О КЛЮЧЕВОЙ СТАВКЕ RUSSIAN ECONOMIC OUTLOOK AND CHALLENGES TO MONETARY POLICY. December Bank of Russia Presentation for Investors

Similar documents
RUSSIAN ECONOMIC OUTLOOK AND MONETARY POLICY. RUSSIA S ECONOMIC OUTLOOK AND MONETARY POLICY December 2018

RUSSIAN ECONOMIC OUTLOOK AND MONETARY POLICY CHALLENGES RUSSIAN ECONOMIC OUTLOOK AND MONETARY POLICY CHALLENGES. Bank of Russia.

RUSSIAN ECONOMIC OUTLOOK AND MONETARY POLICY. RUSSIA S ECONOMIC OUTLOOK AND MONETARY POLICY February 2019

RUSSIAN ECONOMIC OUTLOOK AND MONETARY POLICY CHALLENGES RUSSIAN ECONOMIC OUTLOOK AND MONETARY POLICY. Bank of Russia.

RUSSIAN ECONOMIC OUTLOOK AND MONETARY POLICY CHALLENGES RUSSIAN ECONOMIC OUTLOOK AND MONETARY POLICY CHALLENGES. Bank of Russia.

No. 32. Banking sector liquidity and financial markets. October Facts, assessments and comments. Moscow

Monetary policy spillovers: the case of 2014 shock in Russia. Bank of Russia Research and forecasting Department

Russia 2019: risk-averse mode. Dmitry Dolgin, Chief Economist, Russia & CIS November 2018

Russian Overview. August 27-September 2

Monetary Policy under Fed Normalization and Other Challenges

of Moscow Exchange Group Monthly Market Report december 2013

Monetary Policy Report

Russia: Macro Outlook for 2019

4 August Q 2016 Earnings Presentation

of Moscow Exchange Group Monthly Market Report February 2014

MONTHLY MARKET REPORT

Anti-crisis State Policy in Russia

APPENDIX ECONOMIC INDICATORS DEVELOPED ECONOMIES

Inflation projection of Narodowy Bank Polski based on the NECMOD model

USDKZT volatility hit a two-year low

of Moscow Exchange Group Monthly Market Report

National Monetary Policy Forum. Chris Loewald, Head: Policy Development and Research 10 April 2016 Pretoria

Inflation Report. July September 2012

MONTHLY MARKET REPORT

Monetary Policy Report

Asia Bond Monitor November 2018

MONETARY POLICY COMMITTEE STATEMENT FOR THIRD QUARTER Governor s Presentation to the Media. 16 th November, 2016

Monetary Policy Report 1/12. Charts

MONTHLY BANKING MONITOR

Poland s Economic Prospects

Olivier Blanchard Economic Counsellor and Director of the Research Department, International Monetary Fund

Latin America: the shadow of China

The Korean Economy: Resilience amid Turbulence

Asia Bond Monitor November 2015

Global Economic Prospects

Economic Outlook: Global and India. Ajit Ranade IEEMA T & D Conclave December 12, 2014

Global House View: Market Outlook

Asia Bond Monitor November 2018

Russian Federation. Recent Economic Developments and Challenges. October 2015 IMF MOSCOW OFFICE

> Macro Investment Outlook

Quarterly Report. April June 2015

TABLE OF CONTENTS 1. INTRODUCTION 2. OIL & GAS 3. REAL ESTATE & CONSTRUCTION 4. WHOLESALE & RETAIL 5. OUTLOOK 1. INTRODUCTION

Monetary Policy Report

Global Economic Prospects: Navigating strong currents

MONETARY POLICY COMMITTEE STATEMENT FOR THIRD QUARTER Governor s Presentation to the Media. 22 nd November, 2017

INFLATION-LINKED BONDS: NEW ASSET CLASS FROM MINFIN

Recent Economic Developments and Monetary Policy in Mexico

Kazakhstan s economy expanded by 4.2% in 1H17, supported by growth in mining, manufacturing, construction and transportation sectors

Development of Economy and Financial Markets of Kazakhstan

Quarterly Economic Outlook: Quarter on 25 September 2018 Strong Economic Expansions amidst Uncertainty of Trade War

AsianBondsOnline WEEKLY DEBT HIGHLIGHTS

Chapter 1 International economy

No. 3 SEPTEMBER 2016 MONETARY POLICY REPORT. Moscow

Economic Outlook January, 2012

November Russian equity market key trends

The Long Journey to Recovery. Russia Economic Report April 2016 Edition No. 35

MULTI-ASSET CLASS 1 EQUITIES: DEVELOPED COUNTRIES 1 EQUITY EMERGING COUNTRIES 2

BNM Maintains OPR at 3.25%, Hawkish About Economic Outlook

No. 1 MARCH 2018 MONETARY POLICY REPORT. Moscow

Turkey: Recent Developments and Future Prospects. ISBANK Economic Research Division October 2018

The World Economic & Financial System: Risks & Prospects

ECONOMIC OUTLOOK FINALLY, SYNCHRONIZED GLOBAL GROWTH

Snapshot of SA Economy

Outlook for the Mexican Economy Alejandro Díaz de León Carrillo, Governor, Banco de México. April, 2018

Press Conference. Inflation Report. November Mugur Isărescu. Governor

Moscow Exchange Securities Market

Quarterly Report. October December 2014

ASIAN ECONOMIES. Economics, interest rates and currencies chart pack

B-GUIDE: Economic Outlook

CENTRAL BANK OF THE REPUBLIC OF TURKEY

MonitorING Turkey ING BANK A.Ş. Further fiscal support in the Medium Term Plan. Emerging Markets 4 October 2017

Monthly Economic Review

NATIONAL BANK OF ROMANIA

Monthly Economic Review

TURKEY: RECENT DEVELOPMENTS January March 2018

No. March 2015 MONETARY POLICY REPORT. Information and Analytical Review. Moscow

Macroeconomic and financial market developments. August 2017

Investment Barometer November 2012 VTB Capital Investment Management Research Department

Equity Market Outlook. May, 2016

TURKEY: RECENT DEVELOPMENTS January June 2018

Global Economic Prospects: Update Global Recovery in Transition

Emerging Markets Weekly Economic Briefing

Monetary Policy: A Key Driver for Long Term Macroeconomic Stability

Economic Outlook. Macro Research Itaú Unibanco

Mexico s Macroeconomic Outlook and Monetary Policy

Regional Economic Outlook

Sovereign Risks and Financial Spillovers

Global Markets Update QNB Economics 12 March 2017

Monthly Economic Insight

Global Markets Update QNB Economics 12 November 2017

2015 Market Review & Outlook. January 29, 2015

Mexico: 2016 IMF ARTICLE IV CONSULTATION

2017 FIRST QUARTER ECONOMIC REVIEW

World Economic Outlook. Recovery Strengthens, Remains Uneven April

Report on financial stability

Mexico: Dealing with international financial uncertainty. Manuel Sánchez

Monetary Policy Report 3/12. Charts

Monetary Policy Report 3/11. Charts

Global Markets Update QNB Economics 7 August 2016

MONETARY POLICY COMMITTEE STATEMENT FOR FIRST QUARTER Governor s Presentation to the Media. 16 th May, 2018

Transcription:

О КЛЮЧЕВОЙ СТАВКЕ RUSSIAN ECONOMIC OUTLOOK AND CHALLENGES TO MONETARY POLICY Bank of Russia Presentation for Investors December 16

USD per barrel RUB / USD 2 Oil Eхporters Production-cut Agreements Support the Rise in Oil Prices. But in the Medium-term Run the Bank of Russia Adheres to a Conservative View 1 11 1 9 Oil Price (Fact vs. Forecast) and Ruble Exchange Rate 8 7 7 6 8 7 6 4 3 Jan-14 Apr-14 Jul-14 Oct-14 Jan-1 Apr-1 Jul-1 Oct-1 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 6 4 4 3 3 Urals oil price, fact Urals oil price, December baseline forecast Urals oil price, September baseline forecast USDRUB (right axis) Sources: Bank of Russia, Reuters, Bloomberg.

3 The Possibility of a Faster FED Monetary Policy Normalization Has Risen After the US elections. Capital Outflows from EM Rose as Investors risk Appetite Faded % Key Central Bank Rates % 1, 1, 1,2 1,2 1, 1,,7,7,,,2,2,, -,2 1.13 8.13 3.14 1.14.1 12.1 7.16 2.17 9.17 -,2 US FED Federal Funds Rate - Upper Bound FED rate Bloomberg forecast ECB Main Refinancing Rate ECB rate Bloomberg forecast Source: Bloomberg. Source: Institute of International Finance

1Q7 3Q7 1Q8 3Q8 1Q9 3Q9 1Q1 3Q1 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q1 3Q1 1Q16 3Q16 11.14 12.14 1.1 3.1 4.1.1 7.1 8.1 9.1 1.1 12.1 1.16 2.16 4.16.16 6.16 8.16 9.16 1.16 12.16 Billion USD Billion USD 4 Current Account Surplus is Sufficient to Cover External Debt Payments. Demand for the Bank of Russia Refinancing Operations Subsides 7 Balance of Payments Structure 4 Bank of Russia Refinancing Operations 2-2 - -7-1 -12 3 3 2 1 1 Total of 7,3 bln USD on December 13 th -1 Current account Financial account Net private capital outflow Capital account Net errors and omissions Change in FX reserves FX REPO 1W FX REPO 1Y FX Loans 1Y FX REPO 1M FX Loans 1M Source: Bank of Russia. Source: Bank of Russia

Nominal Interest Rates Continue to Decline. But Monetary Conditions Remain Moderately Tight % 21 Interest Rates % 21 % 8 Indices of Changes in Bank Lending Conditions % 8 18 Latest figures Long-term deposit rate: 7.6% (Oct 16) Long-term loan rate: 11.9% (Oct 16) Interbank rate: 1.% (Nov 16) 18 6 Tightening Expectations 6 1 1 4 4 12 12 9 9 6 6 3 3 - - 1 11 12 13 14 1 16-4 Easing I II III IV I II III IV I II III IV I II III IV I II III IV I -4 Short-term corporate loan rate Long-term corporate loan rate Short-term household deposit rate Long-term household deposit rate O/n interbank rate (MIACR) 12 13 14 1 16 17 Loans to large enterprises Loans to small and medium companies Source: Bank of Russia. Source: Bank of Russia.

6 Credit Activity Remains Low due to Moderately Tight Monetary Conditions and Economic Uncertainty % 3 Contributions of Various Components to the Annual Growth Rates of Bank Loans to Households and Non- Financial Organizations % 3 % Lending Growth (YoY)* % 2 2 4 4 1 1 1 1 3 1 3 1 - - -1-1 -1 1 11 12 13 14 1 16 Loans to non-financial organizations Revaluation of foreign currency loans Loans to households Foreign currency loans to non-resident organizations Ruble loans to non-resident organizations Foreign currency loans to non-financial organizations Ruble loans to non-financial organizations Total loan portfolio Source: Bank of Russia. Dollarisation of loan portfolio (%) 1.1.14 1.1.1 1.1.16 1.12.16 24. 33.3 39.8 33. Loans to households 2.4 2.7 2.7 1.7-1 - 1 11 12 13 14 1 16 Corporate lending Retail lending Total lending * Dotted lines represent growth rate excluding currency revaluation. Loans to non-financial organizations Overdue loans (as % of loan portfolio) Source: Bank of Russia. 1.1.14 1.1.1 1.1.16 1.12.16 4.2 4.2 6.2 6.7 Loans to households 4.4.9 8.1 8.2 -

7 Deposits Dynamics Reflects Elevated Propensity of Households to Save % 4 Contributions of Various Components to the Annual Growth Rates of Banking Sector Liabilities % 4 3 3 3 3 2 2 1 1 1 1 - - -1-1 14 1 16 Other liabilities Household deposits,24,22,,18,16,14,12,1,8,6,4,2, -,2 -,4 -,6 -,8 -,1 -,12 -,14 -,16 -,18 Components of Savings (in Ratios of Disposable Income) Real estate Savings ratio, (SA) Loans Foreign currency assets (cash, foreign currency deposits) SA Ruble financial assets (deposits, stock, cash) SA Deposits of organisations Bonds Borrowed funds from the BoR Total growth Current accounts of organisations Loans of foreign banks Capital Source: Bank of Russia. Dollarisation of deposits (%) 1.1.14 1.1.1 1.1.16 1.12.16 Household deposits 17.4 26.1 29.4 2.7 Corporate deposits and current accounts 31.3 42.6 47.3 4. Total 24. 3. 39.2 33.

1.14 4.14 7.14 1.14 1.1 4.1 7.1 1.1 1.16 4.16 7.16 1.16 1.14 4.14 7.14 1.14 1.1 4.1 7.1 1.1 1.16 4.16 7.16 1.16 8 Economic Activity Dynamics is Uneven. Growth Among Former Leaders is Slowing Down. % 6 Industrial Production Dynamics and its Decomposition (YoY) 6 % % Output in Manufacturing (YoY) % 4 4 1 1 2 2 1 1-2 -2 - - -4-4 -1-1 -6-6 -1-1 Utilities Omissions Manufacturing Mining Industrial production, (%, RHS) Food industry Chemical industry Other manufacturing Sources: Rosstat, Bank of Russia calculations Sources: Rosstat, Bank of Russia calculations

1.1 2.1 3.1 4.1.1 6.1 7.1 8.1 9.1 1.1 11.1 12.1 1.16 2.16 3.16 4.16.16 6.16 7.16 8.16 9.16 1.16 I.11 II.11 III.11 IV.11 I.12 II.12 III.12 IV.12 I.13 II.13 III.13 IV.13 I.14 II.14 III.14 IV.14 I.1 II.1 III.1 IV.1 I.16 II.16 III.16 9 Signs of Investment Activity Recovery are Unstable % Fixed Capital Investment and Construction (YoY) 1 4 % % 1 Government and Private Fixed Capital Investment (YoY) 1% 3 1 1 1 - -1 - -1-3 - - -1-4 -1-1 - - -6-1 -1 Fixed capital investment (quarterly) Construction Production of investment goods Machinery and equipment import, (RHS) Sources: Rosstat, Bank of Russia calculations Private sector Infrastructure companies Government sector Fixed capital investment, (%, RHS) Sources: Rosstat, Bank of Russia calculations

1.8 8.8 3.9 1.9.1 12.1 7.11 2.12 9.12 4.13 11.13 6.14 1.1 8.1 3.16 1.16 1 Despite Wage Growth, Consumer Demand is Still Weak 2% Nominal Wages Growth Rate (YoY) 2% % Real Income and Retail Trade Turnover (YoY) % % % 16% 12% 16% 12% 1% 1% 8% 8% 4% 4% 1% 1% % % % % -4% -4% -8% -8% % % -12% -12% -% 13 14 1 16 -% -16% -16% Private sector Public sector Nominal wages Real income (pensions and wages) Retail trade turnover Sources: Rosstat, Bank of Russia calculations Sources: Rosstat, Bank of Russia calculations

1.1 6.1 11.1 4.16 9.16 1.1 6.1 11.1 4.16 9.16 11 Inflation is Slowing Down in Line with the Bank of Russia s Forecast 2 Inflation, % (YoY) 2 Inflation, % (MoM SA) 4, 4 4 1 1 3, 3 3 2, 2 1 1 2 1, 1 1, -1 CPI Core inflation Non-food goods CPI Core inflation Services Food goods Services Food goods Non-food goods Source: Rosstat Source: Rosstat, Bank of Russia calculations

Д #Н/ Д 12,3 Д #Н/ Д 1,1 Д #Н/ Д 32 Д #Н/ Д Д #Н/ Д 7,2 Д #Н/ Д 6,3 Д #Н/ Д 29 Д #Н/ Д Д #Н/ Д 7, Д #Н/ Д 6,3 12 Inflation Expectations Go Down Slower than Inflation #Н/ #Н/ #Н/ Д #Н/ Д Survey Expectations horizon I.14 II.14 III.14 IV.14 I.1 II.1 III.1 IV.1 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Graph Inflation expectations (absolute value), % Households FOM next 12 months 11,8 11,7 12, 1, 1,7 1, 16, 16,4 16,7 1,7 14,7 14,6 13,6 14,2 14,3 12,6 14,2 12,3 13,7 FOM (Bank of Russia calculations) next 12 months 8,1 9, 9,6 14,4 13,8 12,2 14, 12,8 1,8 7,8 7,4 7,2 6, 6,7 6,9 6,4,9,8,6 Professional analysts Bloomberg 16 6,7 7, 7,2 8, 8,3 7,9 7,4 7,2 6, 6,4 6,3 6,1,9,8 Interfax 16 7, 6,7 7,4 7,6 8, 8,3 7,6 7,4 7,3 6,7 6,6 6,2 6,,8 Reuters 16 7, 8,1 7,9 7,4 7,1 7, 6, 6,3 6, 6, 6,1 Financial markets OFZ IN next 7 years 6,4,8 6,2 6,1,4,2, 4,6 4,6 4,4 4, 4, 4,8 OFZ IN (option not substracted) next 7 years 8,1 7,3 7,7 7,6 6,9 6,7 6, 6,,8,,3,,8 Bond market next quarter 6,9 7, 7,7 8,3 1,6 1, 14,1 14,2 #Н/ #Н/ #Н/ #Н/ Д 6,9 Interbank market next quarter 6,7 7, 8,2 1,2 14,9 17,2 1,1 13,7 #Н/ #Н/ #Н/ #Н/ Д 6,2 Inflation expectations (balanced index*) Households FOM next 12 months 84 8 84 83 76 72 8 83 8 82 84 83 81 78 82 77 82 78 79 FOM next month 79 82 76 77 68 6 71 78 8 76 72 74 7 68 72 69 7 7 74 Businesses REB next 3 months 26 26 32 7 32 28 48 46 22 14 16 3 38 28 26 36 Bank of Russia next 3 months 14,3 12,4 13,9 3,3 14,8 12,7 12,1 17,3 1,6 13,6 12,4 11, 11, 12,1 1,1 9,9 1,4 Retail prices (Rosstat) next quarter 42 41 41 43 31 28 3 29 #Н/ #Н/ #Н/ Д #Н/ Д 28 Tariffs (Rosstat) next quarter 6 2 7 6 2 2 Change against 3MMA: - inflation expectations become better (more than 1 standard deviation) - inflation expectations become better (less than 1 standard deviation) - inflation expectations unchanged (±,2 standard deviation) - inflation expectations become worse (less than 1 standard deviation) - inflation expectations become worse (more than 1 standard deviation) *Balanced index is the difference between the shares of those who expect prices to rise and to fall Sources: FOM, REB, Rosstat, Bank of Russia, Bloomberg, Interfax, Reuters.

13 Fiscal policy: Conservative Approach with a Budget Consolidation The Ministry of Finance plans to adhere to conservative fiscal policy in 16-19: Federal budget expenditures have risen in 16 to 16,4 trln, but in 17-19 will be reduced gradually to 1,8 trln. The Ministry of Finance plans to reduce the federal budget deficit from 3% of GDP in 17 to 1% of GDP in 19 under its fiscal consolidation policy. Net borrowings of OFZ amount to, trln in 16 and to 1, trln annually in 17-19. The Government plans to sell a block of VTB and Sovkomflot shares for 1-13 bln in 17. The Reserve Fund, domestic and external borrowings, revenues from privatization are to be used to cover the federal budget deficit. In May and September 16 the Ministry of Finance borrowed $ 3 bln by offering 1-year eurobonds with 4.7% yield. In January-November 16 it 1,2 trln have been taken from the Reserve Fund. In December it will about 1 trln will be taken from the Reserve Fund In July the Government sold a 1,9% block of ALROSA shares for approximately 2,2 bln, in October a % block of Bashneft shares for approximately 329,7 bln, in December a 19,% block of Rosneft shares for approximately 71,8 bln. Main Indicators of the Federal Budget Federal budget 1 16 (Bank of Russia estimates in baseline scenario Urals 4$) Revenues, % of GDP 16,9 16,1 Expenditures, % of GDP 19,3 19,8 Deficit, % of GDP -2,4-3,7 Financing from the Reserve Fund, trln 2,6 2,1-2,2

USD per barrel 14 Uncertainty About the Future of Oil Price Dynamics Persists. The Bank of Russia Considers 3 scenarios 11 Oil Price Forecast* 1 9 8 Bank of Russia, Urals, Optimistic scenario Bank of Russia, Urals, Baseline scenario Bank of Russia, Urals, Risk scenario 7 6 4 3 13 14 1 16 17 18 19 Note: grey area reflects the range of oil price forecasts made by international organizations and independent analysts and oil prices actually observed in previous years. The forecasts are made for oil grades: Brent, Dubai, WTI. * As presented in Monetary Policy Report 4 (December 16) Sources: Bank of Russia, US Energy Information Administration, World Bank, IMF, The Economist, Consensus Economics, Reuters.

1 Baseline Scenario*: Slow Economic Recovery and Inflation Hitting the Target by Late 17 *As presented in Monetary Policy Report 4 (December 16)

16 Baseline Scenario: Key Indicators 1 (actual) 16 17 18 19 Baseline* Urals crude price (annual average), US dollars per barrel Inflation, % December on December of previous year 2 41 4 4 4 12.9.4-.8 4. 4. 4. Gross domestic product, YoY, % -3.7 -(.7-.).-1. 1.-2. 1.-2. Balance of current and capital accounts, bln USD 69 21 1 19 18 Financial account balance for private sector, bln USD** Change in FX reserves, bln USD ('+' - decrease, '-' - increase) -8-18 -13-22 -21-2 -14-8 Domestic credit growth, % December on December of previous year 7.1-3 4-7 8-1 9-11 *As presented in Monetary Policy Report 4 (December 16) ** Including net errors and omissions Source: Bank of Russia.

17 Baseline Scenario: Balance of Payments Forecast (Billions USD) 1 (actual) 16 17 18 19 Baseline* Current account 69 22 1 19 18 Trade balance 149 8 83 87 89 Exports 341 274 283 294 38 Imports -193-19 -1-7 -219 Services balance -37-22 -26-2 -27 Exports 2 1 4 6 8 Imports -89-74 -8-81 -8 Balance of primary and secondary income -43-4 -42-43 -43 Capital account -1 Balance of current and capital accounts 69 21 1 19 18 Financial account (except reserve assets) -67-7 -7-19 -18 General government and central bank -9 11 6 3 3 Private sector** -8-18 -13-22 -21 Change in FX reserves ('+' - decrease, '-' - increase) -2-14 -8 *As presented in Monetary Policy Report 4 (December 16). Signs according to BPM ** Including net errors and omissions Note: Total values may differ from totals for individual items due to rounding. Source: Bank of Russia

18 Monetary Policy in December 16 Annual inflation continues to decline in line with the baseline forecast Consumer price growth is slowing down in part under the influence of temporary factors Reduction in inflation expectations remains unstable The economy is progressing towards recovery in line with the baseline forecast Decision Keeping the key rate unchanged at 1.% p.a. Monetary policy signal Inflation risks: Inertia of inflation expectations Decrease in household s propensity to save Price volatility in global commodity and financial markets As the trend towards a sustainable decline in consumer price growth takes root, the Bank of Russia will consider an opportunity of cutting the key rate in the first half of 17. Higher government spending under higher oil price scenario

Appendix

The Monetary Policy Implementation Framework will Remain Unchanged under Structural Liquidity Surplus In early 17 the banking sector is likely to switch to the liquidity surplus: The liquidity deficit has been declining following the Reserve fund spending in 1 16 The BoR will retain its monetary policy implementation framework under the liquidity surplus 1W deposit auctions will be conducted instead of 1W repo auctions In case of substantial liquidity surplus the Bank of Russia bonds (OBRs) will be issued Standing facilities will remain in place; the spreads to the key rate will remain unchanged The decrease in liquidity deficit and switch to the liquidity surplus can involve slight decrease in nominal interest rates in a predictable and limited scale The Bank of Russia considers the changing liquidity conditions in its target key rate trajectory

1.6.16 6.6.16 9.6.16 1.6.16.6.16 23.6.16 28.6.16 1.7.16 6.7.16 11.7.16 14.7.16 19.7.16 22.7.16 27.7.16 1.8.16 4.8.16 9.8.16 12.8.16 17.8.16 22.8.16 2.8.16 3.8.16 2.9.16 7.9.16 12.9.16 1.9.16.9.16 23.9.16 28.9.16 3.1.16 6.1.16 11.1.16 14.1.16 19.1.16 24.1.16 27.1.16 1.11.16 7.11.16 1.11.16 1.11.16 18.11.16 23.11.16 28.11.16 1.12.16 21 October - December 16: Performance under Structural Liquidity Surplus. The Bank of Russia Conducted Only Deposit Auctions ( bln) Bank of Russia Operations and the Dynamics of MIACR 28 % 13 11 18 9 7 8-3 1-1 -1 REPO auctions Standing deposit facilities Amount outstanding on other refinancing operations BoR key rate (right-hand scale) Deposit auctions Standing REPO facilities Interbank market O/N rate (MIACR) Source: Bank of Russia

1.1.1 1.2.1 1.3.1 1.4.1 1..1 1.6.1 1.7.1 1.8.1 1.9.1 1.1.1 1.11.1 1.12.1 1.1.16 1.2.16 1.3.16 1.4.16 1..16 1.6.16 1.7.16 1.8.16 1.9.16 1.1.16 1.11.16 1.12.16 22 Key Rate and Interest Rate Corridor % 19 Key Rate and Interest Rate Corridor 18 17 16 1 14 13 12 11 1 9 8 Interbank market O/N rate (MIACR) Interest rate corridor bounds The BoR key rate Source: Bank of Russia

Trillion 23 Bank Loans are the Main Source of Funding 14 1 1 8 6 4 The Russian Financial Market (End of Period, % of GDP) 7 9 1 8 13 14 2 94 98 1 3 7 8 11 13 63 6 6 44 1 1 17 28 34 44 4 43 38 36 3 36 27 8 1 21 9 11 18 13 16 14 14 14 13 12 13 16 23 21 13 11 9 8 6 6 7 8 7 7 8 9 1 1 1 2 3 4 6 7 8 9 1 11 12 13 14 1 1.12.16 Government bonds Corporate debt securities Stock market capitalization Household loans 4 3 3 2 Sectoral structure of the Russian financial market Government bonds 3,9% 47,% 22,7% 1,% 87,% 7,% 62,%,% Utilities Telecommunications Other Oil & Gas Industrials 1 1-31,1% 38,% 16,% 13,6% 24,4% 19,6% 12,% 28,% 22,8% 43,% 34,4% Bank loans Shares Bonds Eurobonds Syndicated loans 37,% 2,% 12,% Financials Consumer Goods&Services Basic Materials,% Source: Bank of Russia

USD bln USD bln USD bln USD bln 24 Credit Growth Remains Slow While Households Saving Activity Proves to Be Stable 1 8 6 4 Contributions of various components to the annual growth of banks' loan portfolio 1 - - 1.11 11.11 9.12 7.13.14 3.1 1.16 11.16 8 6 4 14 1 1 8 6 4 - Contributions of various groups of banks to the annual growth of nonfinancial sector's deposits -4 1.12 8.12 3.13 1.13.14 12.14 7.1 2.16 9.16 Revaluation of foreign currency deposits 14 1 1 8 6 4 - -4 Current accounts of organisations (other banks) Loans to large enterprises Mortgage loans Revaluation of foreign currency loans Loans to medium and small companies Consumer loans Total growth Deposits of organisations (other banks) Current accounts of organisations (3 largest banks) Household deposits (3 largest banks) Household deposits (other banks) Deposits of organisations (3 largest banks) 1.1.16 1.9.16 1.1.16 1.11.16 1.12.16.12.16 Deposits in rubles, trln rub. 28,6 29,4 29, 29, 29,6 29,6 Deposits in foreign currency (in dollar terms), bln dollars 21,6 3,9 4,9 1,9 1,8 2,4 Deposits in national currency, YoY, % 14,6 12, 12,6 13,2 11,3 9,9 Household deposits, YoY, % 19,4 16,3 1,8 1,7 1,3 14,3 Deposits of organisations, YoY, % 8,9 6, 8, 9,9 6, 4,1 Deposits in foreign currency (in dollar terms), YoY, % 11,1-1, -, -7,3-6, -6,3 Household deposits, YoY, % 8,2, 1,2,8,1,6 Deposits of organisations, YoY, % 13,2-2,2-1,2-13, -11,4-11,4 Dollarisation of household deposits, % 29,2 2, 2,2 2,1 2,6 2,4 Change in dollarisation of household deposits to the prev. date, p.p. -3,7 -,3 -,1,6 -,2 due to the change in balances of foreign currency deposits -,1,2,1,2, due to the change in exchange rate -2,3 -, -,1,6 -,2 due to the change in balances of ruble accounts -1,3, -,1 -,2, Dollarisation of organisations deposits, % 42,1 37, 36,7 36,1 36,8 36,7 Change in dollarisation of organisations deposits to the prev. date, p.p. -4,6 -,9 -,6,7 -,1 due to the change in balances of foreign currency deposits -2,3, -,7 -,2,1 due to the change in exchange rate -2,8 -,6 -,1,7 -,3 due to the change in balances of ruble accounts, -,2,2,2,1 Reference data: the US dollar exchange rate 72,9 64,9 63,2 62,9 64,9 64,2 Money supply (М2), YoY, % 11, 11, 12, 12,2 1,6 9,4 Broad money supply (М2Х), YoY, % 19,7 7,1,4,7 4,9 Source: Bank of 3,1 Russia Total growth

1.6.16 9.6.16.6.16 28.6.16 6.7.16 14.7.16 22.7.16 1.8.16 9.8.16 17.8.16 2.8.16 2.9.16 12.9.16.9.16 28.9.16 6.1.16 14.1.16 24.1.16 1.11.16 1.11.16 18.11.16 28.11.16 6.12.16 1.12.1 1.12.1 29.12.1 21.1.16 4.2.16 18.2.16 4.3.16 22.3.16.4.16 19.4.16..16..16 3.6.16.6.16 4.7.16 18.7.16 1.8.16 1.8.16 29.8.16 12.9.16 26.9.16 1.1.16 24.1.16 8.11.16 22.11.16 2 Overnight Rates Moved to the Upper Half of the Interest Rates Corridor. Non-residents are Staying Net Long in Ruble Bln 4 Interest Rates and Turnover on O/N Ruble Segment of the Money Market % 13, Bln Non-residents Net Borrowings on FX Swaps 3 /$ 8 3 12, 12, 11, 1 8 7 11, 7 1, 1, 6 1 9, 9, 8, -1-6 8, -3 FX Swaps turnover Interbank loans turnover O/N repo rate Interest rate corridor bounds Interest rate corridor bounds Repo turnover O/N interbank loan rate O/N swap rate Interest rate O/N Swap Swap 2-9D Swap > 9D USDRUB Spot Sources: MICEX SE, Bank of Russia calculations

1.12.1 7.12.1 11.12.1 17.12.1 23.12.1 29.12.1 13.1.16 19.1.16 2.1.16 29.1.16 4.2.16 1.2.16 16.2.16.2.16 29.2.16 4.3.16 14.3.16 18.3.16 24.3.16 3.3.16.4.16 11.4.16 1.4.16 21.4.16 27.4.16..16 12..16 18..16 24..16 3..16 3.6.16 9.6.16 1.6.16 21.6.16 27.6.16 1.7.16 7.7.16 13.7.16 19.7.16 2.7.16 29.7.16 4.8.16 1.8.16 16.8.16 22.8.16 26.8.16 1.9.16 7.9.16 13.9.16 19.9.16 23.9.16 29.9.16.1.16 11.1.16 17.1.16 21.1.16 27.1.16 2.11.16 9.11.16 1.11.16 21.11.16 2.11.16 1.12.16 7.12.16 1.12.1 11.12.1 23.12.1 13.1.16 2.1.16 4.2.16 16.2.16 29.2.16 14.3.16 24.3.16.4.16 1.4.16 27.4.16 12..16 24..16 3.6.16 1.6.16 27.6.16 7.7.16 19.7.16 29.7.16 1.8.16 22.8.16 1.9.16 13.9.16 23.9.16.1.16 17.1.16 27.1.16 9.11.16 21.11.16 11.1.16 21.1.16 2.2.16 12.2.16 2.2.16 1.3.16 22.3.16 1.4.16 13.4.16 2.4.16 1..16..16 1.6.16 14.6.16 24.6.16 6.7.16 18.7.16 28.7.16 9.8.16 19.8.16 31.8.16 12.9.16 22.9.16 4.1.16 14.1.16 26.1.16 8.11.16 18.11.16 3.11.16 12.12.16 26 The Major Share of Spot FX Turnover is Done by Non-residents Through DMA $mln 3 2 1 - (1 ) (2 ) Net Purchases of Foreign Currency $mln USDRUB Turnover at Moscow Exchange (MOEX) 3 2 1 1 (3 ) Exporters Subsidiaries of foreign organizations Foreign non-bank organizations Non-residents (OTC) Others Foreign households Non-residents (MOEX) Households Foreign households Non-bank organizations Foreign households Others 1 1 9 6 3 - (3) (6) (9) (1 ) (1 ) Net Purchases of Foreign Currency by Non-residents ($ mln) 24 21 18 1 12 9 6 3 - (3 ) Non-res subsidiaries Non-residents (MOEX) Non-residents (OTC) Non-res subsidiaries [cumulative] Non-residents (MOEX) [cumulative] Non-residents (OTC) [cumulative] Sources: MICEX SE, Bank of Russia calculations

27 In November-December Amount of Issued Government Bonds was Higher than Emission of Corporate Bonds due to High Demand of Banks and Non-residents. Government Bonds 3 2 1 1 - -1 JAN1 APR1 JUL1 OCT1 JAN16 APR16 JUL16 OCT16 18, 16, 14, 12, 1, 8, 6, 4, 2,, 3 433 Corporate Bonds 2 1 1 - -1 JAN1 APR1 JUL1 OCT1 JAN16 APR16 JUL16 OCT16 18, 16, 14, 12, 1, 8, 6, 4, 2,, Banks Subsidiaries of foreign banks Mutual funds Non-bank organizations Non-residents Systemically important banks Households Bond yield Date Domestic Capital Market Portfolio ( trillion) Government bonds Regional bonds Corporate bonds Stock market capitalization 9 1,47,421 2,69-1 2,4,462 2,96-11 2,83,424 3,437-12 3,197,44 4,166 2,2 13 3,63,499,189 2,3 14 4,93,32 6,623 23,2 1 4,991,76 8,68 28,8 nov.16,47,611 8,71 33, Change in 16 +9,6% +6,1% +8,4% +16,3% The Placement of Bonds on the Domestic Market ( bln) 4 3 1 Jan 1 Apr 1 Jul 1 Oct 1 Jan 16 Apr 16 Jul 16 Oct 16 Government bonds Corporate bonds Regional bonds Sources: MICEX SE, Bank of Russia calculations

Jan 14 Feb 14 Mar 14 Apr 14 May 14 Jun 14 Jul 14 Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 Jan 1 Feb 1 Mar 1 Apr 1 May 1 Jun 1 Jul 1 Aug 1 Sep 1 Oct 1 Nov 1 Dec 1 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16 Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 28 Issuing Activity in the External Market Increased in September-November. 16 14 12 1 8 6 4 2-2 -4-6 External Debt Placements and Redemptions ($ bln) Planned repayments 16, 14, 12, 1, 8, 6, 4, 2,, -2, -4, -6, Eurobond placement Yeild range (right axis) External Bond Market Portfolio ($ bln) Sovereign Eurobonds Regional Eurobonds Corporate Eurobonds 9 28, 1,4 94,8 1 32,2 1,3 16,6 11 29,2,7 113,9 12 34,9, 148,9 13 4,7,6 181,8 14 39,3, 16,9 1 3,9,4 139,1 Nov.16 37,6, 137,1 Change in 16 +4,7% +2% -1,4% 12 Eurobond Yields and CDS-spread 7 1 83 8 466 6 3 4 233 2 117 Jan-12 Jan-13 Jan-14 Jan-1 Jan-16 Corporate eurobonds Sovereign eurobonds CDS-spread Source: Bank of Russia

USA Canada Japan U.K. France Italy Germany Russia Brazil South Africa China India 29 The Ruble s Increased Volatility and Narrowed Interest Rate Differential Contributed to a Lower Non-residents Demand in November Carry-to-risk ratio and capital flows 8 6 4,6 -,4-4 -6-8,2-1 -1 Jan 14 Jun 14 Nov 14 Apr 1 Sep 1 Feb 16 Jul 16 Dec 16 NDF Implied Rate / Implied Volatility 3 3 2 1 1 1.1 3.1 6.1 8.1 11.1 1.16 4.16 6.16 9.16 11.16 Capital flows on bond market (EPFR Global) Carry-to-risk ratio Credit rating 3 investment grades 2 investment grades, 1 speculative grade 1 investment grade, 2 speculative grades Country/term to maturity 2Y Y 1Y 1Y China -83-64 -7-8 South Africa -67-36 -8 2 India - -38-44 -21 Indonesia -43 2 18 67 Turkey -37 4 19 - Bulgaria -19-277 -314 - Russia 3 74 112 1 3 speculative grades Hungary - 12 144 11 2 1 1 Average P/E G7 9 BRICS Source: EPFR, Bank of Russia calculations

apr.1 may.1 jun.1 jul.1 aug.21 sep.1 oct.1 nov.1 dec.1 jan.16 feb.16 mar.16 apr.16 may.16 jun.16 jul.16 aug.16 sep.16 oct.16 jan.14 mar.14 may/14 jul.14 sep.14 nov.14 jan.1 mar.1 may.1 jul.1 sep.1 nov.1 jan.16 mar.16 may.16 jul.16 sep.16 jan.1 feb.1 mar.1 apr.1 may.1 jun.1 jul.1 aug.21 sep.1 oct.1 nov.1 dec.1 jan.16 feb.16 mar.16 apr.16 may.16 jun.16 jul.16 aug.16 sep.16 oct.16 3 Commodity Derivatives Trading Volumes Rising Rapidly Amid Declining Ruble Exchange Rate Volatility 7 6 4 Average day trading volumes on MOEX derivatives market (bln rubles) 1 8 6 18 16 14 1 1 8 6 4 Structure of trading volumes in commodity futures segment of MOEX derivatives market (bn roubles) 3 4 Other Platinum Silver Gold Brent crude oil 1 4 4 3 3 2 1 1 Value structure of open interest in futures contracts on MOEX derivatives market (end of month, %) Options Commodity futures Stock market futures Interest rate futures FX futures Open interest (right-hand scale) Other contracts Brent crude oil Gazprom or. shares Sberbank or. shares USDRUB exchange rate RTS Index Sources: MICEX SE, Bank of Russia calculations