizers grew by USD0.9 billion to USD2.2 billion, with the balance

of foreign trade in other goods worsening by USD1.4 billion to minus USD6.3 billion.

An increase in the expenditures associated with the imports of natural gas (by USD1.4

billion) that was due to the growth in price (by 27% or by USD39.9 per thousand cubic meters)

as well as in physical volumes (by 22.4%, or by 4 billion cubic meters) accounted for the major

share in the structure of non-energy deficit growth. At the same time, the worsening of the

balance of foreign trade in oil and oil products amounted to only USD0.3 billion due to the

measures aimed at compensating the negative impact of increase in import duties.

The balance of foreign trade in non-energy goods (excluding potash fertilizes)

deteriorated due to the accelerated growth of domestic demand (18.9% in 2010 Q4 versus the

corresponding quarter of the previous year, compared with 0.8% in 2010 Q1) and, as a result,

considerable increase in the demand for imports. These factors contributed to the outstripping

growth rates of the physical volumes of non-energy imports (versus the same period of the

-18-16-14-12-10-8-6-4-2024

-40

-30

-20

-10

0

10

20

30

40

50

2002 2003 2004 2005 2006 2007 2008 2009 2010

% o

f GD

P

%

Individual indicators of the balance of payments of the Republic of Belarus

Icrease in goods and services exports Icrease in goods and services imports

Current account balance (right-hand axis)Source: the National Bank of the Republic of Belarus

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previous year) compared with those of exports since July 2010. As a result, in December 2010,

the physical volumes of non-energy imports exceeded the pre-crises level of June 2008 by

30.9%, while the physical volumes of exports amounted to 95.7% of the level observed in June

2008.

The excess of the growth rates of the physical volumes of non-energy imports over those

of exports was partially compensated by the favorable conditions of foreign trade in non-energy

goods (the ratio of the growth rates of exports prices to the growth rates of imports prices) that

improved by 3.4% on a year before (against a 4.4% worsening in 2009). At the same time, the

conditions of foreign trade in goods were restored, on the whole, less significantly - by 1.9%

after deterioration in 2009 by 11.1% that was due to the further alignment of the conditions of

mineral products’ imports with global ones.

Thus, growing foreign economic imbalance was observed over 2010 that was due to the

increase in the negative balance of foreign trade in goods and services caused by a permanent

external shock related to the changes in the conditions of trade in energy and quick rise in

domestic demand. Under the conditions of inadequate advance in the field of structural reforms

and declining import capacity, material consumption, and energy consumption in the economy

this trend creates risks to the coverage of the gap in financing and ensuring stability of the

external position.

Notwithstanding further accumulation of the external public debt as well as foreign

borrowings by banks, the inflow of foreign capital and financial resources in 2010 was

inadequate for covering the needs in financing.

Net inflow of capital and financial resources amounted in 2010 to USD7.4 billion,

declining by USD0.9 billion compared with 2009. At the same time, the trend of accumulating

external public debt for the purpose of financing the balance of payments deficit continued.

Notwithstanding a 1.9 times drop compared with 2009, net attraction of foreign capital by the

Government agencies and monetary authorities was still making up a considerable sum (USD2.6

billion).

Net attraction of foreign capital by the private sector amounted in 2010 to USD4.8

billion, having increased by USD1.5 billion compared with the previous year, mainly, at the

expense of accumulating debt liabilities (by USD1.2 billion), with declining attraction of direct

foreign investments (by USD0.5 billion). At that, in 2010, the share of short-term borrowings in

the growth of the private sector’s foreign debt was 54.1%.

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Net attraction of direct foreign investments dropped due to the decline in net inflows to

the equity capital by USD0.5 billion, or 1.6 times. An inflow of net investments to the economy

(excluding the funds obtained due to the sale of the shares of OJSC “Beltransgas”) amounted to

36.7% of the forecasted indicator (no less than USD2.6 billion). An inflow of funds to the equity

capital (excluding the funds obtained due to the sale of the shares of OJSC “Beltransgas” and

investments in the banks’ equity capital) amounted to USD120.6 million.

During 2010, the trend towards the accumulation of external debt by banks, which grew

by USD2.2 billion versus USD0.5 billion in 2009, was observed. Short-term liabilities amounted

to 48.7% in the growth of the banks’ foreign debt (29.7% in 2009), evidencing an increasing

vulnerability of the banks’ external position.

The non-financial sector attracted foreign capital, mainly, at the expense of commercial

credits (USD1.1 billion in 2010 versus USD0.7 billion in 2009). Devaluation expectations,

against the background of a relatively inexpensive lending in Belarusian rubles, abated the

stimulus for the attraction of foreign capital by the non-financial sector. Thus, net attraction of

credits and borrowings by the non-financial sector amounted in 2010 to USD61.1 million, having

dropped by USD247.5 million compared with the previous year.

Due to the operations involving the financial account of the balance of payments, gross

foreign debt amounted as at January 1, 2011 to USD28.5 billion, having increased by 29.2% (by

USD 6.5 billion) since January 1, 2010. The relative level of foreign debt reached 52.2% of

GDP, having doubled in 2009-2010 and approached the economic security threshold.

Therefore, high domestic demand under growing vulnerability of the structure of

financing the current account deficit of the balance of payments in 2010 led to the expansion of

the gap in financing and growth in foreign economic imbalance, making an adverse impact on

the level of international reserve assets and creating the risks of decline in the economy’s paying

capacity and stability of the Belarusian ruble exchange rate.

The growing imbalance of the balance of payments was a key factor of high net

demand for foreign exchange in the domestic foreign exchange market of the Republic of

Belarus.

Against the background of worsening conditions of foreign trade in energy and

continuing limited capacities of attracting foreign financial resources by the private sector, net

purchase of foreign exchange by the economic entities grew in 2010 amounting to USD6.9

billion compared with USD3.6 billion in 2009. The highest resident economic entities’ net

12

demand for foreign exchange was in November - December 2010 (USD2.3 billion versus

USD4.5 billion in January-October 2010).

The growth of the households’ devaluation and inflationary expectations in 2010 Q4

resulted in the increase in net demand for foreign exchange to USD1.5 billion. However, in

January-September 2010, net supply of foreign exchange in the amount of USD8 million was

observed in the cash market. In the whole of 2010, the households’ net demand for foreign

exchange was USD1.5 billion against USD0.8 billion in 2009.

Net sale of foreign exchange by resident banks amounted in 2010 to USD0.5 billion

(versus USD0.8 billion in 2009).

With account of external financing attracted by the National Bank and the Government

and other factors, international reserve assets of the Republic of Belarus (on the IMF’s SDDS

definition) dropped in 2010 to USD5,030.7 million, or to 1.6 month of goods and services

imports (the recommended threshold indicator being 3 month of imports), reflecting the growing

risks for the maintenance of stability in the foreign exchange market.

CHAPTER 2. NON-FINANCIAL SECTOR

The financial standing of the sector of non-financial organizations was characterized

in 2010 compared with 2009 by the predominantly positive dynamics. Better situation in

the internal and external markets contributed to the growth of proceeds from the sale of

goods and services, the reduction in the stocks of finished goods in the industrial

enterprises’ warehouses, the increase in the profitability levels of the products sold and

sales, and the decrease in the number of loss-making enterprises and the amount of

incurred losses2.

In 2010, non-financial organizations (excluding small-sized business entities) increased

the sales of products, goods, works, and services in real terms3 by 16.6% on 2009 (a year earlier

the proceeds fell by 3.3%).

In 2010, the stocks of finished goods in the industrial enterprises’ warehouses went down

in current prices by 8.1% (a year earlier an increase stood at 10.3%). The stocks’ share in the

average monthly output declined from 67.9% as at January 1, 2010 to 49.5% as at January 1,

2011.

2Data are presented excluding small-sized business entities. 3 Adjusted for GDP deflator.

18.0 %

29.4 %18.2 %

19.8 %

6.5 %8.1 %

Grouping of organizations by the profitability level in 2009

< 0 0 - 5 5 - 10 10 - 20 20 - 30 > 30

Source: the Belstat

16.0 %

32.2 %18.7 %

20.3 %

6.0 %6.8 %

Grouping of organizations by the profitability level in 2010

< 0 0 - 5 5 - 10 10 - 20 20 - 30 > 30

Source: the Belstat

53.0 52.949.9 49.3

61.1

91.8 94.6

77.8

67.9

71.2

60.7

54.2

49.5

40

50

60

70

80

90

100

01.01.08 01.04.08 01.07.08 01.10.08 01.01.09 01.04.09 01.07.09 01.10.09 01.01.10 01.04.10 01.07.10 01.10.10 01.01.11

%

Ratio between the stocks of finished goods and the average monthly industrial output

Source: the Belstat

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As a result of the faster growth of the profit on the sale of products, works, and services

(131.4%) compared with the cost of products sold (128.5%), the profitability of the products sold

grew from 9.9% in 2009 to 10.1% in 2010 and the profitability of sales from 6.1% to 6.3%

respectively.

At the same time, the share of unprofitable and low-profit enterprises (with the

profitability level from 0% to 5%) remains significant: in 2010 it accounted for 48.2% of the

country’s non-financial sector as a whole (47.4% a year earlier) indicating that the efficiency of

the enterprises’ financial and economic activities is insufficient.

The trend set in 2009 towards a decline in the profit was reversed in 2010 and the share

of loss-making enterprises and the amount of incurred losses fell.

In 2010, the country’s economy as a whole saw the growth in both nominal and real

amounts of all profit indicators. The amount of real profit4 on the sale of goods, products, works,

and services was up by 19.2%, pre-tax profit by 19.3%, and net profit by 22.6%.

The share of organizations that made net loss in 2010 constituted 4.9% of the total

number of organizations accounted by the National Statistical Committee (hereinafter – “the

Belstat”) in the regular course of business, against 6.2% a year earlier. Also, the sum of net

losses incurred by loss-making enterprises fell to 1 trillion Belarusian rubles, a 20.9% decrease

on 2009.

Given the limited working capital, high rates of banks’ lending to organizations as

well as an increase in accounts payable were the most important source of financing the

production and business activities and a significant factor behind the growth of monetary

funds in the accounts of economic entities. Debt burden on non-financial enterprises

continued to increase.

4 Adjusted for GDP deflator.

26.8

16.3

36.4 37.8

17.9

2.3

16.2

2.0

0

5

10

15

20

25

30

35

40

45

Accounts payable Overdue accounts payable Accounts receivable Overdue acconts receivable

Gro

wth

, %

Non-financial enterprises' accounts payable and receivable

2009 2010Source: the Belstat

15

For example, in 2010 total accounts payable (accounts payable and debt on credits and

loans) grew in nominal terms by 24.6% (by 27.2% a year earlier). Debt capacity ratio5 of non-

financial organizations increased from 452.4% as at January 1, 2010 to 479.1% as at January 1,

2011.

In 2010, non-financial organizations’ debt on banks’ credits increased by 33.1%. Debt

on banks’ credits accounted for 48.5% of the total accounts payable (for 45.4% as at January 1,

2010). Credit capacity6 of non-financial organizations as a whole grew from 205.4%

The year 2010 saw an improvement in settlements and an increase of balances in

accounts of organizations and current solvency thereof.

In 2010, overdue total accounts payable declined by 0.2%, including overdue debt on

banks’ credits by 43.9%. Accounts payable among non-financial organizations accounted for

89.3% of all overdue total accounts payable (for 87.1% as at January 1, 2010).

The year 2010 saw a significant deceleration in the growth of overdue accounts payable

and receivable compared with an increase in their total amount which led, in its turn, to a

reduction in the shares of overdue accounts payable and receivable in their total amounts (from

12.4% as at January 1, 2010 to 10.8% as at January 1, 2011 and from 17% to 14.9%

respectively). Also, the share of external overdue accounts payable in the total amount of

external accounts payable declined.

However, the share of organizations which have overdue debt (as a percentage of the total

number of organizations reporting to the Belstat in the regular course of business) is still

significant and continues to grow. On January 1, 2011, as many as 59.2% of organizations had

overdue accounts payable (56.7% a year earlier) and as many as 69.6% of organizations had

overdue accounts receivable (67.2% a year earlier) which may adversely affect non-financial

organizations’ creditworthiness in the future.

5 The ratio between total accounts payable and the average monthly proceeds from the sale of products. 6 The ratio between the debt on banks’ credits and the average monthly proceeds from the sale of products.

16

At the same time, the current solvency indicator 7 went up from 188.3% as at January 1,

2010 to 227.3% as at January 1, 2011 due to faster growth rates of balances in accounts of

organizations (123.5%) compared with the growth of their overdue accounts payable (102.3%).

The year 2010 saw a significant acceleration in the growth of households’ incomes

resulting from an increase in the volume of output and measures taken by the Government

in the field of salary increases. At the same time, households’ incomes differentiation

remained low and continued to decline and low-income level was brought down.

For example, households’ real monetary incomes grew in 2010 by 15.2%, against 2.7% in

2009. The share of households with per capita disposable resources below minimum subsistence

income (low-income level) was reduced from 5% as at year-end 2009 to 3.4% as at year-end

7 The ratio between monetary funds and overdue accounts payable.

15.814.9

13.7 13.8

16.8

19.218.1

17.1 17.017.7

16.1

14.8 14.9

13.312.7

11.4 11.5

13.5

15.2 15.114.5

12.4

14.3

12.1 11.310.8

8

10

12

14

16

18

20

22

01.01.08 01.04.08 01.07.08 01.10.08 01.01.09 01.04.09 01.07.09 01.10.09 01.01.10 01.04.10 01.07.10 01.10.10 01.01.11

%Share of overdue accounts receivable and payable in the total amount thereof

Accounts receivable Accounts payableSource: the Belstat

According to the National Bank’s surveys of non-financial enterprises, the dynamics of the

main indicators characterizing production, investment, and financial activities in 2010 compared with

2009 was predominantly positive. The economic environment and economic conditions of many

enterprises were improved. Enterprises noted that such indicators as physical volumes of output and

sales, production capacity utilization, physical volumes of orders in the internal and external markets,

demand, net profit, and balances were growing at a faster pace. Also, the growth rates of overdue

amounts payable and receivable during 2010 were slower than in 2009. At the same time, enterprises

noted faster growth of production costs and prices for finished goods.

Terms of lending were improved (as regards credit terms, credit cost and amount) and risks of

economic activities associated with changes in laws as well as economic risks were reduced.

The extent to which fluctuations in the exchange rate of the Belarusian ruble, risks of

economic activities, terms of lending, overdue accounts receivable, and demand affect economic

activities of enterprises was reduced.

17

2010. Low wages in some industries continue to be the factor which constrains households’

financial possibilities and potential for the growth of banks’ resource base.

Given high growth rates of households’ real monetary incomes, the year 2010 saw

an acceleration of the growth rates of their consumer and investment expenditures with

relative decline in propensity to save. Households’ investment expenditures that are

financed by the citizens’ own funds and by banks’ loans in particular grew at higher rates.

In 2010, households’ nominal expenditures on the purchase of consumer goods and

services were up by 24.1%, against a 9.2% increase a year earlier. Investments in real estate at

the expense of own and borrowed resources were growing more rapidly than consumer

expenditures, however less rapidly than in 2009 (in 2010, nominal increase constituted 37.9%

against 43.1% in 2009).

At the same time, an absolute growth in households’ financial savings decelerated by

1.8%8. In 2010, the dynamics of households’ ruble and foreign exchange deposits was

multidirectional in nature. For example, where in the first half of the year deposits in the national

currency were growing at a faster pace, beginning in August 2010 households preferred to build

up monetary savings on foreign exchange deposits mainly due to an increase in inflation and

devaluation expectations.

In the whole of 2010, households’ balances in accounts with banks grew in nominal terms

by 26.5% (by 36.9% a year earlier), including in the national currency by 22.4% (by 3.6% a year

earlier) and in foreign exchange by 29.6% (in Belarusian rubles equivalent), or by 23.7% in US

dollars equivalent (against a 40.9% increase in 2009). As a result, the share of ruble deposits in

the total amount of households’ funds with banks fell in 2010 from 44.1% to 42.7%.

8 It should be noted that about half of the increase in the amount of households’ bank deposits in 2009 was

associated with revaluation of their foreign exchange component.

-1 500

-1 000

-500

0

500

1 000

1 500

2 000

2 500

Bel

arus

ian

rubl

es, b

ln

Change in the balance of households'accounts with banks

In Belarusian rubles In foreign exchangeSource: the National Bank of the Republic of Belarus

18

The credit debt owed by households grew at a higher rate than their incomes thus

contributing to further growth of households’ debt burden.

In 2010, households were actively borrowing monetary funds from banks in order to meet

growing demand for consumer and investment goods and services at a time of preserving soft

budget constraints (first and foremost, as part of soft lending to housing). At the same time, the

entire growth of credits was associated with lending in Belarusian rubles due to imposed

constraints on lending in foreign exchange9.

In 2010, the credit debt owed by natural persons to banks was up by 42.2% (by 26.5% a

year earlier), including in Belarusian rubles by 62.9% (by 38.2% a year earlier), and was down in

foreign exchange by 46.5% (by 7.2% a year earlier). As a result, households’ debt burden10

increased from 17.6% in 2009 to 18.3% in 2010.

By the end of 2010, the banking sector’s and the households sector’s reciprocal claims

and liabilities became practically equal as a result of the outstripping growth of credits to

households compared with the growth in their deposits during last months of 2010. For example,

9 The amounts of debt decreased as a result of the decision to stop lending in foreign exchange to natural

persons which was adopted by Resolution No. 105 of the Board of the National Bank dated July 14, 2009 and was conducive to a reduction in banks’ credit risk and households’ foreign exchange risk in 2010.

10 The ratio between the average annual credit debt and households’ disposable incomes earned during the year.

020406080

100120140160180200220

01.01.2009 01.04.2009 01.07.2009 01.10.2009 01.01.2010 01.04.2010 01.07.2010 01.10.2010 01.01.2011

%

Ratio between the credit debt owed by households and households' deposits

In all currencies In Belarusian rubles In foreign exchangeSource: the National Bank of the Republic of Belarus

0

2

4

6

8

10

12

14

16

18

20

0

4000

8000

12000

16000

20000

24000

Jan 2009 Apr 2009 Jul 2009 Oct 2009 Jan 2010 Apr 2010 Jul 2010 Oct 2010

%

Bel

arus

ian

rubl

es, b

ln

Credit debt owed by households

In Belarusian rubles In foreign exchange Debt burden (right-hand axis)Source: the National Bank of the Republic of Belarus

19

the ratio between the credit debt owed by households and households’ bank deposits rose from

87.9% in early 2010 to 98.8% as at January 1, 2011.

20

CHAPTER 3. FINANCIAL SECTOR

Throughout the year 2010, the market for financial intermediation was still

dominated by banks and the state’s share in the capital structure of the banking sector of

the Republic of Belarus was up.

No significant institutional changes in the financial sector of the Republic of Belarus took

place in 2010. In the year under review, the ratio between the broad money supply and GDP11

which characterizes the general level of development of the financial sector and the economy as

a whole stood at 25.9%, a 1.6 percentage points increase on 2009. In 2010, total assets of the

financial sector12 amounted to 62.1% of GDP13 (to 55.6% a year earlier), of which banks

accounted for 97% and insurance companies for 3%.

3.1. BANKING SECTOR

The banking sector of the Republic of Belarus had 31 operating banks as at January 1,

2011 and was still dominated by state-owned banks14.

Following the recapitalization of major state-owned banks as at year-end 2010, the

state’s share in the aggregate authorized capital of the banking sector rose from 70% to 73.6%,

with a simultaneous decline in the foreign capital’s shares (from 27.3% to 24.2%) and deposits

of residents of non-state ownership (from 2.7% to 2.2%). In 2010, the number of state-owned

banks and banks under foreign capital’s control did not change and amounted, as at January 1,

2011, to four and 23 respectively. The number of private banks declined from five to four owing

to a merger between JSC “Belarusian Industrial Bank” and OJSC “Tekhnobank” carried out in

2010 Q2.

11 The average broad money supply over the year as a percentage of nominal GDP. 12 Banks’ and insurance organizations’ assets. 13 The chronological average of the sum of banks’ and insurance organizations’ assets as a percentage of

nominal GDP. 14Here and hereinafter: state-owned banks (SOBs) – a group of banks with a majority interest in the authorized capital belonging to

the Government agencies and legal persons of state ownership; foreign banks(FBs) – a group of banks with a majority stake in the authorized capital belonging to the

foreign capital; private banks (PBs) – a group of banks that are not included into SOBs and FBs groups; large banks (LBs) – a group of banks whose assets’ share in the total assets of the banking sector accounts

for more than 5%; medium-sized banks (MSBs) – a group of banks whose assets’ share in the assets of the banks that are not

included into LBs group accounts for more than 5%; and small banks (SBs) – a group of other banks that are not included into LBs and MSBs groups.

21

As many as ten banks had individual international ratings as at January 1, 2011, of which

eight banks were assigned ratings by Fitch Ratings, six banks by Moody’s Investors Service, and

two banks by Standards & Poor’s.

The concentration of the banking sector’s assets in 2010 was somewhat lower and, on the

contrary, the concentration of capital was higher. In early 2011, five major banks accounted for

83.1% of assets and 78.7% of the banking sector’s capital (84% and 76.9% respectively in early

2010). The Herfindahl-Hirschman index15 calculated on the basis of assets and capital, as at

January 1, 2011, was 0.2403 and 0.2120 respectively (0.2495 and 0.2001 a year earlier). The

uniformity in distribution of the banking sector’s assets became also higher and in distribution of

the banking sector’s capital – lower. The Gini index16 calculated on the basis of assets and

capital was 0.813 and 0.765 (0.817 and 0.761 as at January 1, 2010).

The banking sector’s performance was steadily improving during 2010.

Positive dynamics of profitability indicators of the banking sector in 2010 Q1-Q3 was

mainly due to a low fullness of creation by banks of special provisions for potential losses on

assets exposed to credit risk, given the preferences granted by new procedures for classifying

assets17 which were set in October 2009. Also, the trend towards a reduction in the banking

sector’s bad assets which emerged in 2010 Q3 and became particularly strong in Q4 made it

possible to significantly reduce banks’ net allocations to special provisions and had a positive

15 The Herfindahl-Hirschman index reflects the extent of concentration of the indicator and takes on values

from 0 to1. Value 0 corresponds to minimum concentration, less than 0.10 - to low concentration, from 0.10 to 0.18 - to average concentration, and above 0.18 - to high concentration.

16 The Gini index allows estimating the extent of disparity indicating how equally one or another variable is allocated among the participants. Value 1 corresponds to the total concentration and value 0 to the parity with all participants.

17 In compliance with paragraph 3.1 of Resolution of the Board of the National Bank of the Republic of Belarus No.159 dated September 23, 2009 banks have the right to make special provisions in full till December 31, 2010.

1.65

1.75

1.85

1.95

2.05

2.15

2.25

2.35

2.45

2.55

10

11

12

13

14

15

16

01.01.2009 01.04.2009 01.07.2009 01.10.2009 01.01.2010 01.04.2010 01.07.2010 01.10.2010 01.01.2011

%%

Profitability of the banking sector (before tax)

Return on equity Return on assets (right-hand axis)Source: the National Bank of the Republic of Belarus

22

impact on financial performance of the banking sector.

The profit earned by the banking sector (before tax) in 2010 amounted to 2,103.4 billion

Belarusian rubles, a 44.8% increase on 2009. In 2010, the return on assets (before tax) was up

from 1.96% to 2.14% and the return on equity (before tax) from 11.93% to 14.64%.

Singling out constituent elements in the structure18 of the return on equity shows that an

increase in the return on risk-weighted assets as well as an increase in the financial leverage in

2010 H2 were the main factors behind boosting the return on equity in 2010. At the same time,

the reduction in the risk level became the main constraining factor.

In 2010, the banking sector’s capitalization was maintained at a substantially high

level, nevertheless the banking sector’s protection against assumed risks gradually declined

reflecting an increase in banks’ risky operations. A rise in the Government’s contributions

made at year-end 2010 to the authorized capital of major banks belonging thereto made it

possible to halt the trend towards a gradual reduction in the banking sector’s safety

cushion.

In 2010 H1, the growth of risk-weighted assets was commensurable with the growth rates

in the banks’ regulatory capital. However, beginning in July 2010, the growth in the banking

sector’s risky operations experienced a significant acceleration against a background of slow

growth rates of the regulatory capital which had a negative impact on the level of protection for

the banking sector against assumed risks. During the period from July 1 to December 1, 2010,

the banking sector’s regulatory capital adequacy ratio fell 1.5 percentage points from 19.76% to

18.25%, the prescribed requirement for individual banks being 8%.

18 Four components may be singled out in the structure of the return on equity: the profit margin; the return

on risk-weighted assets; the risk level; and the financial leverage. The profit margin is calculated as the ratio between the profit (before tax) and net revenues from banking; the return on risk-weighted assets – as the ratio between net revenues from banking and risk-weighted assets; the risk level – as the ratio between risk-weighted assets and total assets; and the financial leverage – as the ratio between assets and capital.

-4-3-2-10123456

01.01.2010 01.04.2010 01.07.2010 01.10.2010 01.01.2011

perc

enta

ge p

oint

s

Impact of constituent elements on the change in the return on equity

Profit margin Return on assets

Risk level Financial leverage

Change in the return on equitySource: the National Bank of the Republic of Belarus

23

Additional investments made by the state in December 2010 in major banks belonging

thereto led to a material increase, at the end of the year, in the banking sector’s regulatory capital

– by 31.5% (by 18.5% a year earlier). At the turn of 2011, the capital adequacy ratio stood at

20.45%.

Thus, positive dynamics of the capital adequacy in the banking sector as a whole was

achieved in 2010 by increasing the state-owned banks’ regulatory capital adequacy ratio. At the

same time, the extent of protection of foreign and private banks against assumed risks was

declining throughout the entire 2010 due to high growth rates of risk-weighted assets (50.2% and

49.9% respectively). The foreign banks’ capital adequacy ratio fell from 26.2% as at the

beginning of 2010 to 21.7% as at January 1, 2011 and the private banks’ capital adequacy ratio

from 34.5% to 28.9%.

Along with a significant growth in 2010 of the aggregate amount of the banking sector’s

core capital, banks were actively increasing the regulatory capital at the expense of other sources

that generate additional capital, banks’ own funds (profit of the current year and previous years

as well as funds established at the expense thereof) being the main one. In 2010, the banking

sector’s additional capital grew by 38.1%, or 955.6 billion Belarusian rubles. As a result, the

quality of the banking sector’s regulatory capital fell slightly – the additional capital to the core

capital ratio increased by 1.4 percentage points to 24.5% compared with January1, 2010.

Beginning in 2010 Q2, banks were actively increasing the amounts of lending

operations as the country’s economy was recovering from adverse effects of the global

financial and economic crisis. A significant growth in the credit debt along with a decline in

bad assets was responsible for a material improvement in the quality of the banking

sector’s credit portfolio.

10

12

14

16

18

20

22

24

01.01.2009 01.04.2009 01.07.2009 01.10.2009 01.01.2010 01.04.2010 01.07.2010 01.10.2010 01.01.2011

%

Indicators of the banking sector's capital adequacy

Regulatory capital adequacy Core capital adequacy Capital to assets ratio

Source: the National Bank of the Republic of Belarus

24

In 2010 Q1, the country’s banking sector continued to operate at a time of persistent

negative effect of the global financial crisis. The growth rates of the banking sector’s credit

portfolio decelerated more than two times on 2009 Q4, amounting to 3.2% only.

However, beginning in 2010 Q2, the growth of the banking sector’s assets exposed to

credit risk gathered pace all the time. Where on July1, 2010 an increase in the banking sector’s

assets exposed to credit risk constituted 28.7% (over 12 months), it was up to 33.8% by January

1, 2011.

Also, banks increased the amounts of lending mainly in Belarusian rubles – the amount of

lending in the national currency to the enterprises of the non-financial sector was up by 47.6%

and to households by 62.9%.

At the same time, the credit debt in foreign exchange owed by the banking sector, in the

US dollars equivalent, was reduced in 2010 by 2.7%, including a 48.9%19 reduction in

households’ outstanding debt in foreign exchange.

In 2010, the structure of assets exposed to credit risk saw a slight decrease in the share of

industrial enterprises’ debt and a simultaneous increase in the share of credits extended to

enterprises engaged in agriculture, trade, and construction as well as organizations engaged in

real estate transactions. At the same time, the concentration of banks’ credit portfolio in industry

and agriculture remained high enough – as at January 1, 2011 debt of industrial enterprises

amounted to 38.7% and agricultural enterprises to 23.8%20.

Where the year 2009 saw a continuous acceleration in the growth rates of the credit debt

in real terms21 against a background of growing negative impact of the global financial and

19 A reduction in households’ outstanding balance was due to the ban on lending in foreign exchange to

natural persons imposed by Resolution of the Board of the National Bank of the Republic of Belarus No. 105 dated July 14, 2009.

20 Indicators are calculated based on analytical information provided by banks to the National Bank on the structure of assets exposed to credit risk which are classified under types of activities in compliance with the Nationwide Standard Industrial Classification of Economic Activities (the NSICEA) in the Republic of Belarus.

21 The chronological average of clients’ and banks’ credit debt that is 12 months in arrears, adjusted for GDP deflator.

20

30

40

50

60

70

01.01.2009 01.04.2009 01.07.2009 01.10.2009 01.01.2010 01.04.2010 01.07.2010 01.10.2010 01.01.2011

%

Growth of assets exposed to credit risk

Total assets Granted to enterprises Granted to householdsSource: the National Bank of the Republic of Belarus

25

economic crisis on financial and economic activities of Belarusian enterprises and a plunge in

the growth rates of the economy, a positive trend towards continuous reduction in imbalances

between the growth of the credit debt in real terms and the economy growth was noted

throughout 2010 which contributed to the reduction in the banking sector’s general level of

vulnerability to the risk of the borrowers’ failure to meet their obligations.

Where the growth of banks’ credit investments at the beginning of 2010 exceeded the

economy growth by 41.1 percentage points, this gap was narrowed more than three times to 12

percentage points by January 1, 2011.

As the state of the country’s economy was gradually improving in 2010 H1, the growth

rates of the banking sector’s bad assets were significantly decelerating and, beginning in July

2010, their amount started to decline giving rise to a significant improvement in the quality of

assets exposed to credit risk.

In the whole of 2010, banks’ bad assets grew by 12% only, or 362.3 billion Belarusian

rubles, a 5.9 times decline on 2009. Also, the growth of legal persons’ non-performing loans in

Belarusian rubles (by 20.4%, or 451.8 billion Belarusian rubles) was entirely responsible for the

above-mentioned growth in bad debt. At the same time, the balance of bad debt in foreign

exchange of both legal persons and households was down in 2010 by 11.5%, or 23.3 million

-5

0

5

10

15

20

25

30

35

40

45

01.01.2009 01.04.2009 01.07.2009 01.10.2009 01.01.2010 01.04.2010 01.07.2010 01.10.2010 01.01.2011

%

Change in the amount of credit debt owed by clients and banks

Growth rates of lending Growth rates of real GDPSource: the National Bank of the Republic of Belarus

-2

-1

0

1

2

3

4

01.01.2009 01.04.2009 01.07.2009 01.10.2009 01.01.2010 01.04.2010 01.07.2010 01.10.2010 01.01.2011

perc

enta

ge p

oint

s

Factors behind the change in the share of banks' bad assets

Impact of assets growth Impact of bad assets growth Change in the share of bad assets


26

Belarusian rubles, and by 42.5%, or 14 million Belarusian rubles respectively. In 2010,

households’ bad assets in Belarusian rubles decreased by 5.6%, or 3.6 billion Belarusian rubles.

In 2010, non-performing loans of enterprises engaged in agriculture grew 1.8 times, or

499.9 billion Belarusian rubles and in industry by 28%, or 358.1 billion Belarusian rubles. At the

same time, the amount of non-performing loans extended to enterprises engaged in construction

and trade as well as organizations engaged in real estate transactions decreased by 16.8%,

28.3%, and 76% respectively, or 8.9, 62.9, and 337.6 billion Belarusian rubles.

In 2010, the growth rates of assets exposed to credit risk were significantly faster than an

increase in bad assets giving rise to a material improvement in the quality of the banking sector’s

credit portfolio.

In early 2011, the amount of bad assets of the banking sector22 stood at 3.38 trillion

Belarusian rubles and the share of bad assets in the total sum of the banking sector’s assets

exposed to credit risk declined from 4.24% as at January 1, 2010 to 3.55% as at the beginning of

2011. However, the share of bad debt of industrial and agricultural enterprises remained higher

than 5%.

The indicator characterizing the overall exposure of the banking sector to credit risk23

decreased in 2010 from 69.7% to 58%, the minimum over the last six years.

In 2010, the structure of bad assets of the banking sector also improved. The share of

assets classified under Group III grew significantly compared with the beginning of the year. At

the same time, the share of bad assets classified under Groups IV and V declined significantly –

from 28.4% in early 2010 to 17.7% as at January 1, 2011.

By the beginning of 2011, banks ensured that special provisions for potential losses on

bad assets were established practically in full. As a result, the banking sector’s vulnerability to

22 Assets classified under Groups III, IV, and V with a view to making special provision. 23 The ratio of assets evaluated in terms of credit risk for the purpose of calculating regulatory capital

adequacy to assets.

57.1 %

28.4 % 14.5 %

Structure of bad assets as at January 1, 2010

Group III Group IV Group V


82.3 %

14.1 %

3.6 %

Structure of bad assets as at January 1, 2011

Group III Group IV Group V

S o ur ce: the National B an k of the Republic o f B elarus

27

70

120

170

220

270

320

370

420

0

5

10

15

20

25

30

35

01.01.2009 01.04.2009 01.07.2009 01.10.2009 01.01.2010 01.04.2010 01.07.2010 01.10.2010 01.01.2011

%

Indicators of the banking sector's liquidity

Ratio of liquid assets to total assets

Short-term liquidity*100 (right-hand axis)

Current liquidity (right-hand axis)


credit risk (the ratio between bad assets less actually established provision thereon and regulatory

capital) declined in 2010 from 15.39% to 12.40%.

Measures taken by the National Bank at the end of 2009 with a view to regulating

the liquidity of the two largest state-owned banks and the additional capitalization thereof

provided by the Government in late 2010 were conducive to a considerable reduction in the

banking sector’s exposure to liquidity risk.

The decisions of the National Bank on extending credits in the form of credit lines for 5

years and on assuming obligations to grant monetary funds up to one year to the two largest

state-owned banks stimulated a significant improvement of the liquidity indicators both of the

above-mentioned banks and the banking sector as a whole. In 2010, the average daily ratio of the

liquid assets to total assets of the banking sector was within 26.5-29.5%, with the requirement

prescribed for an individual bank being 20%, and the short-term liquidity ratio ranged from

2.57% to 3.87%, with the minimum requirement for an individual bank being 1.

Moreover, in 2010, banks were much more intensively attracting long-term funds as

compared with the extension of long-term credits which was conducive to streamlining the

correlation between terms of placing funds and attracting resources and to reducing the banking

sector’s exposure to liquidity risk. In 2010, the growth rates of the banking sector’s liabilities

In 2010, the banking sector’s sensitivity to the potential worsening of its credit portfolio quality was reduced, still remaining high enough.

With the increase in the share of banks’ bad assets by 15 percentage points and with the structure of bad assets remaining unchanged, the losses of the banking sector would still be considerable and would exceed banks’ profit over 12 months 3.6 times (5.3 times as at January 1, 2010). The losses versus capital would be 35.5% (43% as at January 1, 2010).

Stress testing results

Indicators 01.01.2010 01.10.2010 01.01.2011 Change

over 3 months

over 12 months

Capital adequacy ratio, % Actual value 19.8 19.0 20.5 1.5 0.7 Calculated value 12.3 11.4 14.3 2.9 2.0 Change -7.4 -7.7 -6.2 1.5 1.2

Losses versus profit over 12 months, times Ratio 5.29 4.42 3.60 -0.82 -1.69

Losses versus capital, % Ratio 43.00 45.64 35.54 -10.10 -7.46

Volume of additional investments in capital, billion Belarusian rubles Amount 1 162.3 1 505.1 38.1 -1 467.0 -1 124.2

On the whole, the banking sector would be able to withstand the potential deterioration in credit portfolio quality: capital adequacy ratio would be 14.3% (12.3% as at January 1, 2010), with the prescribed requirement being 8%.

Detailed results of stress testing are shown in the Appendix.

28

attracted for a term exceeding one year were 1.3 times higher than that of long-term assets. The

amounts of banks’ long-term assets and liabilities grew by 18.3 trillion Belarusian rubles and

23.1 trillion Belarusian rubles respectively. As a result, the gap between the long-term assets and

liabilities of the banking sector narrowed from 12.1 trillion Belarusian rubles to 7.3 trillion

Belarusian rubles.

The borrowings of the National Bank’s funds were growing intensively, the funds being

the main source of replenishment of the banking sector’s resource base in 2010. The volume of

resources provided by the National Bank to the banking sector grew from 8.4 trillion Belarusian

rubles to 22.9 trillion Belarusian rubles, a 2.7 times increase compared with 2009.

The share of the National Bank’s resources in the structure of the banking sector’s

liabilities continued to grow, each time being a new record over the past ten years. By the early

2011, the share of the National Bank’s funds in the banks’ ruble resource base stood at 38.2%, a

4 times increase over the past two years24.

The rapid growth of the National Bank’s share in the banks’ ruble liabilities was due to

deposit exchange operations, under which banks placed foreign exchange for various terms with

the National Bank in the form of deposits and received, in return, ruble resources to provide

credits to the real sector of economy. In this situation it was the National Bank that assumed the

foreign exchange risks, but along with that the dependency of banks’ soundness on the National

Bank’s ability to discharge its foreign exchange liabilities increased.

The volumes of funds attracted from households as well as balances in the accounts of

Government agencies and economic entities were growing at much lower rates accounting for

26.5%, 18.4%, and 37.1% respectively, which considerably reduced the significance of these

24 As at January 1, 2009, the share of the National Bank’s resources in the structure of the banking sector’s liabilities in

Belarusian rubles accounted for 9.6% (21.6% as at January 1, 2010).

0

4

8

12

16

20

24

28

%

Share of the National Bank's resources in the total amount of the banking sector's liabilities


29

sources of replenishment of the resource base with respect to expanding internal lending and

maintaining the banking sector’s liquidity by banks.

In 2010, banks were rather actively accumulating external debt liabilities. The volume of

resources attracted from non-residents increased by USD2.2 billion, or 61.5%, (in 2009, the

growth of the banking sector’s external debt liabilities was only USD472 million) over the year.

In 2010, the actual values of all liquidity ratios of the banking sector as well as the level of sustainability of the banking sector as a whole with respect to a potential withdrawal by natural and legal persons of 20% of their funds remained high. Along with that, the number of banks vulnerable to this risk remained unchanged, with the share of such banks in the banking system’s assets shrinking insignificantly.

If deposits attracted from households and enterprises outflow in the amount of 20%, nine banks with the share of assets amounting to 34.6% of the total assets of the banking sector would be confronted with liquidity shortage. In early 2010, the number of such banks remained the same, the share of their assets amounting to 38.6% of the total assets.



over the quarter

over 12 months

Instant liquidity ratio, % Actual value 237.9 438.0 450.1 12.1 212.2 Calculated value 202.8 354.8 493.7 138.9 290.9 Change -35.1 -83.2 43.7 126.9 78.8

Current liquidity ratio, % Actual value 172.7 211.4 225.3 13.9 52.6 Calculated value 152.7 174.2 206.6 32.4 53.9 Change -20.0 -37.2 -18.8 18.4 1.2

Short-term liquidity ratio, % Actual value 3.01 2.85 3.38 0.5 0.4 Calculated value 2.11 2.37 2.64 0.3 0.5 Change -0.90 -0.48 -0.73 -0.3 0.2

Liquid-to-total assets ratio,% Actual value 28.4 28.7 29.2 0.5 0.8 Calculated value 10.4 21.6 22.6 1.0 12.2 Change -18.0 -7.1 -6.6 0.5 11.4

As regards the banking sector as a whole, in case of a shock scenario all liquidity indicators would be higher than the minimum prescribed requirements.


16.8 %

12.6 %23.5 %

27.2 %

4.7 %15.2 %

Liabilities structure as at January 1, 2010

Government NBRB Enterprises

Households Banks Non-residents


14.2 %

22.8 %

20.2 %

22.9 %

2.8 %17.1 %

Liabilities structure as at January 1, 2011

Government NBRB Enterprises

Households Banks Non-residents


30

In 2010, the banking sector’s vulnerability to the outflow of non-residents’ funds was reduced but still remained high enough as at the end of the year.

If funds attracted from non-residents outflow in the amount of 50% as at January 1, 2011, the number of banks lacking liquidity in foreign exchange would be 20, the assets thereof covering almost the whole banking sector (96.6% of the total assets). The ratios of short-term liquidity, current liquidity, and liquid-to-total assets in foreign exchange calculated with respect to the assets and liabilities of the banking sector as a whole would be lower than the prescribed liquidity requirements for all types of currencies.



over the quarter

over 12 months

Ratio of instant liquidity in foreign exchange, % Actual value 147.8 228.9 396.5 167.6 248.7 Calculated value 97.1 107.2 107.5 0.3 10.4 Change -50.7 -121.7 -289.0 -167.3 -238.3

Ratio of current liquidity in foreign exchange, % Actual value 105.1 120.8 173.5 52.7 68.4 Calculated value 27.8 69.2 52.3 -16.9 24.5 Change -77.3 -51.6 -121.2 -69.6 -43.9

Ratio of short-term liquidity in foreign exchange Actual value 0.86 0.96 1.45 0.5 0.6 Calculated value 0.01 0.46 0.44 0.0 0.4 Change -0.85 -0.49 -1.00 -0.5 -0.2

Ratio of liquid-to-total assets in foreign exchange, % Actual value 28.2 34.6 46.8 12.2 18.6 Calculated value 13.6 21.3 18.3 -3.0 4.7 Change -14.6 -13.3 -28.5 -15.2 -13.9

With the occurrence of a shock scenario, certain banks would have the following ratios lower than the prescribed requirements: 16 banks (49.1% of the total assets) – the ratio of instant liquidity in foreign exchange, 15 banks (48.8%) – the ratio of current liquidity in foreign exchange, 20 banks (96.6%) – the ratio of short-term liquidity in foreign exchange, and 15 banks (54.6%) – the ratio of liquid-to-total assets in foreign exchange.


As at January 1, 2011, the funds attracted for a term exceeding one year were dominating

in the structure of the banking sector’s external debt. In the first half of 2010, the share of a long-

term component in the total volume of funds attracted from non-residents fell from 55.5% to

46.7% which shows the predominance of short-term resources in the banks’ borrowings. In the

second half of 2010, on the contrary, the predominant growth of long-term external borrowings

was observed which called forth an increase in the share of the banking sector’s long-term debt

liabilities to 53.8% by the early 2011.

As at January 1, 2011, the Russian Federation, Germany, and Austria still remained the

largest creditors to the banking sector of the Republic of Belarus.

31

Structure of liabilities to non-residents by countries, %

In 2010, a significant decline in the indicators of the banking sector’s open foreign

exchange position brought about a considerable reduction in the level of its vulnerability to

the possible fluctuations of exchange rates. At the same time, the still existing

multidirectional dynamics of the shares of foreign exchange components in the banks’

assets and liabilities remained to be the factor behind an increase in their exposure to

foreign exchange risk.

The indicators of the open foreign exchange position of the banking sector declined to a

great extent compared with the previous year which indicates a decrease in the degree of its

exposure to foreign exchange risk. In 2010, the ratio of the total open foreign exchange position

to the banking sector’s regulatory capital ranged from 1.24% to 6.48%, with the requirement

prescribed for individual banks not exceeding 20% (in 2009, the total open foreign exchange

position of the banking sector ranged from 4.71% to 16.01% of the banking sector’s total

regulatory capital).

31.3

21.414.2

11.6

4.6

3.02.6

11.3

January 1, 2010

Russia

Germany

Austria

USA

Great Britain

Italy

Iran

Other countries

Source: the National Bank of he Republic of Belarus

41.3

22.5

8.2

4.9

3.4

3.32.9

13.6

January 1, 2011

Russia

Germany

Austria

Netherlands

Iran

USA

Great Britain

Other countries


-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

01.01.2009 01.04.2009 01.07.2009 01.10.2009 01.01.2010 01.04.2010 01.07.2010 01.10.2010 01.01.2011

%

Open foreign exchange position of the banking sector

Ratio of total OFEP to capital Ratio of net OFEP to capitalSource: the National Bank of the Republic of Belarus

32

Continued decline in the balance of credit debt in foreign exchange owed by households

(a decline by USD516.5 million, or 48.9%, over the year) as well as outpacing growth of lending

in Belarusian rubles to the corporate sector compared with lending in foreign exchange (47.6%

and 1.6% respectively) resulted in further reduction in the share of foreign exchange component

in the banking sector’s assets. By the early 2011, the share of foreign exchange claims in the

total amount of clients’ debt on credit and other asset-related operations dropped to 22.4%

(30.7% as at early 2010), the lowest indicator over the past six years.

At the same time, where during January-September 2010 a trend emerged towards a

decline in the share of attracted foreign exchange funds in the banking sector’s liabilities from

42% to 40.1%, by the end of 2010 the growing inflation and devaluation expectations of

households and economic entities led to a shift in their preferences in favor of foreign exchange

as the currency of savings.

In 2010 Q4, the tendency towards translating households’ ruble savings into foreign

exchange deposits was observed. During October-December 2010 the balances in the natural

persons’ current, deposit, and other accounts in foreign exchange were up by USD527.2 million,

or 13.4%, along with a simultaneous decline in the same indicator in Belarusian rubles by

USD970.2 billion, or 9.1%. As a result, the share of foreign exchange funds attracted from

natural persons increased to 57.8% in 2010 Q4 which is higher than the same indicator in early

2010 (a decline from 56.5% to 52.4% in January-September 2010).

30

35

40

45

50

55

60

20

25

30

35

40

45

50

%

Ratio of foreign exchange components to the total volume

Clients' funds Credit amounts owed by clients

Households' funds (right-hand axis) Enterprises' funds (right-hand axis)Source: the National Bank of the Republic of Belarus

33

In 2010, the share of the foreign exchange component in the total volume of funds in the

current, deposit, and other accounts of economic entities increased from 47.3% to 48.3%.

In 2010, the degree of the banking sector’s vulnerability to potential changes in

interest rates raised significantly. The risk of losses that banks may incur due to the

changes in the return on assets and liabilities in Belarusian rubles remained insignificant,

while the potential losses in foreign exchange were substantial.

The analysis of the dynamics of key indicators characterizing the banking sector’s

exposure to interest rate risk indicates a considerable increase in the degree of its vulnerability to

the change in interest rates on claims and liabilities both in Belarusian rubles and foreign

exchange in 2010.

In 2010, an increase in the weights of the interest-rate sensitive assets and liabilities in the

structure of the banking sector’s claims and liabilities both in Belarusian rubles and foreign

exchange was observed which called forth a general growth of banks’ exposure to interest rate

risk. In the year under review, the share of the banking sector’s interest-rate sensitive assets in

Belarusian rubles increased from 87.6% to 88.4% and in foreign exchange – from 86.2% to

92.7%, while the share of interest-rate sensitive liabilities in Belarusian rubles rose from 96.7%

to 96.9% and in foreign exchange – from 88.7% to 90.5%.

In 2010, the banking sector’s sensitivity to the devaluation of the national currency against the US dollar remained at a low level.

In case of a 20% depreciation of the Belarusian ruble against the US dollar the total losses of the banking sector would be insignificant with respect to both profit and capital. As at January 1, 2011, 17 banks (83.9% of the total assets of the banking sector) maintained a short US dollar position. With the occurrence of a shock scenario, the losses thereof would be 80.0 billion Belarusian rubles. The remaining 14 banks maintained a long US dollar position as at the same date and, therefore, with the occurrence of a shock scenario, would earn, in addition to the profit made, 72.7 billion Belarusian rubles.

In a shock situation, the capital adequacy ratio of the banking sector as a whole would remain virtually unchanged which testifies its ability to withstand the direct foreign exchange risk.



over the quarter

over 12 months

Capital adequacy ratio, % Actual value 19.8 19.0 20.5 1.5 0.7 Calculated value 19.7 19.0 20.5 1.5 0.8 Change -0.1 -0.1 0.0 0.1 0.1


Losses versus capital, % Ratio 0.36 0.31 -0.01 -0.32 -0.37


34

The dynamics of indicators characterizing the banking sector’s exposure to the risk of

changes in the net interest income from the assets and liabilities in Belarusian rubles indicates a

slight growth of this exposure. According to data as at early 2011, with a 1% change per annum

in interest rates on the assets and liabilities in the national currency, a change in the banking

sector’s net interest income will amount to 2.3% (1.4% as in early 2010).

Such growth in the banking sector’s vulnerability to the risk of changes in interest rates

was due to a decline in the net interest margin on claims and liabilities in Belarusian rubles from

5.95% to 5.86% in 2010 and a significant growth of cumulative interest gap between the interest

rate sensitive assets and liabilities with the maturities not exceeding one year (from 4.3 trillion

Belarusian rubles to 10.8 trillion Belarusian rubles). By the end of 2010, the growth of

vulnerability reached 13.5% of the total sum of interest rate sensitive assets (8.4% as in early

2010).

Where the degree of the impact exerted by a change in interest rates on claims and

liabilities in Belarusian rubles upon the volume of the banking sector’s net interest income was

low in 2010, the banking sector’s exposure to interest rate risk to assets and liabilities in foreign

exchange remained high and the situation was deteriorating over the year.

The growth of interest rate sensitive liabilities in foreign exchange which is not

compensated by the growth of assets with corresponding terms of income revision continued to

contribute to the increase in the banking sector’s exposure to interest rate risk. Owing to

continued deterioration in the volume and time structure of the banking sector’s interest-bearing

claims and liabilities in foreign exchange in 2010, the risk of the change in net interest income

continued to grow. According to data as at early 2011, with a 1% change per annum in the return

on assets and liabilities in foreign exchange, the potential relative change in net interest income

of the banking sector will account for 28.7% (13% as in early 2010).

35

The risks diagram drawn based on data as at January 1, 2011 shows a significant

decline in the relative level of risks assumed by the banking sector compared with 2009.

As at January 1, 2011, the level of the banking sector’s vulnerability to the upward movement of the Belarusian ruble yield curve compared with January 1, 2010 slightly decreased and to the the upward movement of the foreign exchange yield curve increased.

The parallel 1,500 basis points upward movement of the Belarusian ruble yield curve would result in a milder decline of the capital adequacy ratio of the entire banking sector and in less significant losses versus profit earned over 12 months and versus capital compared with data as at January 1, 2010. The banking sector’s ability to generally withstand such shock would remain high.



over the quarter

over 12 months

Capital adequacy ratio, % Actual value 19.8 19.0 20.5 1.5 0.7 Calculated value 17.8 17.1 19.5 2.4 1.7 Change -1.9 -1.9 -0.9 1.0 1.0


Losses versus capital, % Ratio 9.74 10.30 4.70 -5.60 -5.04

In case of 1,000 basis upward movement of the foreign exchange yield curve as at January

1, 2011, 17 banks whose share accounts for 95.1% of the total assets of the banking sector would suffer a decline in the capital adequacy ratio. The ratio of losses versus profit over 12 months would account for 54% (13% as at the beginning of 2010), versus capital - for 5.3% (1.1%), and the change in the capital adequacy ratio of the entire banking sector would be 1.1 percentage points (0.2 percentage points). Stress testing results


over the quarter

over 12 months

Capital adequacy ratio, % Actual value 19.8 19.0 20.9 1.9 1.1 Calculated value 19.5 18.1 19.4 1.3 -0.2 Change -0.2 -1.0 -1.1 -0.1 -0.9

Losses versus profit over 12 months, times Ratio 0.13 0.49 0.54 0.05 0.41

Losses versus capital, % Ratio 1.08 5.03 5.32 0.29 4.24


The risks diagram is a comprehensive (aggregated) assessment of the relative level of the banking sector’s soundness based on a combination of the analysis of the dynamics of financial stability indicators and the results of the banking sector’s stress testing within the observable historic period of time.

The scheme for plotting a composite indicator which evaluates the level of risks in the banking sector is based on the principle of using the multiplicity of indicators characterizing various factors affecting its stability, with the system of weighting coefficients which show the significance of each factor when determining the overall level of risks being employed.

The majority of weights in the suggested algorithm were attached in an expert manner based on the experience and knowledge of the National Bank’s specialists. However, an expert survey was conducted with a view to improving the assessments of the main risk factors’ significance made by the National Bank’s specialists and to enhancing the objectivity of the comprehensive assessment of the level of the banking sector’s exposure to risks which made it possible to take their opinions into account when defining the measure of significance of the main characteristics of the banking sector’s soundness.

36

As a result of measures taken by the Government in the late 2009 with the purpose of

increasing the liquidity of state-owned banks, the overall level of risks assumed by the banking

sector was declining in 2010.

A considerable improvement of liquidity indicators, reduction in credit and foreign

exchange risks, and enhancement of the banking sector’s performance efficiency exerted a

lowering impact on the dynamics of the overall relative level of risks. At the same time, a

substantial growth in interest rate risks, on the contrary, led to an increase in the banking sector’s

exposure to risks.

Dynamics of the level of the banking sector’s risks

2009 2010 2011

01.01 01.04 01.07 01.10 01.01 01.04 01.07 01.10 01.01

Overall level of risks 3 5 7 9 7 5 2 2 2Liquidity risk 8 9 9 9 6 3 1 2 3Capital adequacy 3 3 5 6 6 4 5 7 6Credit risk 1 3 5 6 8 7 5 3 1Foreign exchange risk 4 6 8 9 6 4 3 1 1Interest rate risk 2 4 3 4 3 7 4 7 8Profitability 7 5 7 9 6 4 4 2 2

0123456789

Overall level of exposure torisks

Credit risk

Liquidity risk

Foreign exchange riskInterest rate risk

Profitability

Capital adequacy

Diagramof risks as at January 1, 2011

01.01.2010

01.01.2011

Source: the NationalBank of the Republic of Belarus

37

3.2. INSURANCE SECTOR

As at January 1, 2011, the insurance sector of the Republic of Belarus comprised 24

insurance companies, including 4 life insurance companies and State Unitary Enterprise

“Belarusian National Reinsurance Organization”.

In 2010, 8 insurance companies with controlling stakes therein belonging to the state

(their number did not change over the year) conducted business in the country’s insurance

market. The number of companies controlled by foreign capital fell from 9 to 8 due to the

reorganization of CJSIC “Victoria” by means of its merger with IBA CJSIC “Kupala”, while the

number of private insurers25, on the contrary, grew from 7 to 8 owing to CJSC

“IC”Rosgosstrakh” which entered the Belarusian insurance market in 2010.

By the early 2011, the insurance sector’s own capital totaled 1.98 trillion Belarusian

rubles, with its growth considerably decelerating compared with the previous year and

amounting to mere 108.3 billion Belarusian rubles, or 5.8% (488.1 billion Belarusian rubles, or

35.3%, in 2009). State-owned insurers accounted for more than 84% of the above-mentioned

growth. Unlike in 2009, own funds of insurance companies were the main source of

accumulating the capital of the insurance sector (profit of the current year and the previous years

and funds established at the expense thereof)26. As a result, a slight decrease, compared with

2009, in the share of the authorized fund in the insurance sector’s own capital was registered –

from 88.4% to 87.9%.

Also, a decline in the ratio between the insurance sector’s own capital and assets was

observed – from 63.9% to 63%27.

As at January 1, 2011, four insurance companies had individual ratings of international

rating agencies, two of them were assigned ratings by Fitch Ratings, one by Standard & Poor’s,

and one by A.M. Best Co.

In 2010, the level of concentration of the insurance sector slightly declined, however,

still remaining high enough.

25 Hereinafter: State-owned insurance companies – a group of insurance companies with Government agencies’ and state-

owned legal persons’ dominating share in authorized capital. Foreign insurance companies – a group of insurance companies with foreign capital’s dominant share in

authorized capital. Private insurance companies – a group of insurance companies that are not included in the groups of state-

owned and foreign insurance companies. 26 In 2009, the growth of the insurance sector’s own capital was mainly due to an increase in the amount of

the Government’s contribution to the Belarusian State Unitary Enterprise for Export and Import Insurance “Beleximgarant” by 350 billion Belarusian rubles.

27 The chronological mean of the insurance sector’s own capital, aggregate authorized fund, and assets.

38

In 2010, the bulk of insurance business was concentrated in 10 insurance companies

(mainly state-owned28) which held leading positions in the volumes of insurance premiums.

However, where in 2009 these companies accounted for 94.9% of insurance premiums as regards

the insurance sector as a whole, in 2010 they accounted for only 93.8%. The Herfindahl-

Hirschman index for the insurance sector calculated based on the insurance premiums indicator

with account of reinsurance operations declined from 0.31 to 0.29 in 2010, while the Gini

coefficient calculated based on the same indicator fell from 0.76 to 0.74 which indicates a slight

decrease in the concentration of the insurance sector in the Republic of Belarus.

In 2010, an intensive development of the Belarusian insurance market was observed

testifying a tight connection with the economy’s development and indicating the restoration

of business activities in the country along with an increase in the volume of the goods and

services consumption after the adverse affect of the world financial crisis.

In 2010, an accelerated development of the insurance sector was registered. Where in

2009 the growth rates of net insurance premiums (excluding the devaluation of the Belarusian

ruble) were only 10.8%29, in 2010 these rates increased almost twice and accounted for 20.6%

(including the reinsurance operations). The outpacing development of life insurance was

observed – the volume of life insurance premiums grew by 29.6% compared with 2009, while

other insurance premiums grew only by 20.1%.

In 2010, the total volume of net insurance premiums, including the reinsurance

operations, reached 1.3 trillion Belarusian rubles and the share of voluntary insurance premiums

stood at 49.9% (at 46.5% in 2009).

*CHI – compulsory health insurance.

28 The state-owned insurers comprising the above-mentioned group of 10 companies raised over 83% of the entire sector’s premiums. 29 Based on calculations of the National Bank.

1.3 1.31.2

2.7

2.2 2.1

0.8 0.7 0.70.7 0.8 0.8

0

0.5

1

1.5

2

2.5

3

2008 2009 2010

%

Gross insurance premiums as a percentage of GDP

Russia (without CHI)* Ukraine Kazakhstan Republic of BelarusSource: Internet data and the National Bank of the Republic of Belarus

39

The share of insurance premiums as a percentage of GDP remained virtually unchanged

and accounted for 0.82% (for 0.81% in 2009). In terms of this indicator the Republic of Belarus

falls greatly behind the majority of the developed European countries. Among the CIS countries

the level of the insurance market development in Belarus is comparable with that of Kazakhstan.

The outpacing growth rates of net insurance claims against net insurance premiums

brought about further increase in the level of insurance claims and decline in the efficiency

indicators of the insurance companies’ activities.

In 2010, the total amount of net claims (including the reinsurance operations) was up by

27.8%, exceeding the growth rates of insurance premiums by 7.2 percentage points. As a result,

the insurance sector’s loss ratio (the ratio between the net insurance claims and net insurance

premiums) continued to grow and accounted for 60.5% in 2010 (for 57.1% in 2009). The

indicated growth of the loss ratio of the insurance sector as a whole was totally due to an

increase in this ratio – from 59.2% to 63.1% – of non-life insurance companies30. The group of

life insurance companies observed, on the contrary, a decline – from 20.2% to 18.4% – in the

ratio between the net insurance claims and net insurance premiums in 2010.

Though the combined loss ratio of non-life insurance companies (the ratio of the sum of

net insurance claims [including the reinsurance operations], revisions to insurance reserves, and

policy administration costs to the net insurance premiums) characterizing the efficiency of

insurance business slightly declined compared with 2009, it remained on the level exceeding

100% accounting for 100.9% (for 101.9% in 2009).

Accordingly, insurance business of non-life insurance companies still made a loss in 2010

and investment income was the main source of profit.

Pre-tax total profit earned by the insurance sector in 2010 totaled 92.1 billion Belarusian

rubles, down by 26.4 billion Belarusian rubles, or 22.3%, compared with 2009.

As a result, the ratio between the pre-tax profit earned by insurers over the year and the

average annual value of their own capital in 2010 declined by more than a third compared with

the year earlier – from 7.5% to 4.8%. The return on assets31 of the insurance sector also fell from

4.8% to 3%.

30 Types of insurance other than life insurance.

31 The ratio between the pre-tax profit earned over the year and the chronological mean of the assets of the insurance sector.

40

The dynamics of indicators characterizing the adequacy of insurance reserves set up

by insurance companies and the ability thereof to perform obligations in the long-term

perspective testify a slight increase in the exposure of the country’s insurance sector to

insurance risks.

Where the amount of insurance reserves set up as at January 2010 was 1.83 times higher

than the average annual volume of net insurance claims paid in the past three years, at the end of

2010 this indicator dropped to 1.65 times. The ratio between the sum of insurance reserves and

the average annual volume of net insurance premiums also fell from 96% to 91.9% in 2010.

The risk of potential material losses and decrease in the amount of insurance reserves of

the domestic insurance sector caused by large claims may be assessed as not very high. In 2010,

the total amount of large insurance claims paid by the country’s insurance companies as

compensation for the damages caused by natural calamities and anthropogenic impact (transport

accidents (wrecks), industrial accidents, and other) totaled 16.8 billion Belarusian rubles, or

1.8% of the sum of insurance reserves set up by the insurance sector32 (24.5 billion Belarusian

rubles and 3.3% respectively in 2009).

The degree of the Belarusian insurance sector’s exposure to market risks did not

significantly change in 2010. The level of the stock market risk remained considerable,

while the insurance companies’ vulnerability to the foreign exchange and interest rate

risks, as well as the risk of changes in real estate prices remained low.

The insurance sector’s exposure to stock market risk remained high during 2010, having

slightly declined. As at January 1, 2011, the total sum of insurance companies’ investments in

legal persons’ securities remained virtually unchanged and amounted to 1.4 trillion Belarusian

rubles, or 43.9% of the insurance sector’s assets (48.5% in early 2010). This situation was totally

due to the insurance sector’s significant investments of funds in the authorized capitals of state-

owned banks33 in 2008.

Given the prohibition on the investment of funds in real estate by state-owned insurers in

conjunction with a high level of concentration of the Belarusian insurance sector, the sector’s

exposure to the risk of changes in real estate prices remained low in 2010. As at January 1, 2011,

32 The chronological mean of the sum of the set up insurance reserves. 33 Pursuant to Resolution of the Council of Ministers of the Republic of Belarus No. 1975 dated December

18, 2008, the authorized funds of two state insurance companies – Belgosstrakh and State Unitary Enterprise “Belarusian National Reinsurance Organization” – were increased by 1 trillion Belarusian rubles, these funds being further used to increase the capitals of the largest state-owned banks.

41

the domestic insurance companies invested in real estate properties only 8.8% of the total

amount of assets (6.6% as at the beginning of 2010).

The insurance sector’s vulnerability to potential fluctuations in exchange rates of foreign

currency is also relatively low. Since insurance policies – under which reserves are set up in

foreign exchange – are mainly of short-term nature and loss ratios of such types of insurance are

relatively low, domestic insurers’ assets exceed, as a rule, liabilities in the relevant currency.

This motivates the country’s insurance companies to have predominantly a long foreign

exchange position.

In early 2011, the insurance sector’s net open foreign exchange position accounted for

11.2% of the aggregate amount of its own capital (for 10.1% as at January 1, 2010).

The low share of life insurance premiums (long-term types of insurance) is responsible

for low exposure of the insurance sector to interest rate risk.

The exposure to interest rate risk is inherent only in life insurance companies maintaining

long-term insurance business which include, along with insurance against various risks

associated with natural persons’ life and health, the investment component that makes it possible

to accumulate monetary funds and obtain the insurance coverage as well. The key parameter of

such insurance products is the guaranteed return rate (guaranteed income rate) accrued on the

funds accumulated under insurance policies which makes such products sensitive to the change

in interest rates.

Over the past few years, the share of life insurance premiums was constantly growing,

but in 2010, their share continued to be insignificant – 5.9% (5.5% in 2009) which makes it

possible to draw a conclusion that the level of exposure of the insurance sector as a whole to

interest rate risk is low.

Given that the Republic of Belarus does not maintain the practices of extending

credits to insurance companies, the level of the insurance sector’s vulnerability to credit

risk also remains low.

Whereas legislation of the Republic of Belarus prohibits the insurance companies from

crediting their clients and the credit risk for the insurance sector manifests itself in the

counterparties’ failure to perform their obligations under reinsurance, investment (deposit), and

other economic agreements.

As at January 1, 2011, total receivables of the insurance sector amounted to 82.4 billion

Belarusian rubles, or 6.2% of the total volume of insurance premiums, in 2010 (to 5.5% in 2009).

42

In 2010, liquidity risk for the country’s insurance sector remained of minor

importance.

As at January 1, 2011, the domestic insurance companies placed 57.1% of assets34 on

(settlement and deposit) accounts with banks or used them to purchase government securities

(57.6% as at the beginning of 2010). Thus, insurance companies are in position to regulate,

without material losses, their liquidity through the purchase/sale of government securities that

are freely traded in the market or early withdrawal of funds from deposit accounts.

34 Exclusive of investments in authorized capitals of the state-owned banks amounting to 1 trillion

Belarusian rubles.

43

CHAPTER 4. FINANCIAL MARKETS

In 2010, the majority of operations in the foreign exchange market was conducted in

US dollars, the share of which dropped significantly compared with the previous year, with

the volume of foreign exchange operations involving the euro and Russian rubles having

grown.

In 2010, the turnover of the domestic foreign exchange market was up by 31.7%

compared with 2009, amounting to USD111.99 billion, of which the turnover of the over-the-

counter market declined by 44.4% (to USD76.41 billion), the turnover of the stock market

increased by 50.4% (to USD21.22 billion), and the turnover of the cash market went up by

15.1% (to USD14.36 billion).

Transactions involving US dollars prevailed in the gross volume of foreign exchange

operations in the foreign exchange market (57.8%). The share of this currency dropped by 7.5

percentage points compared with 2009, with the share of the euro increasing from 27.9% to

31.9%. The foreign exchange market of the Republic of Belarus saw a growth in the share of the

Russian ruble, from 6.8% to 9.4%. The volume of operations in other currencies slightly grew

up, but remained insignificant, with their share accounting for 1%, against 0.1% in 2009.

In 2010, while implementing the exchange rate policy the National Bank used the

mechanism of pegging the Belarusian ruble to the currency basket which incorporated in

equal shares the US dollar, the euro, and the Russian ruble, that made it possible to

mitigate to a considerable degree the risks associated with reciprocal fluctuations in the

exchange rates of the above-mentioned currencies.

In 2010, the average daily movement of the cost of currency basket amounted to 0.15%

ranging from minus 1.25% to plus 0.71%. In the year under review the average daily movement

of the exchange rate of the Belarusian ruble versus the US dollar was 0.08% ranging from minus

9.37%

57.77%

31.86%0.99%

Structure of foreign exchange market in 2010

Russian ruble US dollar Euro Other currencies

Источник: Национальный банк Республики Беларусь.

6.76%

65.23%

27.88%

0.12%

Structure of foreign exchange market in 2009

Russian ruble US dollar Euro Other currencies

Источник: Национальный банк Республики Беларусь.

44

1.05% to plus 0.57%35 (in 2009, 0.21% ranging from minus 1.54% to plus 1.78%). Daily

movements of the exchange rate of the Belarusian ruble versus the euro ranged from minus

1.85% to plus 2.07% (from minus 2.6% to plus 2.2% in 2009) and versus the Russian ruble from

minus 2.07% to plus 1.54% (from minus 3.2% to plus 5.3% in 2009).

In 2010, the average weighted exchange rate of the Belarusian ruble versus the US dollar

both in the over-the-counter market and the cash foreign exchange market deviated from the

exchange rate set by the National Bank by as much as 0.6% on average.

Maintenance of stable exchange rate of the Belarusian ruble and attractive interest

rates on ruble deposits ensured the preservation of higher return on ruble savings

compared with the return on savings in foreign exchange, contributing to the growth in the

depositors’ motivation to place deposits in the national currency.

The maintenance of exchange rate of the Belarusian ruble within the prescribed band and

actual dynamics of nominal interest rates on deposits in foreign exchange and national currency

resulted in the decrease in ruble return on foreign exchange deposits. Where for almost all 2009

(except for January) it amounted to 17.2% per annum, in 2010 it averaged 13.2 percentage

points. In 2010, an excess of the return on ruble deposits over the return on foreign exchange

deposits accounted for 4.1 percentage points.

Also, real return on ruble deposits was maintained at a high positive level. During the

year under review a real rate on newly attracted time deposits amounted to 3.4 percentage points

(in 2009, 8.1 percentage points).

35 An adverse movement of the exchange rate of the Belarusian ruble corresponds to the weakening of the Belarusian ruble; positive movement – to its strengthening.

-13

-8

-3

2

7

%

The cost of the currency basket Versus the US dollar

Versus the euro Versus the Russian rubleSource: the National Bank of the Republic of Belarus

Official exchange rate of the Belarusian ruble in 2010 on the beginning of the year

45

The decrease in interest rates on foreign exchange deposits that dropped in 2010 from

8.4% to 6.7% per annum was also responsible for the downturn in depositors’ motivation for

saving in foreign exchange.

The prevailing conditions made it possible to reduce the refinance rate and the rates on

the National Bank’s operations on a gradual basis for the purpose of enhancing the accessibility

of credit resources while maintaining attractiveness of deposits with banks.

Decrease in the interest rates on liquidity provision instruments and the interbank

market rates determined, to a large extent, a further dynamics of rates in the credit and

deposit markets.

The interest rate on households’ fresh time deposits in rubles decreased from 20.9% per

annum in December 2009 to 15.6% per annum in December 2010.

Despite the decrease in the interest rates, time ruble deposits of natural persons grew in

2010 by 18.1%. At the same time, at the year-end 2010 time deposits in foreign exchange grew

by 21.4% in the US dollar equivalent.

Annual dynamics of growth rates of the natural persons’ time ruble deposits reflected the

changes in the households’ inflationary and devaluation expectations. While in 2010 Q1 time

ruble deposits of natural persons increased by 16.3%, in Q3 by 7.3%, in Q4 they declined by

14.6%. The growth rates of households’ time deposits in foreign exchange (in the US dollar

equivalent), on the contrary, went up from minus 0.6% in 2010 Q1 to 13.6% in 2010 Q4.

-40

-20

0

20

40

60

80

100

% p

er a

nnum

Return on banks' newly attracted deposits

In Belarusian rublesIn foreign exchange


During 2010 the refinance rate of the National Bank was gradually scaled down from 13.5% to 10.5%

per annum. In 2010, the interest rates on the National Bank’s operations were reduced: on standing facilities designed to support liquidity by 5.5 percentage points to 16% per annum and on operations involving liquidity withdrawal by 2.5 percentage points to 10% per annum.

46

Moreover, the growth rates of time deposits in Belarusian rubles lowered in 2010 due to

the establishment of high interest rates on transferable deposits (mainly since 2010 Q2) both in

the national currency and in foreign exchange by separate banks.

Therefore, the situation in the deposit market in 2010 remained, on the whole, stable,

though it was somewhat vulnerable due to the growth of devaluation and inflation expectations

at the end of 2010.

In view of the need to increase the accessibility of credit resources owing to a rather high

level of real values of interest rates on credits, the interest rates on ruble credits granted by the

banks on market terms were decreased during 2010 from 21.2% per annum in January 2010 to

13.7% per annum in December 2010.

Also, the total value of the borrowing from the banks stood, due to a high share of

soft credits compensated at the expense of budgetary funds, at the level that was lower than

the refinance rate.

For example, in 2010 interest rates on bank credits with account of soft credits ranged

from 8.3% to 10.4% per annum. Such difference between the interest rates stimulated the

demand for soft credits (including from the borrowers with unstable financial standing) and thus

contributed to the build-up of risks in the banking sector.

7

9

11

13

15

17

19

21

23

January 2009

March 2009 May 2009 July 2009 September 2009

November 2009

January 2010

March 2010 May 2010 July 2010 September 2010

November 2010

% p

er a

nnum

Interest rates in the credit and deposit market

Newly attracted deposits Newly granted creditsSource: the National Bank of the Republic of Belarus

6

8

10

12

14

16

18

% p

er a

nnum

Interest rates on credits, including soft credits

Credits Inflation Refinance rateSource: the National Bank of the Republic of Belarus

47

In 2010, interbank credits in the national currency (hereinafter – “interbank credits”)

remained one of the main instruments of regulating the banks’ liquidity. 31 resident banks of the

Republic of Belarus and non-resident banks were the participants of this monetary market

segment. The National Bank of the Republic of Belarus made a corrective impact thereon.

During the year under review the situation in the interbank ruble market developed under

the conditions of post-crisis economic recovery. In 2010, the volume of operations carried out by

banks in the interbank market was somewhat higher compared with 2009, amounting to 109.8

trillion Belarusian rubles (in 2009, 88.6 trillion Belarusian rubles). The structure of time

instruments in the interbank market didn’t undergo significant changes: intraday interbank

credits were still accounted for over 80%. In the year under review the share of operations with

non-resident banks in the ruble interbank market went down to a small degree, amounting to

2.33% (2.99% in 2009 and 1.03% in 2008).

In 2010, credit risk associated with transactions conducted in the interbank market was

not high. The share of bad debts, which is one of the indicators of credit risk, in the total volume

of interbank ruble credits was close to zero.

However, the availability of such risk factor as a high level of concentration of the market

on the demand side should be noted. Two major banks accounted for more than 75% of attracted

resources (this indicator accounted for more than 75% in 2009 as well and more than 66% in

2008). On the supply side the market was distributed in a rather uniform manner (the share of

one lending bank did not exceed 13%). Market monopolization by borrowing banks sets

preconditions for an increase in credit risk since the possible credit default infringes the interests

of several banks. Such concentration of the market may negatively affect the functioning of the

banking system as well as contribute to the increase in the level of interest and liquidity risk. At

the same time, the short terms of interbank credits, redistribution of liquidity in the interbank

market by virtue of repo operations, and improvement of liquidity regulation instruments and

prudential norms of the National Bank were conducive to mitigation of these risks.

With a view to ensuring a normal payment process, preventing non-payments crisis, and

smoothing fluctuations of interest rates in the interbank market under the shortage of liquidity,

the National Bank provided necessary resources to banks. At the time of excess liquidity the

National Bank carried out operations in the open market involving sterilization of excess

liquidity.

The National Bank’s impact on the banking system’s liquidity and the dynamics of

interest rates in the money market was exerted through operations of three types: the standing

facilities, bilateral operations, and open market operations (main and fine-tuning ones).

48

During the year under review interest rates on standing facilities and bilateral operations

designed to maintain liquidity were gradually reduced by 5.5 percentage points (from 21.5% per

annum to 16% per annum), interest rates on standing facilities designed to withdraw liquidity

were decreased by 2.5 percentage points (from 9.5% per annum to 7% per annum).

Moreover, the practice of granting the National Bank’s refinancing against the pledge of

mortgages continued. These credits were provided for a term of 6 months. During the reporting

period the interest rate on these credits was reduced from the level of the rate on overnight credit

decreased by 3 percentage points to the level of the refinance rate increased by 2 percentage

points.

Measures of the interest rate policy of the National Bank resulted in the shrinkage of

interest rates’ band on operations involving liquidity regulation and facilitated the reduction of

possible fluctuations of rates in the intraday interbank ruble market, decreasing the interest rate

risk for banks.

In 2010, the average daily spread between maximal and minimal interest rates amounted

to 2.9 percentage points and was considerably lower than the average daily amount in 2009 (8.1

percentage points). Also, the bulk of transactions were carried out at mid-market interest rate.

5

7

9

11

13

15

17

19

21

23

% p

er a

nnum

Dynamics of the interest rate on intraday interbank credits and interest rates on the National Bank's operations

Interest rates on lombard auctions Interest rates on short-term NB bonds' auctions

Interest rate in the intraday interbank credit market Interest rates on standing facilities designed to withdraw liquidity

Refinance rate Interest rates on deposit auctions

Interest rates on credits secured by mortgages Interest rates on standing facilities designed to maintain liquidity


0

10

20

30

40

50

d<=-5 -5<d<=-4 -4<d<=-3 -3<d<=-2 -2<d<=-1 -1<d<=0 0<d<1 1<=d<2 2<=d<3 3<=d<4 4<=d<5 5<=d

%

Distribution of deviations from mean value in the interest rate on intraday interbank credits in the national currency

2010 2009Source: the National Bank of the Republic of Belarus

49

In 2010, the density of interest rates distribution in the intraday interbank market

increased compared with 2009, indicating the reduction of the interest rate risk.

The National Bank provided necessary resources to banks with a view to ensuring a

normal payment process and smoothing fluctuations of interest rates in the interbank market. At

the same time, the interbank market performed the function of funds’ redistribution in the

banking system to the full extent.

In 2010, average daily balance of debt under operations designed to maintain current

liquidity of the banking system amounted to 1,127.5 billion Belarusian rubles. Average daily

balance of the banks’ funds under operations involving withdrawal of the National Bank’s

liquidity was 390.5 billion Belarusian rubles within the same period.

In addition, with a view to expanding the banks’ capacities of regulating their own

liquidity by using the resources of the required reserves fund at the time of limited acceptable

security required to obtain refinancing from the National Bank, the ratio of the fixed portion of

reserve requirements was reduced from 40% to 10% in March 2010. This measure made it

possible to increase the funds that may be used by banks for the purpose of daily regulation of

liquidity by about 600 billion Belarusian rubles.

In 2010 the development of the securities market of the Republic of Belarus was

characterized by decreasing share and volume of government securities in circulation,

significantly increasing volume of corporate bonds and bonds of local borrowings and a

debuting issue of government bonds of the Republic of Belarus in foreign markets.

0

100

200

300

400

500

600

January February March April May June July August September October November December

BY

R b

n

Average daily volume of transactions designed to attract funds in the intraday interbank market

2009 2010Source: the National Bank of the Republic of Belarus

05

10

15

2025

30

3540

45

50

01.01.2006 01.01.2007 01.01.2008 01.01.2009 01.01.2010 01.01.2011

% o

f GD

P

Volume of securities in circulation

Total Shares Corporate bonds BLB Government securitiesSource: Ministry of Finance of the Republic of Belarus

50

Growing volume of securities in circulation compared with the GDP value evidences a

growing significance of the securities market, its dynamic development, and expanding

structure of circulating instruments.

Activization of processes related to the independent attraction of investments by

organizations made it possible to ensure a significant growth in the corporate securities in

circulation. At the same time, the government securities were not issued in the domestic market

(except for a small volume issued as part of restructuring of amounts owed to the National Bank

by the Government). Consequently, the structure of the securities market’s instruments

underwent significant changes that resulted in the reduction of the government securities

market’s share and its replacement by corporate securities and bonds of local executive and

regulatory authorities (hereinafter – “BLB”).

As of January 1, 2011, the shares form a major part in the total volume of securities

placed in circulation – 73.7%. In 2010, the total amount of issue of stock-joint companies’ shares

was 18.6 trillion Belarusian rubles, exceeding the indicator of 2009 almost twice. As of January 1,

2011, the shares worth 58.9 trillion Belarusian rubles were in circulation, a 45.2% growth compared

with the indicator as of January 1, 2010. In the year under review the volume of stock exchange

transactions involving shares accounted for 0.3 trillion Belarusian rubles, the amount of transactions

in the over-the-counter market – 1.2 trillion Belarusian rubles.

In 2010, 394 issues of 145 legal persons’ corporate bonds were registered. The amount of

registered issue was 15.2 trillion Belarusian rubles. Also, the issue volume increased twice

compared with 2009. As of January 1, 2011, corporate bonds worth 13.7 trillion Belarusian

rubles at nominal value were in circulation, including 3.7 trillion Belarusian rubles of non-bank

institutions. During the year under review their share in the total volume grew from 7.4% to

27.2%. In 2010, the amount of stock exchange transactions involving corporate bonds accounted

for 3.4 trillion Belarusian rubles – a 1.2 times growth compared with 2009.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

01.01.2006 01.01.2007 01.01.2008 01.01.2009 01.01.2010 01.01.2011

The ratio of main instruments in securities market

Shares Corporate bonds BLB Government securitiesSource: Ministry of Finance of the Republic of Belarus

51

Beginning from 2009 the issue of bonds of local executive and regulatory authorities was

activated. The National Bank and major state-owned banks are the main holders of BLB. The

volume of BLB in their securities portfolio grew 3.6 times over 2010 amounting to 3.8 trillion

Belarusian rubles as of January 1, 2011. In 2010, the amount of stock exchange auctions

involving BLB was 2.0 trillion Belarusian rubles, of which the National Bank’s transactions

accounted for 64%. BLB are included in the Lombard List of the National Bank and during 2010

were the main pledge under the lombard and overnight credits. In the year under review the share

of pledged BLB averaged 64.5% of all securities pledged to the National Bank.

As of January 1, 2011, government bonds worth 1.8 trillion Belarusian rubles were in

circulation, with their volume dropping by 16.6% during the year. In 2010, the volume of stock

exchange transactions involving government bonds amounted to 17.5 trillion Belarusian rubles.

While as at January 1, 2011 the share of government bonds in the total volume of circulating

securities was only 2.2%, the share of transactions involving such bonds in the stock exchange

secondary market accounted in 2010 for over 75%.

Notwithstanding the growing volumes of securities in circulation, in 2010, the

securities market was still characterized by the low level of development that manifested

itself, above all, in illiquidity of the bulk of its segments, except for the government bonds’

market.

In August 2010, the eurobonds of the Republic of Belarus (with additional placement)

totaling USD1 billion (at nominal value) with a five-year term of circulation and a coupon rate of

8.75% per annum were issued.

In December 2010, the government bonds of the Republic of Belarus worth 7 billion

Russian rubles with a two-year term of circulation and a coupon rate of 8.7% per annum were

placed in the Russian financial market. These securities were accepted for a free circulation in

the stock exchange and over-the-counter markets of the Russian Federation.

The entering of the international debt market by the Republic of Belarus as a sovereign

borrower has, on the one hand, extended the possibilities of external financing, but, on the other

hand, has increased the dependence of the financial system of the Republic of Belarus on the

international capital markets. Market yield on the Belarusian eurobonds became for foreign

investors one of the integrating indicators of the country’s credit risk that makes an impact on the

value of external borrowings both by the Government and banks.

52

CHAPTER 5. PAYMENT SYSTEM OF THE REPUBLIC OF BELARUS

In 2010, a sustainable and fail-safe functioning of the core component of the

payment system of the Republic of Belarus – automated system of interbank settlements

(hereinafter - the “ASIS”) and its functional component – the BISS system – was ensured.

In the year under review, 61.6 million payments (239.6 thousand payments a day, on

average) worth 1,107.6 trillion Belarusian rubles were effected in the BISS (4.3 trillion

Belarusian rubles a day, on average). Compared with 2009, the number of payments performed

in the BISS increased by 9.2% and the value of payments reduced by 7.1%. The decrease in the

amount of interbank turnover in 2010 compared with 2009 was due to the reduction of the

volume of the National Bank’s operations by 111.3 trillion Belarusian rubles (7.7%).

The ratio of banks’ accessibility to the ASIS in 2010 was 99.71% of the daily production

time (the norm being not lower than 99.5%).

In 2010, the share of payments processed in the BISS five minutes prior to the deadline

for the payments acceptance was, mainly, within the interval from 99.91% to 99.99%.

The major risks in the payment system – credit risk, liquidity risk, and operational

risk – were minimized due to the National Bank’s consistent efforts aimed at improving

risk management procedures and ensuring banks’ liquidity.

In 2010, redistribution of a payment flow in favor of the first half of the BISS’s business

day continued, contributing to the reduction of the settlement risk. While in 2009 62.5% of the

total volume of payment instructions sent within the day was entered into the BISS till 14.00

p.m., in 2010, the mentioned indicator amounted to 64%.

For the purpose of preventing systemic risk and minimizing credit risk and risk of

liquidity in the payment system the procedures for supplying the banks with liquidity and the

mechanisms and instruments of monetary regulation accessible to the banks for ensuring the

continuity of settlements were improved. In 2010, the part of required reserves fund that the

banks could use in settlements within a business day was increased to 90% instead of 40% (60%)

in 2009.

In 2010, for the purpose of minimizing operational risk a lot of attention was paid to the

modernization of the ASIS hardware and software infrastructure, as well as holding of activities

53

aimed at detecting the failures and malfunctions therein in a timely manner and correcting them

in the shortest possible time.

As part of the development of the management system of the ASIS hardware and

software complex the work on implementing new services of the user support division - Help

desk and Call-center - was continuing. The measures designed to upgrade the system of the ASIS

antivirus protection were carried with a view to ensuring information security.

A system of centralized copying and archiving that provides for a possibility of

recovering the data from the tape carrier in case of a logical failure of databases or a breakdown

of the ASIS data storage system was put into operation.

The development and improvement of the current system of standardization and

certification of the software and hardware in the sphere of banking services and technologies was

continued as one of the directions aimed at mitigating operational risk. The developers of

software programs that fall within the scope of application of the introduced Technical

Regulations “Banking. Information Technologies. Information Compatibility of Software and

Hardware Tools of the Payment System” passed through necessary procedures and obtained the

certificates of compliance. A working draft of the technical code of established practice which

sets the requirements to the assurance of continuous work and recovery of working capacity of

the payment systems’ participants was developed.

Regulatory legal base regulating the procedures for performing interbank settlements in

the BISS, technical codes of established practice of the National Bank that set the requirements

to the payment instructions and the ASIS software and hardware complexes, and contractual

relations of the system’s participants were maintained current that contributed to the

minimization of legal risk in the ASIS.

A comprehensive assessment of operational risk in the intrabank systems of major

participants of the national payment system that was carried out in 2010 showed that the

level of operational risk in the ASIS is, generally, in the low risk area.

During 2010 the National Bank performed a risk-oriented supervision over the payment

system, under which a complex work on assessing the operational risk in the most critical ASIS

elements that are potential carriers of the systemic risk (by the system’s operator and its major

participants) was carried out.

The assessment of operational risk in the intrabank systems of five largest banks of the

country was conducted using the developed methodology which is based on the analytical

54

method of expert assessements. The data obtained in the course of interviews (surveys) and

complex inspections at the banks were used for the assessment.

In 2010, the work on assessing the operational risk on the side of the ASIS’s operator

using the developed instruments (catalog of threats, questionnaire, and scale) was completed.

The catalog of threats in the ASIS contains description of all threats and measures designed to

remove them and reduce the possible losses. The questionnaire makes it possible to check the

compliance of the system elements with the security controls, as well as to determine the areas of

non-compliance therewith. Risk detection (identification) is carried out based on a certain non-

compliance as an area of its potential appearance. The threats and the risks resulting from them

are assessed by two categories: risk probability and risk influence.

According to the assessment, the level of the operational risk in the ASIS is, generally, in

the low risk area and partially in the average risk area.

Following the assessment of the ASIS operational risk the National Bank will develop

recommendations and measures designed to maintain the risk level in the area of its

acceptability.

By the end of 2010, the state of the BISS was characterized by a full compliance with

the Core Principles for Systemically Important Payment Systems.

Risks were managed in the payment system on the basis of activities aimed at attaining

full compliance with the Core Principles for Systemically Important Payment Systems developed

by the Committee on Payment and Settlement Systems of the Bank for International Settlements.

The analysis of the BISS’s state performed by the National Bank in December 2010

suggests that the BISS fully complies with the Core Principles. The National Bank will maintain

the compliance with Core Principles in the payment system in future.

Appendix 1 MACROECONOMIC INDICATORS

Table 1.1 MAIN MACROECONOMIC INDICATORS of financial instability emergence and development as of January 1, 2011.

Indicators, whose dynamics is evidencing the downturn

(maintenance at the same level) the upsurge

in the potential emergence of financial instability In 2010, gross domestic product (GDP) increased by 7.6% (in 2009, 0.2%).

In 2010, consolidated budget deficit was 2.6% of GDP (in 2009, 1.8% of GDP).

In 2010, investments in fixed capital grew by 16.6% (in 2009, 4.7%).

As of January 1, 2011, external public debt was 17.8% of GDP compared with 16.1% of GDP in early 2010.

In 2010, consumer price index (CPI) amounted to 109.9% compared with 110.1% in 2009.

Producer price index (PPI) amounted to 118.8% compared with 111.1% in 2009.

In 2010, the volume of industrial production increased by 11.3% (in 2009, declined by 2%).

Relative level of gold and foreign exchange reserves in months of imports decreased from 2.23 months as of January 1, 2010 to 1.62 months as of January 1, 2011.

In 2010, the ratio between the stocks of finished goods and average monthly production volume amounted to 49.5% (in 2009, 67.9%)

As of January 1, 2011, dollarization of the economy (the share of foreign exchange in the broad money supply) was 44%, increasing by 1.5 percentage points compared with early 2010.

As of January 1, 2011, domestic public debt (except for the debt of local governments and self-governing authorities) was 5.7% of GDP (the same figure as of January 1, 2010)

External debt increased from 44.8% as of January 1, 2010 to 52.2% of GDP as of January 1, 2011.

In 2010, the level of profitability of sold products increased and amounted to 10.1% (in 2009, 9.9%)

Export, import, current account deficit (in 2010, the growth rates of export of goods and services amounted to 20%, of import to 22.6%; adverse balance of external trade was USD7,425.6 million compared with USD5,517.8 million in 2009.

Share of loss-making enterprises in their total number was 4.9% in 2010, compared with 7.1% in 2009.

As of January 1, 2011, share of the time component in М2 (share of time deposits in the ruble money supply) was 45.7 percentage points, having grown by 1.8 percentage points compared with January 1, 2010.

Source: the National Bank of the Republic of Belarus, National Statistical Committee, and Ministry of Finance of the Republic of Belarus

Table 1.2 MAIN INDICATORS of international operations of the Republic of Belarus, million USD

Indicators 2008 2009 2010

Foreign trade balance % of GDP

-4,612.7 -7.6

-5,517.8 -11.2

-7,425.6 -13.6

Current account balance % of GDP

-5,229.5 -8.6

-6,389.7 -13.0

-8,492.7 -15.6

Net foreign borrowing (financial account balance)

% of GDP 5,152.5

8.5 5,698.8

11.6

8,081.2

14.8 of which

net inflow of direct investment % of GDP

2,150.0 3.5

1,782.2 3.6

1,306.6 2.4

Balance of payments (increase in reserve assets) % of GDP

-1,002.8

-1.6

2,442.9

5.0

-808.5

-1.5 Foreign debt (as of the end of the year)

% of GDP

15,154.1 24.9

22,060.3 44.8

28,512.1 52.2

of which short-term foreign debt

% of GDP 8,275.6

13.6 9,871.9

20.1 12,793.6

23.4

Export of goods and services to GDP, % 60.8 50.5

54.6

Import of goods and services to GDP, % 68.4 61.8

68.2

International reserve assets (as of the end of the year) % of GDP

in months of import of goods and services 5.0 0.9

11.5 2.2

9.2 1.6


Table 1.3 DYNAMICS of financial performance of enterprises, billion Belarusian rubles

Indicators 2009 2010 Rate of

growth, %

For information:

2009 to 2008

Proceeds from sale of goods, products, works, and services 260,452 334,795 128.5 102.2 Taxes and fees included in proceeds from sale of products, works, and services 32,276 40,997 127.0 93.9

% of sales proceeds 12.4 12.2 Cost of sold products, works, and services 161,857 207,966 128.5 106.9

% of sales proceeds 62.1 62.1 Profit and losses (-) from sales of products, works, and services 16,001 21,018 131.4 78.6

% of sales proceeds 6.1 6.3 Profits and losses (-) before tax 15,669 20,599 131.5 74.1

% of sales proceeds 6.0 6.2 Taxes, fees, and payments paid from profits 4,949 6,139 124.1 77.3

% of profit before tax 31.6 29.8 Net profit/losses (-) 10,594 14,315 135.1 72.4 Profitability of sales, % 6.1 6.3 Profitability of sold products, % 9.9 10.1 Share of loss-making enterprises in their total number, % 6.2 4.9 Amount of losses 1,317 1,042 79.1 218.5 Donations from the budget for the compensation of losses and price differences 5,195 4,595 88.5 97.1 Source: the National Statistical Committee (excluding small business entities).

Table 1.4 RATES OF GROWTH of profits by industry to 2009, %

Indicators

Profits and losses (-) from sales of goods, products, works, and

services

Profits and losses (-) before tax

Net profits and losses (-)

nominal real nominal real nominal real Republic of Belarus 131.4 119.2 131.5 119.3 135.1 122.6

of which: Industry 137.8 125.0 136.7 124.0 139.1 126.2

Power industry 6.7 6.1 5.8 5.3 х х Fuel industry 111.3 101.0 102.7 93.2 91.8 83.3

Oil refining industry 75.6 68.6 94.7 85.9 69.2 62.8 Ferrous industry 195.0 177.0 167.8 152.3 170.5 154.7

Chemical and petrochemical industry 146.8 133.2 116.7 105.9 113.0 102.5

Machinery building and metal processing 141.0 127.9 157.2 142.6 167.5 152.0

Timber, woodworking, and pulp and paper industry 149.8 135.9 148.0 134.3 170.3 154.5

Construction materials 69.7 63.2 62.2 56.4 55.9 50.7 Light industry 139.4 126.5 166.7 151.3 182.3 165.4 Food industry 203.7 184.8 256.1 232.4 302.7 274.7

Flour-and-cereals and combined fodder industry 126.4 114.7 141.6 128.5 146.9 133.3

Agriculture х х 152.0 137.9 153.7 139.5 Transport 119.8 108.7 131.8 119.6 135.7 123.1 Communication 99.1 89.9 96.2 87.3 98.4 89.3 Construction 112.5 102.1 111.1 100.8 109.0 98.9 Trade and public catering 117.4 106.5 143.4 130.1 152.0 137.9 Logistics and sales 121.5 110.3 145.1 131.7 143.7 130.4 Housing and utilities 169.7 154.0 167.2 151.7 231.2 209.8 Source: the National Statistical Committee (except for small business entities).

Table 1.5 DYNAMICS of profitability of sold products and sales, %

Indicators

Profitability of sold products, works, and services Profitability of sales

2009 2010 Deviation, percentage

points 2009 2010

Deviation, percentage

points

Republic of Belarus 9.9 10.1 0.2 6.1 6.3 0.2 of which:

Industry 9.9 9.9 0.0 7.4 7.5 0.1 Power industry 4.5 0.2 -4.3 3.7 0.2 -3.5

Fuel industry 10.4 8.5 -1.9 6.7 6.1 -0.6 Ferrous industry 5.7 7.6 1.9 5.0 6.5 1.5

Chemical and petrochemical industry 21.4 19.3 -2.1 16.0 13.9 -2.1

Machinery building and metal processing 11.3 11.5 0.2 8.6 8.9 0.3

Timber, woodworking and pulp and paper industry 6.4 7.4 1.0 4.8 5.5 0.7 Construction materials 9.4 5.0 -4.4 7.2 4.0 -3.2

Light industry 11.0 11.6 0.6 8.8 9.2 0.4 Food industry 7.0 11.0 4.0 5.2 8.1 2.9

Flour-and-cereals and combined fodder industry 5.5 5.4 -0.1 3.8 4.1 0.3

Agriculture - 0.3 5.2 5.5 - 0.2 4.2 4.4 Transport 18.8 18.0 -0.8 8.8 7.6 -1.2 Communication 32.0 26.0 -6.0 21.4 18.0 -3.4 Construction 10.9 9.5 -1.4 8.4 7.5 -0.9 Trade and public catering 16.7 18.6 1.9 2.9 2.8 -0.1 Logistics and sales 32.9 32.1 -0.8 4.9 4.7 -0.2 Housing and utilities 2.0 2.3 0.3 1.7 1.9 0.2 Source: the National Statistical Committee (except for small business entities).

Table 1.6 DYNAMICS of payables and receivables, billion Belarusian rubles

Indicators 01.01.2010 01.01.2011 Increase (+), decline (-)

Rate of growth, %

For information: 01.01.2010 to 01.01.2009

Payables 49,012.2 57,785.2 8,773.0 117.9 126.8 of which: in arrears 6,075.7 6,217.0 141.4 102.3 116.3

% of total 12.4 10.8 Receivables 42,577.9 49,457.2 6,879.3 116.2 136.4

of which: in arrears 7,243.8 7,387.3 143.5 102.0 137.8 % of total 17.0 14.9

Net payables 6,434.4 8,328.0 1,893.6 129.4 86.6 % of receivables 15.1 16.8

Net payables in arrears 1,168.1 1,170.2 2.1 100.2 % of receivables in arrears 19.2 18.8

Share of organizations having arrears (% of total number)

payables 56.7 59.2 receivables 67.2 69.6

Credit amounts owed to banks 48,692.6 64,814.9 16,122.3 133.1 155.9 of which: in arrears 358.5 201.1 -157.4 56.1 263.1

% of credit amounts owed to banks 0.7 0.3 Total payables 107,255.5 133,665.8 26,410.3 124.6 127.2

of which: in arrears 6,978.5 6,964.7 -13.8 99.8 112.8 % of total arrears 6.5 5.2

Source: the National Statistical Committee (except for small business entities).

Table 1.7 DYNAMICS of external payables and receivables, billion Belarusian rubles

Indicators 01.01.2010 01.01.2011 Increase (+), decline (-)

Increase (+), decline (-)

For information:01.01.2010

to 01.01.2009

External payables 10,727.4 10,997.7 270.3 102.5 160.5 of which: in arrears 1,253.2 902.3 -350.9 72.0 149.1

% of total external payables 11.7 8.2 External receivables 8,630.8 9,010.5 379.6 104.4 165.6

of which: in arrears 852.9 993.8 140.9 116.5 140.8 % of total external receivables 9.9 11.0


Table 1.8 DYNAMICS of monetary funds on enterprises’ accounts, billion Belarusian rubles

Indicators 01.01.2010 01.01.2011 Rate of growth,% For information:

01.01.2010 to 01.01.2009

Republic of Belarus 11,442.1 14,131.7 123.5 125.0

Industry 4,167.5 4,890.0 117.3 109.1

Agriculture 233.9 486.8 208.1 83.8

Transport 1,218.9 1,884.0 154.6 127.7

Communication 677.4 653.1 96.4 131.8

Construction 864.1 1 333.0 154.3 100.9

Trade and public catering 1,106.5 1,003.1 90.7 140.2

Logistics and sales 146.8 162.6 110.8 186.5

Housing and utilities 165.0 249.6 151.3 99.3 Source: the National Statistical Committee (except for small business entities).

Table 1.9 DYNAMICS of credit amounts owed to banks, billion Belarusian rubles

Indicators 01.01.2010 01.01.2011 Increase Rate of growth,%

For information: 01.01.2010

to 01.01.2009

Republic of Belarus 48,692.6 64,814.9 16,122.3 133.1 155.9 Industry 24,302.8 29,558.6 5,255.8 121.6 162.5

Agriculture 11,781.4 17,256.3 5,474.9 146.5 157.0 Transport 1,763.0 2,463.7 700.7 139.7 158.6

Communication 112.9 223.1 110.1 197.5 81.7 Construction 1,871.8 3,251.3 1,379.5 173.7 141.3

Trade and public catering 3,427.3 4,343.9 916.6 126.7 128.6 Logistics and sales 2,689.3 4,295.4 1,606.1 159.7 127.5

Housing and utilities 744.9 1,169.5 424.6 157.0 236.3 Source: the National Statistical Committee (except for small business entities).

Table 1.10

DYNAMICS of current solvency, %

01.01.2010 01.04.2010 01.07.2010 01.10.2010 01.01.2011 Republic of Belarus 188.3 124.1 149.1 184.3 227.3

Industry 180.5 123.8 156.1 187.1 212.6 Agriculture 12.3 12.2 13.7 18.3 21.8

Transport 469.7 241.9 397.4 406.7 666.4 Communication 9,167.0 10,795.5 11,223.5 9,140.0 29,246.0

Construction 186.8 122.1 174.6 176.5 271.0 Trade and public catering 154.1 88.1 105.8 128.0 189.5

Logistics and sales 128.1 190.2 212.9 406.4 248.8 Housing and utilities 76.3 66.7 58.6 66.1 99.2


Appendix 2 INDICATORS OF PERFORMANCE OF THE BANKING SECTOR OF THE REPUBLIC OF BELARUS

Table 2.1 MAIN INDICATORS of performance of the banking sector of the Republic of Belarus

Date All banks 71 Large banks Medium banks Small banks All ALL FB PB ALL FB PB ALL FB PB

Number of banks, units 01.01.2010 32 3 2 0 0 6 0 1 15 5 01.01.2011 31 3 1 0 0 6 0 1 16 4

Assets, trillion Belarusian rubles 01.01.2010 84.25 60.69 10.10 0 0 9.70 0 0.36 2.40 1.00 01.01.2011 127.66 90.31 9.81 0 0 19.89 0 0.56 5.73 1.36

Liabilities, trillion Belarusian rubles 01.01.2010 70.90 51.97 8.56 0 0 7.81 0 0.24 1.56 0.76 01.01.2011 110.24 78.53 8.81 0 0 16.89 0 0.43 4.52 1.06

Capital, trillion Belarusian rubles 01.01.2010 13.34 8.72 1.54 0 0 1.89 0 0.12 0.83 0.24 01.01.2011 17.41 11.78 0.99 0 0 2.99 0 0.13 1.22 0.30

Profits, billion Belarusian rubles 01.01.2010 1,084.2 488.7 268.3 0 0 203.7 0 8.7 98.6 16.1 01.01.2011 1,714.9 866.6 147.0 0 0 520.9 0 13.5 144.6 22.3

Share of Banking groups in assets, % 01.01.2010 100.0 72.0 12.0 0 0 11.5 0 0.4 2.8 1.2 01.01.2011 100.0 70.7 7.7 0 0 15.6 0 0.4 4.5 1.1

Share of Banking groups in liabilities, % 01.01.2010 100.0 73.3 12.1 0 0 11.0 0 0.3 2.2 1.1 01.01.2011 100.0 71.2 8.0 0 0 15.3 0 0.4 4.1 1.0

Share of Banking groups in capital, % 01.01.2010 100.0 65.3 11.6 0 0 14.2 0 0.9 6.3 1.8 01.01.2011 100.0 67.7 5.7 0 0 17.2 0 0.8 7.0 1.7


71 As of January 1, 2010, the balance sheet and statistical reports were submitted to the National Bank by 31 banks.

Table 2.2 INDIVIDUAL INTERNATIONAL RATINGS of the Banks of the Republic of Belarus

Name of rating agency JSC “Belagroprombank” JSC “JSSB Belarusbank” “Belinvestbank” JSC JSC “BPS-Bank”

Rating as of 01.01.2011 Latest changes Rating as of

01.01.2011 Latest changes Rating as of 01.01.2011 Latest changes Rating as of

01.01.2011 Latest changes

Fitch Ratings

Issuer default long-term rating (IDR) B 18.10.2010 (B-) B 18.10.2010

(B-) B 18.10.2010 (B-) B 22.01.2010 (B-)

Short-term IDR B 10.02.2006 (С) B 10.02.2006 (С) B 13.11.2006 (*) B 10.02.2006 (С)

Outlook for long-term rating Stable 18.10.2010 (Negative) Stable 18.10.2010

(Negative) Stable 18.10.2010 (Negative) Stable 18.10.2010

(Negative) Individual rating D/E 15.12.2004 (*) D/E 04.02.2005 (E) D/E 09.10.2007 (E) D/E 10.10.2006 (E) Support rating 4 18.10.2010 (5) 4 18.10.2010 (5) 4 18.10.2010 (5) 4 22.01.2010 (5) Moody's Investors Service Foreign currency long-term deposit rating В2 18.02.2008 (*) В2 25.10.2007 (*) В2 22.05.2008 (*) В2 19.10.2007 (*)

Foreign currency short-term deposit rating Not Prime 18.02.2008 (*) Not Prime 25.10.2007 (*) Not Prime 22.05.2008 (*) Not Prime 19.10.2007 (*)

National currency long-term deposit rating В1 14.07.2009

(Ba1) В1 14.07.2009 (Ba1) В1 14.07.2009

(Ba2) Вa3 14.05.2010 (B1)

National currency short-term deposit rating Not Prime 18.02.2008 (*) Not Prime 25.10.2007 (*) Not Prime 22.05.2008 (*) Not Prime 16.07.2007 (*)

Bank financial soundness rating Е+ 18.02.2008 (*) Е+ 25.10.2007 (*) Е+ 22.05.2008 (*) Е+ 16.07.2007 (*) Standard & Poor's Foreign currency long-term credit rating B+ 28.05.2010 (*)

Not assigned Not assigned

В+ 20.06.2008 (*)

Outlook for foreign currency long-term rating Negative 28.05.2010 (*) Negative 03.11.2008

(Stable) Foreign currency short-term credit rating B 28.05.2010 (*) В 20.06.2008 (*)

National currency long-term credit rating B+ 28.05.2010 (*) В+ 20.06.2008 (*)

National currency short-term credit rating B 28.05.2010 (*) В 20.06.2008 (*)

Outlook for national currency long-term rating Negative 28.05.2010 (*) Negative 03.11.2008

(Stable)

Table 2.2 cont’d INDIVIDUAL INTERNATIONAL RATINGS of the Banks of the Republic of Belarus

Name of rating agency JSC “Belgazprombank” CJSC VTB Bank

(Belarus) CJSC “BTA Bank”

OJSC “Belvnesheconombank”


01.01.2011 Latest changes Rating as of 01.01.2011 Latest changes Rating as of


Fitch Ratings Issuer default long-term rating (IDR) B 09.10.2007 (B-) B 09.10.2007 (*) B- 10.12.2010

(CCC) B 07.08.2009 (*)

Short-term IDR B 09.03.2005 (*) B 09.10.2007 (*) B 10.12.2010 (C Negative) B 07.08.2009 (*)

Outlook for long-term rating Stable 18.10.2010 (Negative) Stable 18.10.2010

(Negative) Stable 10.12.2010 (Negative) Stable 18.10.2010

(Negative)

Individual rating D/E 09.04.2009 (E) E 09.10.2007 (*) E 11.12.2008 (*) D/E 07.08.2009 (*)

Support rating 4 09.10.2007 (5) 4 09.10.2007 (*) 5 20.02.2009 (4) 4 07.08.2009 (*)

Name of rating agency “Bank Moscow-Minsk” JSC JSC “MTBank”



Moody's Investors Service Foreign currency long-term deposit rating В2 15.07.2008 (*) В2 27.11.2008 (*)

Foreign currency short-term deposit rating Not Prime 15.07.2008 (*) Not Prime 27.11.2008 (*)

National currency long-term deposit rating Ва3 09.07.2009

(Ba2) В2 27.11.2008 (*)

National currency short-term deposit rating Not Prime 15.07.2008 (*) Not Prime 27.11.2008 (*)

Bank financial soundness rating Е+ 15.07.2008 (*) Е+ 27.11.2008 (*)

Source: data from the websites of international rating agencies * assigned for the first time.

Table 2.3 INDICATORS of financial stability of the banking sector of the Republic of Belarus

Indicators 01.01.2009 01.01.2010 Change 01.01.2011 Change Capital adequacy

Regulatory capital adequacy ratio 21.79 19.76 -2.03 20.45 0.69 Fixed capital adequacy ratio (Tier I) 16.94 14.41 -2.53 14.87 0.47 Capital to assets 17.39 15.84 -1.55 13.64 -2.20

Credit risk Growth of credit to the economy 24.25 41.32 17.06 19.6 -21.72 Large open positions to regulatory capital 111.22 112.53 1.31 138.84 26.32 Share of problem assets in total assets exposed to credit risk 1.68 4.24 2.56 3.55 -0.69 Share of problem assets in total credit to the economy 0.59 0.95 0.36 0.64 -0.31 Problem assets less provisions actually created against them to capital 4.52 15.39 10.88 12.40 -3.00

Distribution of loans by branch Industry 39.84 42.91 3.07 38.73 -4.18 Agriculture 19.89 21.82 1.93 23.79 1.97 Construction 3.50 3.42 -0.08 4.15 0.73 Trade 16.35 15.63 -0.72 16.58 0.95 Real estate operations 5.26 5.68 0.42 6.74 1.06 Other 15.16 10.53 -4.63 10.02 -0.51

Income/returns Return on assets 1.90 1.96 0.06 2.14 0.18 Return on capital 13.03 11.93 -1.10 14.63 2.70 Interest margin to gross income 35.66 39.23 3.57 41.88 2.65 Non-interest expenses to gross income 77.86 79.27 1.41 78.53 -0.74 Staff costs to non-interest expenses 28.03 21.35 -6.68 18.89 -2.46

Table 2.3 cont’d INDICATORS of financial stability of the banking sector of the Republic of Belarus

Indicators 01.01.2009 01.01.2010 Change 01.01.2011 Change Interest rates spread

for all loans and deposits in Belarusian rubles 4.90 7.90 3.00 6.80 -1.10 for new loans and deposits in Belarusian rubles 2.30 0.50 -1.80 3.16 2.66 for all foreign exchange loans and deposits 4.20 4.90 0.70 3.80 -1.10 for new foreign exchange loans and deposits 3.80 4.09 0.29 1.82 -2.27

Liquidity

Liquid assets to total assets 23.20 28.41 5.21 29.21 0.80 Short-term liquidity 2.30 3.01 0.71 3.38 0.37 Instant liquidity 108.81 237.85 129.04 450.05 212.2 Current liquidity 102.01 172.72 70.71 225.31 52.59 For information: Maturity mismatch between assets and liabilities over 12 months, trillion Belarusian rubles -10.382 -12.112 -1.730 -7.346 4.766

Foreign exchange risk Total open foreign exchange position to regulatory capital 8.69 11.74 3.05 1.68 -10.06 Share of clients’ debt on loans and other asset operations in foreign exchange in clients’ total debt on loans and other asset operations 31.91 30.65 -1.26 22.43 -8.22

Share of clients’ resources in foreign exchange in total resources attracted from clients 32.95 41.96 9.01 43.47 1.51


Table 2.3 cont’d

INDICATORS of financial stability of non-financial corporations’ sector of the Republic of Belarus

Indicators 2008 2009 Change 2010 Change Ratio of aggregate debt to own capital % 38.5 47.4 8.9 49.2 1.8 Rate of return on own capital (return on own capital), % 11.6 8.1 -3.6 8.7 0.6 Ratio of profit to expenditures relating to the repayment of the principle of the loan and interest, % 53.7 35.8 -17.9 30.4 -5.4 Ratio of net open foreign exchange position to own capital, % -7.5 -10.3 -2.8 -9.4 0.9 Number of applications for protection against creditors 1,957 1,400 -557 1,486 86

Source: the National Bank of the Republic of Belarus ** Data not available. INDICATORS of financial stability of households sector of the Republic of Belarus

Indicators 2008 2009 Change 2010 Change Ratio of households’ debt to GDP, % 9.7 11.6 1.9 13.9 2.3 Ratio of households’ expenditure relating to the repayment of the principle amount of the loan and interests to profit, % 6.1 4.8 -1.3 5.2 0.4


Table 2.3 cont’d INDICATORS of insurance sector of the Republic of Belarus

Indicators 01.01.2009 01.01.2010 Change 01.01.2011 Change Ratio of insurance organizations’ assets to total assets of financial sector**, % 2.2 2.1 -0.1 1.5 -0.6

Ratio of insurance organizations’ assets to gross domestic product (GDP), % 1.5 1.9 0.4 1.8 -0.1

Source: the National Bank of the Republic of Belarus ** Financial sector – National Bank of the Republic of Belarus, banks, and insurance organizations of the Republic of Belarus. INDICATORS of real estate market

Indicators 01.01.2009 01.01.2010 Change 01.01.2011 Change Ratio of credits and loans on the real estate*** to total credits and loans, % 20.3 21.3 1.0 22.6 1.3

Source: the National Bank of the Republic of Belarus *** Credits and loans on the real estate – credits to resident clients.

Table 2.4 DISTRIBUTION OF BANKS by regulatory capital adequacy ratio

Banking group Number of banks/share in the banking sector’s assets 01.01.2010 CAR* <= 0 0 < CAR <= 8 8 < CAR <= 16 16 < CAR <= 24 24 < CAR <= 30 30 < CAR Total

Banking sector 0 0 0 0 3 50.4 5 16.1 4 24.5 19 9.0 31 100.0 State-owned banks 0 0 0 0 2 48.7 0 0 1 23.4 1 0.4 4 72.5 Foreign banks 0 0 0 0 1 1.7 4 15.8 2 0.9 15 7.9 22 26.3 Private banks 0 0 0 0 0 0 1 0.3 1 0.2 3 0.7 5 1.2 Large banks 0 0 0 0 2 48.7 2 12.0 1 23.4 0 0 5 84.0 Medium banks 0 0 0 0 1 1.7 2 3.8 1 0.8 2 5.2 6 11.5 Small banks 0 0 0 0 0 0 1 0.3 2 0.3 17 3.9 20 4.5

01.01.2011 CAR <= 0 0 < CAR <= 8 8 < CAR <= 16 16 < CAR <= 24 24 < CAR <= 30 30 < CAR Total Banking sector 0 0 0 0 4 56.2 5 9.6 7 27.5 15 6.7 31 100.0 State-owned banks 0 0 0 0 2 47.1 0 0 2 24.1 0 0 4 71.2 Foreign banks 0 0 0 0 2 9.1 4 9.2 4 3.1 13 6.3 23 27.7 Private banks 0 0 0 0 0 0 1 0.4 1 0.3 2 0.4 4 1.1 Large banks 0 0 0 0 3 54.8 0 0 1 23.6 0 0 4 78.4 Medium banks 0 0 0 0 1 1.4 3 8.2 1 2.2 1 3.8 6 15.6 Small banks 0 0 0 0 0 0 2 1.5 5 1.7 14 2.9 21 6.0

Source: the National Bank of the Republic of Belarus * Regulatory capital adequacy ratio.

0102030405060

less 0% from 0 to 8% incl.

from 8 to 16% incl.

from 16 to 24%

incl.

from 24 to 30%

incl.

over 30%

%

Distribution of share in the assets according to CA value

01.01.2010

01.10.2010

01.01.2011

Table 2.5 DISTRIBUTION OF BANKS by share of problem assets

Banking group Number of banks/Share in the banking sector’s assets 01.01.2010 share = 0 0 < share <= 1 1 < share <= 2 2 < share <= 4 4 < share Total

Banking sector 1 0.1 5 1.0 5 3.8 8 61.6 12 33.5 31 100.0 State-owned banks 0 0 0 0 0 3 49.1 1 23.4 4 72.5 Foreign banks 0 0 5 1.0 4 3.6 5 12.5 8 9.2 22 26.3 Private banks 1 0.1 0 0 1 0.2 0 0 3 0.9 5 1.2 Large banks 0 0 0 0 0 0 3 54.7 2 29.4 5 84.0 Medium banks 0 0 0 0 2 3.5 3 6.3 1 1.7 6 11.5 Small banks 1 0.1 5 1.0 3 0.4 2 0.6 9 2.4 20 4.5

01.01.2011 share = 0 0 < share <= 1 1 < share <= 2 2 < share <= 4 4 < share Total Banking sector 0 0 13 46.0 3 12.2 8 13.8 7 28.1 31 100.0 State-owned banks 0 0 2 41.7 0 0 1 5.9 1 23.6 4 71.2 Foreign banks 0 0 9 3.9 3 12.2 6 7.5 5 4.1 23 27.7 Private banks 0 0 2 0.4 0 0 1 0.3 1 0.3 4 1.1 Large banks 0 0 1 41.2 1 7.7 1 5.9 1 23.6 4 78.4 Medium banks 0 0 1 1.4 1 3.8 2 6.9 2 3.5 6 15.6 Small banks 0 0 11 3.4 1 0.7 5 1.0 4 0.9 21 6.0

Source: the National Bank of the Republic of Belarus.

010203040506070

0% from 0% to 1% incl.

from 1% to 2% incl.

from 2% to 4% incl.

over 4%

%

Distribution of share in the assetsin accordance with a value of share of problem assets

01.01.2010

01.10.2010

01.01.2011

Table 2.6 DISTRIBUTION OF BANKS by liquidity indicator value as of January 1, 2011

Banking group Number of banks/Share in the banking sector’s assets ILR* 0 < ILR <= 20 20 < ILR <= 40 40 < ILR <= 70 70 < ILR <= 100 100 < ILR Total

Banking sector 0 0 0 0 0 0 0 0 31 97.8 31 100.0 State-owned banks 0 0 0 0 0 0 0 0 4 72.9 4 71.2 Foreign banks 0 0 0 0 0 0 0 0 23 23.8 23 27.7 Private banks 0 0 0 0 0 0 0 0 4 1.1 4 1.1 Large banks 0 0 0 0 0 0 0 0 4 79.3 4 78.4 Medium banks 0 0 0 0 0 0 0 0 6 13.6 6 15.6 Small banks 0 0 0 0 0 0 0 0 21 4.9 21 6.0

CLR* 0 < CLR <= 70 70 < CLR <= 80 80 < CLR <= 90 90 < CLR <= 100 100 < CLR Total Banking sector 0 0 0 0 0 0 2 3.6 29 96.4 31 100.0 State-owned banks 0 0 0 0 0 0 0 0 4 71.2 4 71.2 Foreign banks 0 0 0 0 0 0 2 3.6 21 24.2 23 27.7 Private banks 0 0 0 0 0 0 0 0 4 1.1 4 1.1 Large banks 0 0 0 0 0 0 0 0 4 78.4 4 78.4 Medium banks 0 0 0 0 0 0 2 3.6 4 12.0 6 15.6 Small banks 0 0 0 0 0 0 0 0 21 6.0 21 6.0

Source: the National Bank of the Republic of Belarus. *ILR – instant liquidity ratio, CLR – current liquidity ratio.

020406080

100

from 0% to 20% incl.



from 70% to 100%

incl.

over 100%

%

Distribution of share in the assets in accordance with instant liquidity ratio

01.01.2010

01.10.2010

01.01.20110

20406080

100


from 70% to 80%

incl.

from 80% to 90%

incl.

from 90% to 100%

incl.

over 100%

%Distribution of share in the assets in accordance with current

liquidity ratio

01.01.2010

01.10.2010

01.01.2011

Table 2.6 cont’d DISTRIBUTION OF BANKS by liquidity indicator value as of January 1, 2011

Banking group Number of banks/Share in the banking sector’s assets SLR* 0 < SLR <= 1 1 < SLR <= 1.5 1.5 < SLR <= 2.0 2.0 < SLR <= 2.5 2.5 < SLR Total

Banking sector 0 0 2 1.8 5 16.3 7 9.8 17 72.2 31 100.0 State-owned banks 0 0 0 0 1 5.9 0 0 3 65.3 4 71.2 Foreign banks 0 0 1 1.4 4 10.4 4 9.1 14 6.9 23 27.7 Private banks 0 0 1 0.4 0 0 3 0.7 0 0 4 1.1 Large banks 0 0 0 0 1 5.9 1 7.7 2 64.8 4 78.4 Medium banks 0 0 1 1.4 4 10.4 0 0 1 3.8 6 15.6 Small banks 0 0 1 0.4 0 0 6 2.1 14 3.5 21 6.0

LATA* 0 < LATA <= 20 20 < LATA <= 30 30 < LATA <= 40 40 < LATA <= 50 50 < LATA Total Banking sector 0 0 13 83.8 10 10.7 3 0.6 5 5.0 31 100.0 State-owned banks 0 0 4 71.2 0 0 0 0 0 0 4 71.2 Foreign banks 0 0 7 11.9 8 10.3 3 0.6 5 5.0 23 27.7 Private banks 0 0 2 0.7 2 0.4 0 0 0 0 4 1.1 Large banks 0 0 4 78.4 0 0 0 0 0 0 4 78.4 Medium banks 0 0 2 3.6 3 8.2 0 0 1 3.8 6 15.6 Small banks 0 0 7 1.8 7 2.5 3 0.6 4 1.2 21 6.0

Source: the National Bank of the Republic of Belarus * SLR – short-term liquidity ratio; LATA– ratio of liquid assets to total assets.

0.0

20.0

40.0

60.0

80.0

from 0 to 1 incl.

from 1 to 1.5 incl.

from 1.5 to 2 incl.

from 2 to 2.5 incl.

over 2.5

%

Distribution of share in the assets in accordance with short-term liquidity ratio

01.01.2010

01.10.2010

01.01.2011 020406080

100





over 50%

%

Distribution of share in the assets in accordance with a ratio of liquid to total assets

01.01.2010

01.10.2010

01.01.2011

Table 2.7

DISTRIBUTION OF BANKS by ratio of total foreign exchange position to regulatory capital

Banking group Number of banks/Share in the banking sector’s assets

01.01.2010 TFEP = 0 0 < TFEP <= 5 5 < TFEP <= 10 10 < TFEP <= 15

15 < TFEP <= 20 20 < TFEP Всего

Banking sector 1 0.2 11 21.7 9 4.9 3 23.7 5 0.8 2 48.6 31 100.0 State-owned banks 0 0 1 6.1 1 0.4 1 23.4 0 0 1 42.6 4 72.5 Foreign banks 1 0.2 8 15.1 6 4.1 1 0.1 5 0.8 1 6.0 22 26.3 Private banks 0 0 2 0.6 2 0.4 1 0.2 0 0 0 0 5 1.2 Large banks 0 0 2 12.0 0 0 1 23.4 0 0 2 48.6 5 84.0 Medium banks 0 0 4 8.6 2 2.9 0 0 0 0 0 0 6 11.5 Small banks 1 0.2 5 1.1 7 2.0 2 0.3 5 0.8 0 0 20 4.5

01.01.2011 TFEP = 0 0 < TFEP <= 5 5 < TFEP <= 10 10 < TFEP <= 15

15 < TFEP <= 20 20 < TFEP Всего

Banking sector 0 0 9 51.5 14 13.8 6 30.0 0 0 2 4.7 31 100.0 State-owned banks 0 0 1 41.2 1 0.4 2 29.5 0 0 0 0 4 71.2 Foreign banks 0 0 6 9.6 12 13.0 3 0.5 0 0 2 4.7 23 27.7 Private banks 0 0 2 0.6 1 0.4 1 0.0 0 0 0 0 4 1.1 Large banks 0 0 2 48.9 0 0 2 29.5 0 0 0 0 4 78.4 Medium banks 0 0 1 1.4 4 9.6 0 0 0 0 1 4.6 6 15.6 Small banks 0 0 6 1.2 10 4.2 4 0.5 0 0 1 0.1 21 6.0


0102030405060

0% from 0% to 5% incl.

from 5% to 10%

incl.

from 10% to 15%

incl.

from 15% to 20%

incl.

over 20%

%

Distribution of share in the assetsin accordance with the value of ratio of total foreign exchange

position to regulatory capital

01.01.2010

01.10.2010

01.01.2011

Table 2.8

DISTRIBUTION OF BANKS by return on capital (before tax)

Banking group Number of banks/Share in the banking sector’s assets 01.01.2010 ROE* <= 0 0 < ROE <= 5 5 < ROE <= 10 10 < ROE <= 15 15 < ROE <= 20 20 < ROE Всего

Banking sector 2 0.1 4 24.2 4 1.9 6 53.8 4 6.5 11 13.6 31** 100.0 State-owned banks 0 0 1 23.4 1 0.4 2 48.7 0 0 0 0 4 72.5 Foreign banks 2 0.1 2 0.4 2 1.1 2 4.7 3 6.4 11 13.6 22 26.3 Private banks 0 0 1 0.4 1 0.3 2 0.4 1 0.1 0 0 5 1.2 Large banks 0 0 1 23.4 0 0 2 48.7 1 6.0 1 6.0 5 84.0 Medium banks 0 0 0 0 1 0.8 2 4.7 0 0 3 6.0 6 11.5 Small banks 2 0.1 3 0.8 3 1.0 2 0.4 3 0.5 7 1.6 20 4.5

01.01.2011 Banking sector 1 0.0 4 1.1 6 25.4 5 4.8 4 49.6 10 19.0 30** 99.9 State-owned banks 0 0 0 0 1 23.6 1 0.4 2 47.1 0 0 4 71.2 Foreign banks 1 0.0 2 0.4 5 1.8 3 4.3 2 2.5 9 18.7 22 27.7 Private banks 0 0 2 0.7 0 0 1 0.0 0 0 1 0.3 4 1.1 Large banks 0 0 0 0 1 23.6 0 0 2 47.1 1 7.7 4 78.4 Medium banks 0 0 0 0 0 0 1 3.8 1 1.9 4 9.8 6 15.6 Small banks 1 0.0 4 1.1 5 1.8 4 0.9 1 0.6 5 1.5 20 5.9

Source: the National Bank of the Republic of Belarus * ROE – return on capital. ** The banks that carry out their activities for less than 12 months as of a reporting date are not included in the calculations.

0102030405060

less 0% from 0% to 5% incl.

from 5% to 10%

incl.

from 10% to 15%

incl.

from 15% to 20%

incl.

over 20%

%

Distribution of share in the assetsin accordance with the level of return on capital

01.01.2010

01.10.2010

01.01.2011

Table 2.9 DISTRIBUTION OF BANKS by return on assets (before tax)

Banking group Number of banks/Share in the banking sector’s assets 01.01.2010 ROA* <= 0 0 < ROA <= 0.5 0.5 < ROA <= 1 1 < ROA <= 2 2 < ROA <= 3 3 < ROA Всего

Banking sector 2 0.1 1 0.2 2 0.6 8 75.9 4 10.7 14 12.4 31** 100.0 State-owned banks 0 0 0 0 0 0 3 72.0 1 0.4 0 0 4 72.5 Foreign banks 2 0.1 1 0.2 1 0.2 4 3.6 3 10.3 11 12.0 22 26.3 Private banks 0 0 0 0 1 0.4 1 0.3 0 0 3 0.5 5 1.2 Large banks 0 0 0 0 0 0 3 72.0 1 6.0 1 6.0 5 84.0 Medium banks 0 0 0 0 0 0 2 2.9 2 4.3 2 4.3 6 11.5 Small banks 2 0.1 1 0.2 2 0.6 3 1.0 1 0.4 11 2.2 20 4.5

01.01.2011 Banking sector 1 0.0 0 0 4 1.9 6 66.2 6 20.8 13 11.0 30** 99.9 State-owned banks 0 0 0 0 0 0 2 64.8 1 5.9 1 0.4 4 71.2 Foreign banks 1 0.0 0 0 2 1.2 4 1.3 5 14.9 10 10.2 22 27.7 Private banks 0 0 0 0 2 0.7 0 0 0 0 2 0.4 4 1.1 Large banks 0 0 0 0 0 0 2 64.8 2 13.6 0 0 4 78.4 Medium banks 0 0 0 0 0 0 0 0 3 7.1 3 8.4 6 15.6 Small banks 1 0.0 0 0 4 1.9 4 1.3 1 0.1 10 2.6 20 5.9

Source: the National Bank of the Republic of Belarus. * ROA – return on assets. ** The banks that carry out their activities less than 12 months as of a reporting date are not included in the calculations.

01020304050607080

less 0% from 0% to 0.5%

incl.

from 0.5% to 1% incl.

from 1% to 2% incl.

from 2% to 3% incl.

over 3%

%

Distribution of share in the assetsin accordance with the level of return on assets

01.01.2010

01.10.2010

01.01.2011

Table 2.10 FINDINGS OF STRESS - TESTING of the banking sector (credit risk, foreign exchange risk, and interest rate risk)

Indicators All SOB FB PB LB MB SB Actual values as of 01.01.2011

Capital adequacy ratio (CAR), % 20.5 19.7 21.7 28.9 18.9 21.1 36.9 Profit over 12 months, billion Belarusian rubles 1,718.2 880.1 815.7 22.4 1,013.6 520.9 183.7 Capital (on balance), billion Belarusian rubles 17,414.9 11,912.9 5,205.9 296.1 12,776.8 2,994.7 1,643.4

Values after shock Scenario. Deterioration of the quality of assets by 5 percentage points

CAR, % 18.5 17.5 20.2 27.8 16.8 19.6 35.7 losses to profit over 12 months 1.20 1.75 0.62 0.84 1.66 0.55 0.53

losses to capital, % 11.8 12.9 9.7 6.3 13.2 9.5 5.9 by 10 percentage points


losses to capital, % 23.7 25.9 19.3 12.6 26.3 19.0 11.8 by 15 percentage points


losses to capital, % 35.5 38.8 29.0 19.0 39.5 28.5 17.7 Scenario. Devaluation of the national currency to US dollar by 5 percentage points

CAR, % 20.5 19.7 21.8 28.9 18.9 21.2 36.9 losses to profit over 12 months -0.000 0.008 -0.010 0.018 0.007 -0.013 -0.007

losses to capital, % -0.00 0.06 -0.15 0.14 0.06 -0.22 -0.08 by 10 percentage points


losses to capital, % -0.01 0.12 -0.30 0.28 0.12 -0.44 -0.16 by 20 percentage points


losses to capital, % -0.01 0.23 -0.60 0.56 0.23 -0.89 -0.31

Indicators ALL SOB FB PB LB MB SB

Scenario. Increase in the Belarusian ruble yield curve by 500 basis points


losses to capital, % 1.7 1.9 1.2 3.4 1.5 2.4 1.6 by 1,000 basis points


losses to capital, % 3.3 3.6 2.3 6.5 3.0 4.6 3.1 by 1,500 basis points


losses to capital, % 4.7 5.2 3.3 9.2 4.3 6.6 4.4 Scenario. Increase in foreign currency yield curve by 200 basis points

CAR, % 20.2 19.4 21.6 28.9 18.6 20.9 36.9 losses to profit over 12 months 0.12 0.20 0.04 0.01 0.18 0.06 -0.02

losses to capital, % 1.2 1.5 0.6 0.0 1.4 1.0 -0.3 by 500 basis points


losses to capital, % 2.9 3.5 1.5 0.1 3.4 2.4 -0.6 by 1,000 basis points


losses to capital, % 5.3 6.6 2.7 0.2 6.3 4.5 -1.2

Table 2.10 cont’d FINDINGS OF STRESS- TESTING of the banking sector (credit risk, foreign exchange risk, and interest rate risk)

Indicators Number of banks CAR <= 0 0 < CAR <= 8 8 < CAR <= 16 16 < CAR <= 24 24 < CAR <= 30 30 < CAR

Actual values as of 01.01.2011 Capital adequacy ratio (CAR) 0 0 4 5 7 15

share in assets, % 0 0 56.2 9.6 27.5 6.7 Values after shock

Scenario. Deterioration of the quality of assets by 5 percentage points 0 0 8 2 6 15

share in assets, % 0 0 65.4 0.5 27.4 6.7 by 10 percentage points 0 0 8 6 2 15


share in assets, % 0 54.8 10.6 27.6 4.1 2.9 Scenario. Devaluation of the national currency to US dollar by 5 percentage points 0 0 4 5 7 15



share in assets, % 0 0 58.1 7.7 27.5 6.7 Scenario. Increase in the Belarusian ruble yield curve by 500 basis points 0 0 5 4 7 15

share in assets, % 0 0 21.5 44.3 27.5 6.7 by 1,000 basis points 0 0 6 5 5 15


share in assets, % 0 0 23.1 66.9 3.3 6.7 Scenario. Increase in foreign currency yield curve by 200 basis points 0 0 4 6 6 15

share in assets, % 0 0 56.7 9.2 27.4 6.7 by 500 basis points 0 0 4 6 6 15


share in assets, % 0 0 56.7 9.2 27.4 6.7 Source: the National Bank of the Republic of Belarus.

Table 2.11 FINDINGS OF STRESS-TESTING of the banking sector (liquidity risk)

Indicators ALL SOB FB PB LB MB SB Actual values as of 01.01.2011

Liquidity indicators in all types of currencies the ratio of liquid assets to total assets 29.2 27.4 34.4 28.4 27.5 35.5 38.0

instant liquidity ratio 450.1 554.6 307.0 401.5 529.2 285.0 351.5 current liquidity ratio 225.3 267.5 168.2 152.3 248.4 171.3 192.7

short-term liquidity ratio 3.38 3.37 2.69 2.22 3.26 2.70 4.34 Values after shock

Scenario. The outflow of household’s and enterprises’ deposits The outflow of 5 %

the ratio of liquid assets to total assets 27.7 25.8 33.0 26.3 25.9 34.1 36.7 instant liquidity ratio 469.0 590.5 312.3 408.0 560.3 290.7 356.3 current liquidity ratio 223.7 267.7 166.2 146.3 247.1 170.5 190.7

short-term liquidity ratio 3.21 3.31 2.57 2.01 3.19 2.59 4.20 The outflow of 10 %




short-term liquidity ratio 2.64 2.95 2.14 1.27 2.71 2.21 3.71

Table 2.11 cont’d FINDINGS OF STRESS-TESTING of the banking sector (liquidity risk)

Indicators ALL SOB FB PB LB MB SB Actual values as of 01.01.2011

Liquidity indicators in foreign currency the ratio of liquid assets to total assets 46.8 49.2 43.9 47.4 47.2 43.4 56.0

instant liquidity ratio 396.5 432.7 349.1 568.8 466.6 264.5 495.3 current liquidity ratio 173.5 182.0 162.3 196.1 173.3 159.2 230.9

short-term liquidity ratio 1.45 1.21 2.02 2.57 1.16 2.68 5.17 Values after shock

Scenario. The outflow of non-residents’ funds in foreign currency The outflow of 10 %






short-term liquidity ratio 0.44 0.55 0.13 2.20 0.48 0.02 0.85

Table 2.11 cont’d FINDINGS OF STRESS-TESTING of the banking sector (liquidity risk)

Indicators 0 < ILR <= 20 20 < ILR <= 40 40 < ILR <= 70 70 < ILR <= 100 100 < ILR Actual values as of 01.01.2011

Liquidity indicators in all types of currencies instant liquidity ratio 0 0 0 0 31

share in assets, % 0 0 0 0 100.0 Liquidity indicators in foreign currency

instant liquidity ratio 1 0 0 1 29 share in assets, % 0.3 0 0 2.2 97.5

Values after shock Scenario. The outflow of household’s and enterprises’ deposits

The outflow of 5 % 0 0 0 1 30 share in assets, % 0 0 0 2.2 97.8

The outflow of 10 % 0 0 0 1 30 share in assets, % 0 0 0 2.2 97.8

The outflow of 20 % 0 0 2 0 29 share in assets, % 0 0 2.6 0 97.4

Scenario. The outflow of non-residents’ funds in foreign currency The outflow of 10 % 2 1 1 0 27

share in assets, % 0.3 0.6 2.2 0 96.9 The outflow of 25 % 5 0 1 4 21

share in assets, % 4.5 0 0.1 8.4 87.0 The outflow of 50 % 16 0 1 1 13

share in assets, % 49.1 0 0.3 0.1 50.5

Table 2.11 cont’d

FINDINGS OF STRESS-TESTING of the banking sector (liquidity risk)

Indicators 0 < CLR <= 70 70 < CLR <= 80 80 < CLR <= 90 90 < CLR <= 100 100 < CLR Actual values as of 01.01.2011

Liquidity indicators in all types of currencies current liquidity ratio 0 0 0 2 29

share in assets, % 0 0 0 3.6 96.4 Liquidity indicators in foreign currency

current liquidity ratio 1 0 0 1 29 share in assets, % 2.2 0 0 1.4 96.4


The outflow of 5 % 0 0 2 0 29 share in assets, % 0 0 3.6 0 96.4

The outflow of 10 % 0 1 1 0 29 share in assets, % 0 2.2 1.4 0 96.4

The outflow of 20 % 1 2 0 1 27 share in assets, % 2.2 1.6 0 0.4 95.8


share in assets, % 4.2 0 0 0.2 95.6 The outflow of 25 % 4 3 1 1 22

share in assets, % 4.4 14.3 0.0 1.6 79.7 The outflow of 50 % 15 0 0 3 13

share in assets, % 48.8 0 0 42.5 8.8

Table 2.11 cont’d


Indicators 0 < SLR <= 1 1 < SLR <= 1.5 1.5 < SLR <= 2.0 2.0 < SLR <= 2.5 2.5 < SLR Actual values as of 01.01.2011

Liquidity indicators in all types of currencies short-term liquidity ratio 0 2 6 6 17

share in assets, % 0 1.8 24.0 2.1 72.2 Liquidity indicators in foreign currency

short-term liquidity ratio 3 6 4 2 16 share in assets, % 9.9 49.2 27.7 5.0 8.2


The outflow of 5 % 0 2 8 5 16 share in assets, % 0 1.8 24.5 2.0 71.7

The outflow of 10 % 0 5 9 1 16 share in assets, % 0 7.0 21.3 0.0 71.7

The outflow of 20 % 5 5 5 1 15 share in assets, % 2.8 22.0 3.5 41.2 30.5



share in assets, % 67.8 24.3 1.4 0 6.4 The outflow of 50 % 20 2 2 0 7

share in assets, % 96.6 0.5 1.4 0 1.5

Table 2.11 cont’d


Indicators 0 < LATA <= 20 20 < LATA <= 30 30 < LATA <= 40 40 < LATA <= 50 50 < LATA Actual values as of 01.01.2011

Liquidity indicators in all types of currencies the ratio of liquid assets to total assets 0 13 11 2 5

share in assets, % 0 83.8 10.7 0.5 5.0 Liquidity indicators in foreign currency

the ratio of liquid assets to total assets 0 1 9 5 16 share in assets, % 0 2.2 20.7 28.1 49.0








share in assets, % 54.6 2.1 41.3 0.3 1.7 Source: the National Bank of the Republic of Belarus

Financial Stability in the Republic of Belarus 2010 · Belarus was characterized by decreasing...

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