Fitch: Belarus banks constrained

Fitch Ratings said in a new report on the Belarusian banking system that the country’s banks operate in a difficult operating environment, which is characterized by strong state influence over banks, primarily in the form of directed lending and interest rate regulation.

Notwithstanding these challenges, banks have reported low loan impairment ratios and reasonable performance. However, sector liquidity has proved vulnerable, capital positions have weakened and foreign exchange risk is significant, the agency said.

The Belarusian banking sector has been expanding rapidly to meet the growing loan demand of both corporate and retail customers, Fitch said.

The profitability of Belarusian banks has been constrained by margin regulation, high cost bases and large growth-driven impairment charges, the agency said.

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