"We do not expect a potential ceasefire between Russia and Ukraine in 2025 to pose significant risks to the stability of the banking sector in regional countries (Central Asia and the South Caucasus)", APA reports, citing international rating agency S&P Global Ratings.
The agency has outlined potential channels that could impact the banking sector of regional countries.
It was noted that it can be a moderation of inflows or an acceleration of outflows of non-resident deposits and capital: "Inflows of non-resident deposits, primarily from Russia, to the region have been gradually diminishing after their 2022-2023 peak. Even if some funds are channeled back to Russia or to other countries, we see the risk of accelerated deposit outflows as contained. This is because uncertainties about Russia's macroeconomic and policy outlook, including transfer and convertibility restrictions, will remain high in the near term."
S&P believes that the growth of banks' commission revenues may increase:
"The unusually strong growth in commission and fee revenues related to currency exchange and money transfers observed in 2022–2023 is gradually slowing down. This normalization may accelerate somewhat in 2025, with non-interest income returning to previous levels."
The rating agency also noted that no significant impact on credit growth is expected:
"We assume that individuals and businesses that migrated to the region due to the conflict mainly use local banks for deposit and payment services, with relatively low interest in loans. Therefore, if some of them leave the region, it will not have a significant impact on the banks' credit portfolios."
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