Alexander Danilov said the Russian banking sector registered growth in overdue debt in 2006, largely in the individual lending segment. According to Fitch, overdue loans by households accounted for 2.8% in 2006, compared with 1.9% in 2005, and the share of such loans was expected to rise slightly this year.
"Along with growing competition and lower margins, the situation could generate problems for some banks, but it has not yet created the conditions for a systemic crisis in 2007," the Fitch analyst said.
Danilov also said high rates of Russian economic growth are increasing demand for banking services and contributing to the sector's further expansion.
According to Fitch, the banking assets/GDP ratio in Russia reached 54% by the end of 2006, compared with 45% by the end of 2005.
The loans to GDP ratio was 30% in Russia at the end of last year and, compared with 37% in the Czech Republic, 48% in Kazakhstan and 54% in Hungary, the figure suggests considerable potential for the development of the Russian banking system, Danilov said.
However, he added that growth will most likely slow down in percentage terms.
The Fitch analyst said the structure of the Russian banking system will not undergo any significant changes in 2007.
"Leading state-run banks, which account for about 40% of the banking sector's assets, will be able to consolidate their dominance," he said.
At the same time, the share of banks with foreign participation will continue to grow through possible acquisitions of Russian banks, Danilov said.
