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PRESIDENTIAL DECREE OF THE REPUBLIC OF BELARUS

of May 25, 2017 No. 182

About approval of the report of National Bank for 2016

1. Approve the enclosed report of National Bank for 2016 *, including:

1.1. activities report of National Bank and accomplishment of the Main directions of monetary policy of the Republic of Belarus;

1.2. annual accounting (financial) accounts, including:

the balance sheet in the amount of 12 888 186 thousand rubles;

reports:

about profits and losses;

about change of equity;

about forming and use of funds;

about maintenance costs of National Bank in the amount of 89 076 thousand rubles;

about execution of the estimate of the capital investments in the amount of 30 960 thousand rubles;

about the got profit and its distribution;

notes to the reporting.

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* It is not dispatched.

2. Send to National Bank to reserve fund the retained earnings in the amount of 639 thousand rubles got as a result of transfer of the amounts of revaluation on the fixed assets which were disposed in reporting year.

3. This Decree becomes effective from the date of its signing.

President of the Republic of Belarus

A. Lukashenko

Approved by the Presidential decree of the Republic of Belarus of May 25, 2017 , No. 182

The report of National Bank for 2016

Minsk

CONTENT

Introduction

Chapter 1. Economic and financial position of the Republic of Belarus

1.1. Macroeconomic sales terms of monetary policy and development of banking sector

1.2. Paying balance and gross external debt

1.3. Financial sector

1.3.1. Banking sector

1.3.1.1. Institutional characteristics

1.3.1.2. Structure of assets (liabilities) of banks

1.3.1.3. Efficiency and stability of banking sector

1.3.2. Financial market

1.3.2.1. Foreign exchange market

1.3.2.2. Interbank credit market

1.3.2.3. Interest rates of the credit and deposit markets

1.3.2.4. Market of government securities

1.3.2.5. Security market of National Bank

1.3.2.6. Market of corporate securities

1.3.2.7. Funds of bank management

1.3.2.8. Leasing organizations

1.3.2.9. Microfinancial organizations

1.3.2.10. Forex company

Chapter 2. Activities of National Bank

2.1. Monetary policy

2.1.1. Monetary policy purpose

2.1.2. Course policy

2.1.3. Percentage policy and regulation of liquidity of banks

2.1.4. Main monetary indicators

2.2. Supervision of activities of banks

2.2.1. Enhancement of the regulatory legal base in the field of banking supervision

2.2.2. Remote supervision

2.2.3. Checks of banks

2.3. Regulation of banking activities

2.3.1. Participation in development of regulatory legal acts and local documents of banks concerning the credit and deposit markets

2.3.2. Development of system of clearing settlements in retail payments

2.3.3. Enhancement of regulation of clearing settlements

2.3.4. Forming of credit stories and provision of credit reports

2.4. Regulation of non-bank transactions

2.4.1. Regulation of leasing activities

2.4.2. Regulation of activities of the microfinancial organizations

2.4.3. Regulation of transactions with off-exchange financial instruments

2.4.4. Control of compliance with law about leasing activities, behind observance by the microfinancial organizations of the legislation on provision and attraction of microloans

2.5. Currency control and currency exchange control

2.6. Monitoring of financial stability

2.7. Financial accounting and reporting

2.8. Cash circulation

2.9. Payment system

2.10. Information technologies

2.11. Financial literacy

2.12. Research activities

2.13. International cooperation

2.14. Staffing and personnel training

2.15. Internal audit

Chapter 3. Annual accounting (financial) accounts

Forms of annual accounting (financial) accounts of National Bank for 2016

Notes to annual accounting (financial) accounts of National Bank for 2016

Conclusion

Appendices

1.1.-1.14. Tables, drawings, schedules to Chapter 1

2.1.-2.16. Tables, drawings, schedules to Chapter 2

Introduction

The report of National Bank for 2016 is prepared according to article 46 of the Bank code of the Republic of Belarus.

Monetary policy of the Republic of Belarus in 2016 as a part of measures of single economic policy was pursued according to the Main directions of monetary policy of the Republic of Belarus for 2016 approved by the Presidential decree of the Republic of Belarus of December 18, 2015 No. 505, taking into account the developing macroeconomic situation.

Activities of National Bank in 2016 were directed to achievement of main objectives of monetary policy and accomplishment of the functions of Central Bank assigned to it according to the legislation of the Republic of Belarus.

Chapter 1. Economic and financial position of the Republic of Belarus

1.1. Macroeconomic sales terms of monetary policy and development of banking sector *

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* By preparation of the Section data of National Statistical Committee are used.

Despite functioning of economy of the Republic of Belarus in the conditions of adverse external economic conjuncture at the beginning of year, in general during 2016 reducing economic activity was slowed down.

From the second half of 2016 the main economic indicators began to improve, rates of recession to be reduced.

The amount of gross domestic product in 2016 made 94, 3 billion rubles, having decreased in the comparable prices to the level of 2015 for percent 2,6 (in 2015 - on percent 3,8).

Power consumption of GDP for 2016 increased by percent 1,2 (in 2015 decreased on percent 4,9) (appendix 1.1).

The amount of the retail turnover in the comparable prices in 2016 in comparison with 2015 decreased on percent 4,1 (in 2015 - on percent 1,3).

The real wage of the population in 2016 in comparison with 2015 decreased by 4 percent (in 2015 - on percent 3,1), the real located cash incomes decreased on percent 7,3 (in 2015 - on percent 5,9).

Investments into fixed capital in 2016 in comparison with 2015 in the comparable prices were reduced by percent 17,9 (in 2015 - on 17, percent). The annual volume of investment into fixed capital constituted 18, 1 billion rubles, their specific weight in GDP - percent 19,2 (in 2015 - percent 24,2).

In technological structure of investments into fixed capital expenses on installation and construction works (percent 52,9), on investments into active part (machines, the equipment and vehicles) prevailed percent 35,1, other works and costs - 12 percent of total amount of capital investments was necessary.

Industrial output in 2016 was reduced in the comparable prices in comparison with 2015 by percent 0,4 (in 2015 - on percent 6,6).

Inventories of finished industrial output for January 1, 2017 were put into storages of the companies at the level 3, by 7 billion rubles, having increased since the beginning of year on 9, of percent. In relation to average monthly production volume for January 1, 2017 their size constituted percent 66,9 against percent 68,7 for January 1, 2016.

Production of agricultural industry in 2016 in comparison with 2015 increased in the comparable prices of percent 3,4 (in 2015 decreased on percent 2,5).

The amount of transportation of goods (without pipeline transport) was reduced by percent 3,2 (in 2015 - on percent 6,6). The cargo turnover (without pipeline transport) increased by 1 percent (in 2015 decreased on percent 8,8).

The passenger turnover in 2016 in comparison with 2015 was reduced by percent 3,6 (in 2015 - on percent 4,2).

Financial condition of the sector of the non-financial organizations in 2016 in comparison with 2015 (appendix 1.2) developed as follows:

proceeds from sales of products, goods, works, services in 2016 constituted 171, 8 billion rubles and in comparison with 2015 in nominal terms increased by 9 percent;

the profit on sales of products constituted 12, 6 billion rubles that in nominal terms on 5, it is more percent, than in 2015. The profit to the taxation increased by percent 38,9, net profit - by percent 54,8.

Decrease in profit on sales of products is in real terms fixed with insignificant growth of proceeds from sales of products, goods, works, services and other indicators of profit.

As a result of the advancing growth of revenue and cost of sales in comparison with profit on sales of products profitability of sales decreased with percent 7,6 2015 prior to percent 7,3 for 2016, profitability of goods sold - with 9,4 to percent 9,2 respectively.

By calculations of National Bank, the share of unprofitable and low-profitable enterprises (on profitability of sales) for 2016 constituted percent 58,3.

In 2016 1 434 organizations (19 percent) against 1 644 organizations (percent 21,7) in 2015 were unprofitable. The amount of net loss on one unprofitable organization on average for the republic in 2016 constituted 1, 8 million rubles (in 2015 - 2, 5 million rubles).

The budget policy in 2016 remained balanced.

The consolidated budget, according to the Ministry of Finance, for 2016 is performed with surplus which made percent 1,3 to GDP against percent 1,8 to GDP for 2015.

Income of the consolidated budget for 2016 increased by 7,1 of percent and constituted 28, one billion rubles (percent 30,2 to GDP against percent 29,6 to GDP for 2015) (appendix 1.3). Expenses of the consolidated budget for 2016 constituted 27, 3 billion rubles (29 percent to GDP against percent 27,8 to GDP for 2015).

The republican budget, according to the Ministry of Finance, for 2016 is also performed with surplus in the amount of 1 billion rubles, or 1, percent to GDP (for 2015 surplus made percent 1,7 to GDP). The income of the republican budget for 2016 in comparison with 2015 increased by 6,2 of percent and constituted 17, 8 billion rubles (percent 18,8 to GDP against percent 18,6 to GDP for 2015). Expenses of the republican budget constituted 16, 8 billion rubles (percent 17,8 to GDP against percent 16,9 to GDP for 2015).

The public debt of the Republic of Belarus, according to the Ministry of Finance, for January 1, 2017 constituted 37 billion rubles, having increased in comparison with the beginning of 2016 on 4, 1 billion rubles, or by percent 12,5.

The internal public debt of the Republic of Belarus for January 1, 2017 constituted 10, 2 billion rubles (percent 10,9 to GDP), having increased for 2016 on 0, 5 billion rubles (taking into account exchange differences), or by 5 percent.

In 2016 5 million US dollars and 543, are placed by one million rubles of domestic currency and ruble government bonds for physical persons and legal entities on the amount 1642,. In reporting year 6 million US dollars and 599, are extinguished by 5 million rubles of currency and ruble government bonds for physical persons and legal entities on the amount 1502,.

The external public debt of the Republic of Belarus for January 1, 2017 constituted 13, one billion US dollars (percent 28,5 to GDP), having increased for 2016 on 1 198, 8 million US dollars (taking into account exchange differences), or by percent 9,6. In 2016 external state loans 9 million US dollars are attracted on the amount 1 934,, extinguished - on the amount 892, by 4 million US dollars.

1.2. Paying balance and gross external debt

Following the results of 2016 the paying balance of the Republic of Belarus was created with surplus. The negative account balance of current transactions was reduced owing to improvement of balance of foreign trade in services and decrease in payments for Article of investment revenues.

Deficit of the account of current transactions of paying balance made 1, 7 billion US dollars, or 3, GDP percent, having reduced in comparison with 2015 on 0, 1 billion US dollars (appendix 1.4).

In 2016 foreign trade deficit goods and services made 27, 3 million US dollars (in 2015 surplus of foreign trade in the amount of 121, was observed by 2 million US dollars).

According to paying balance, the balance of foreign trade in goods in 2016 was characterized by deficit in the amount of 2, of 6 billion US dollars (in 2015 - 2, 1 billion US dollars). In case of this balance of foreign trade in energy goods owing to low world oil prices and oil products and oil underdeliveries from the Russian Federation 1 billion US dollars worsened on 1, and constituted minus 2, of 7 billion US dollars. The balance of foreign trade in not energy goods developed in the amount of 0, 1 billion US dollars against minus 0, 5 billion US dollars in 2015.

In 2016 commodity export decreased on percent 12,2, or on 3, 2 billion US dollars, and constituted 23 billion US dollars. The main impact on dynamics of commodity export was exerted by reducing oil supply and oil products, fertilizers and ferrous metals.

Commodity import in 2016 decreased on 9, percent, or on 2, 7 billion US dollars, and there was in the amount of 25, one billion US dollars. Reducing investments into fixed capital caused decrease in investment import on 0, in 6 billion US dollars. Consumer import was reduced on 0, by 6 billion US dollars owing to decrease in real incomes of the population. Import of intermediate goods decreased on 1, 6 billion US dollars, including energy goods - on 1, 8 billion US dollars.

The foreign trade turnover of services in 2016 remained at the level of 2015 and constituted 11, 1 billion US dollars, at the same time export of services grew on 2, percent and one billion US dollars was created in the amount of 6,. Import of services decreased by 2,8 of percent and constituted 4, 2 billion US dollars. Surplus of foreign trade in services developed in the amount of 2, 6 billion US dollars (13,3 percent higher, than in 2015) and compensated the developed deficit of trade in goods.

The balance of primary income improved on 0, one billion US dollars and made minus 2, of 2 billion US dollars that was caused by decrease in payments for the income to foreign investors.

The balance of the secondary income in 2016 developed in the amount of 0, 6 billion US dollars against 0, 5 billion US dollars in 2015.

According to the financial account (without reserve assets), for 2016 net borrowing at other countries was created in the amount of 1, by 3 billion US dollars against 0, in 7 billion US dollars for 2015.

Attraction of financial resources to the Republic of Belarus at the expense of direct foreign investments constituted 1, 2 billion US dollars (in 2015 - 1, one billion US dollars). At the same time inflow of direct foreign investments (without the reinvested income) still remained at the insufficient level and constituted 0, 5 billion US dollars against 0, 4 billion US dollars in 2015.

8 billion US dollars, including at the expense of the credits to the Government of the Republic of Belarus - 1 billion US dollars, due to placement of securities by National Bank - 0, are attracted with 5 billion US dollars the government of the Republic of Belarus and National Bank on net basis 0,. Following the results of 2016 net borrowing of foreign investments banking sector developed in the amount 0, of 1 billion US dollars, other sectors - in the amount 0, of 4 billion US dollars.

Surplus of paying balance in 2016 made 0, 5 billion US dollars against deficit in the amount of 0, of 6 billion US dollars in 2015.

For January 1, 2017 the gross external debt of the Republic of Belarus developed in the amount of 37, 6 billion US dollars, or GDP percent 78,6, having reduced since the beginning of year on 0, 7 billion US dollars (appendix 1.5).

The external debt of the sector of public administration of the Republic of Belarus for January 1, 2017 constituted 14, one billion US dollars, having increased since the beginning of year on 1, 2 billion US dollars, or by percent 9,1.

External debt obligations of National Bank for January 1, 2017 constituted 1, one billion US dollars, having decreased since the beginning of 2016 on 0, 3 billion US dollars, or on percent 15,4. The main part of debt was constituted by long-term borrowings (percent 94,5).

Obligations of banking sector (without intercompany lending) for 2016 were reduced on 0, by one billion US dollars, or by percent 8,2, and for January 1, 2017 constituted 5, 9 billion US dollars. At the same time repayment of long-term obligations in the amount of 0, in 4 billion US dollars was followed by reducing short-term obligations on 0, 1 billion US dollars.

Debt obligations of other sectors (without intercompany lending) for 2016 were reduced on 1, by 2 billion US dollars and for January 1, 2017 constituted 14, 1 billion US dollars. At the same time decrease as long-term (for 1 billion US dollars, or on percent 14,4), and short-term obligations was noted (on 0, 3 billion US dollars, or on percent 3,1).

In recent years in the Republic of Belarus the steady tendency of shift of terms of borrowing from short-term to long-term was observed. For January 1, 2017 the share of long-term borrowings in the total amount of borrowings constituted percent 71,7.

1.3. Financial sector

1.3.1. Banking sector
1.3.1.1. Institutional characteristics

For January 1, 2017 banking activity in the Republic of Belarus was performed by 24 banks and 3 non-bank credit and financial organizations. In stage of liquidation there were 5 banks (Delta Bank Ltd, Interpeybank Ltd, BIT-Bank Ltd, Evrobank Ltd, N.E.B. Bank Ltd). The total quantity of structural divisions of the banks (departments, the centers of banking services, payment processing centers, foreign exchange offices) distributed on the territory of the country was reduced for 2016 by 12,7 of percent and for January 1, 2017 constituted 3 682 divisions.

For January 1, 2017 in the Republic of Belarus there were 5 representative offices of foreign banks: 2 representative offices of banks of the Russian Federation, representative offices of bank of Latvia, bank of Germany, and also Interstate bank. The Belarusian banks 9 representations are open abroad.

The foreign capital was present at authorized capitals of 19 banks. At the same time in 14 banks share of participation of foreign investors in authorized fund exceeded 50 percent (in 4 of them it constituted 100 percent). The capital from Russia, Austria, Iran, Switzerland, Cyprus, Poland, Kazakhstan, the UAE, Lebanon, Georgia, the USA, Great Britain, Germany and other countries participated in authorized capitals of the Belarusian banks.

The cumulative registered authorized capital of banks for January 1, 2017 constituted 4, 7 billion rubles, having increased for 2016 by percent 5,2.

Characteristic of institutional development of banks in 2016 were:

reduction of share of the banks controlled by the state, in cumulative authorized fund of banking sector from 82 to 80, of percent, at the same time the share of the specified banks in the normative capital of banking sector was reduced with 63,7 to percent 61,4, the share in assets of banking sector increased with 65,4 to percent 66,8;

increase in share of foreign banks * in cumulative authorized fund of banking sector with 15,3 to percent 17,1. The specific weight of such banks in the aggregate normative capital increased with 32,9 up to 35 percent. In assets of banking sector the share of the specified banks decreased with 32,5 to percent 30,7;

preserving share of banks of private pattern of ownership in cumulative authorized fund of banking sector at the percent 2,7 level. The specific weight of such banks increased in assets of banks on 0,5 of percent point and made percent 2,6, the share in the aggregate normative capital increased with 3,5 to percent 3,6.

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* Foreign banks - banks in which the share of foreign investors in authorized funds exceeds 50 percent.

1.3.1.2. Structure of assets (liabilities) of banks

For 2016 assets (liabilities) of banks increased on 1 420, one million rubles, or by percent 2,3, and for January 1, 2017 reached 64 467 million rubles (appendices 1.6-1.9).

For January 1, 2017 the relation of assets (liabilities) of banks to GDP constituted percent 68,3 (for January 1, 2016 - percent 70,1).

The specific weight of requirements of banks to economy in assets of banks for January 1, 2017 made percent 62,5 (for January 1, 2016 - 66 percent). The share of long-term loans in the total amount of credit debt for January 1, 2017 constituted percent 74,8, having increased for 2016 by 1,7 of percent point.

Requirements of banks to economy ** for 2016 decreased on 1 355, 7 million rubles, or on 3, percent (for 2015 grew by 20 percent), and for January 1, 2017 constituted the 40th 276, 5 million rubles. Requirements of banks to economy in national currency decreased on 519, 7 million rubles, or by 3 percent (for 2015 grew by percent 5,5), in foreign currency (in dollar equivalent) - on 1 099, 5 million US dollars, or by percent 8,5 (for 2015 - by percent 14,9).

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** Requirements of banks and JSC Development Bank Republic of Belarus to economy decreased for 2016 by percent 2,8.

Requirements of banks to economy (on Belarusian ruble exchange rate to US dollar for January 1, 2016) for 2016 decreased on 2561, 4 million rubles, or on percent 6,2, and for January 1, 2017 constituted the 39th 070, 8 million rubles.

Considerable impact on reduction of requirements of banks to economy was exerted by implementation of schemes of repayment of the problem credits provided by the Presidential decree of the Republic of Belarus of August 25, 2016 No. 320 "About development of agricultural production of the Vitebsk region", the Presidential decree of the Republic of Belarus of December 28, 2016 No. 496 "About measures for financial improvement of legal entities - members of Myasomolprom holding, the resolution of Council of Ministers of the Republic of Belarus and National Bank of the Republic of Belarus of November 15, 2016 to No. 923/28 "About measures for implementation of the Presidential decree of the Republic of Belarus of July 14, 2016 No. 268".

The main direction of investment of funds by banks in 2016 was crediting of subjects of managing. For January 1, 2017 the credit debt to subjects of managing constituted the 28th 687, 9 million rubles, having decreased for 2016 by the 2nd 192, 1 million rubles, or by percent 7,1. The main demand for the credits was observed from the companies and the organizations of processing industry (for January 1, 2017 the debt on bank loans constituted the 14th 840, 3 million rubles, or 51,7 of percent of all credit debt), the organizations of trade, the companies and the organizations rendering services in car repairs, household products and objects of private use (the 4th 730, 9 million rubles, or percent 16,5).

The credit debt, the provided banks and JSC Development Bank Republic of Belarus within state programs and actions for decisions of the President of the Republic of Belarus and Council of Ministers of the Republic of Belarus, for January 1, 2017 constituted the 17th 764, 51 million rubles, having decreased since the beginning of year on 625, 65 million rubles, or by percent 3,4, including credit debt, provided by banks, constituted the 14th 229, 45 million rubles (reduction on 1128, of 76 million rubles, or on percent 7,3), on the loans granted to JSC Development Bank Republic of Belarus - 3535, 06 million rubles (increase on 503, in 1 million rubles, or on percent 16,6).

For January 1, 2017 the specific weight of credit debt, provided by banks within state programs and actions, in requirements of banks to economy made percent 35,3, having decreased for 2016 on 1,6 of percent point.

In 2016 on housing construction within implementation of the resolution of Council of Ministers of the Republic of Belarus of December 29, 2015 No. 1101 "About measures for task performance for 2016 on construction of apartment houses, amounts of commissioning and financing of construction of housing and objects of engineering and transport infrastructure in 2017" banks granted credits to the amount 502, to 1 million rubles, including the credits on favorable terms - in the amount 473, 8 million rubles, on the terms of banks - in the amount 28, 3 million rubles. The loans are on favorable terms granted at the expense of means of the Ministry of Finance in the amount of 299, to 9 million rubles, at the expense of returnable resources of bank - in the amount of 147, by 6 million rubles.

In structure of liabilities of banks the greatest specific weight borrowed funds raised from residents of the Republic of Belarus (in 2016 - 65 percent, in 2015 - percent 65,3). At the same time for January 1, 2017 the specific weight of means of physical persons made percent 32,2 (for January 1, 2016 - percent 32,3), means of subjects of managing - percent 19,5 (for January 1, 2016 - percent 19,2).

For 2016 the raised funds of physical persons (including bank deposits (deposits), bank deposits (deposits) of precious metals and gemstones, savings certificates and bonds) increased on 387, 4 million rubles, or by percent 1,9, and for January 1, 2017 constituted the 20th 750, 5 million rubles.

In structure of the raised funds of physical persons the currency component prevailed. For 2016 the share of the raised funds of the population in foreign currency in the total amount of the raised funds decreased with 80,1 to percent 78,1. The share of the raised funds of the population in national currency increased with 19,9 to percent 21,9.

In 2016 the raised funds in foreign currency decreased on 105, one million rubles, or on 0, percent, and for January 1, 2017 constituted the 16th 208, 9 million rubles, the raised funds in national currency increased on 492, 5 million rubles, or by percent 12,2, and for January 1, 2017 constituted 4541, 6 million rubles.

The most demanded banking products for placement of free money by physical persons were bonds which amount for accounting year increased on 583, 8 million rubles, or on percent 58,2, and for January 1, 2017 constituted 1 586, 5 million rubles (percent 7,7 from the total amount of the placed means of physical persons).

Bank deposits (deposits) * physical persons in national currency for 2016 increased on 499, 6 million rubles, or by percent 12,4, and for January 1, 2017 constituted 4520, 1 million rubles, including term and conditional bank deposits (deposits) increased on 336, 2 million rubles, or by percent 12,9, and constituted 2950, 7 million rubles.

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* Hereinafter in subitem 1.3.1.2 of the data on bank deposits (deposits) of physical persons are specified by method of calculation of wide money supply.

For 2016 bank deposits (deposits) of physical persons in foreign currency in ruble equivalent decreased on 697, 4 million rubles, or on 4, percent, and for January 1, 2017 constituted the 14th 552, one million rubles. Term and conditional bank deposits (deposits) at the same time decreased on 574, 9 million rubles, or by 4 percent, and for January 1, 2017 constituted the 13th 707, 4 million rubles. Bank deposits (deposits) of physical persons in foreign currency in dollar equivalent for 2016 decreased on 782, 1 million US dollars, or by percent 9,5, and for January 1, 2017 constituted 7430, 7 million US dollars. Term and conditional bank deposits (deposits) at the same time decreased on 692, 6 million US dollars, or by 9 percent, and for January 1, 2017 constituted 6998, 9 million US dollars.

The main part of deposits (deposits) of physical persons was placed in JSC ASB Belarusbank, JSC Belagroprombank, JSC Belinvestbank, JSC Priorbank, JSC BPS-Sberbank, JSC Bank of BELVEB which share in the deposit market of physical persons for January 1, 2017 constituted 85,2 of percent of total amount of deposits (deposits) in banks, or the 16th 239, 8 million rubles.

For January 1, 2017 on average 4 rubles of the savings placed in banks against 2144, of the 8th ruble for January 1, 2016 were the share of one resident of the Republic of Belarus 2182,. In dollar equivalent this indicator decreased with 1155,1 to 1114, 3 US dollars, or on percent 3,5.

For 2016 bank deposits (deposits) of legal entities * increased on 520, 5 million rubles, or by percent 5,2, and for January 1, 2017 constituted the 10th 618, 5 million rubles.

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* Hereinafter in subitem 1.3.1.2 of the data on bank deposits (deposits) of legal entities are specified by method of calculation of wide money supply.

Bank deposits (deposits) of legal entities in national currency for 2016 grew on 859, 5 million rubles, or by percent 24,8, and for January 1, 2017 constituted 4 329 million rubles.

For 2016 bank deposits (deposits) of legal entities in foreign currency in ruble equivalent decreased by 339 million rubles, or by percent 5,1, and for January 1, 2017 constituted 6289, 5 million rubles. Bank deposits (deposits) of legal entities in foreign currency in dollar equivalent for 2016 decreased on 358, 3 million US dollars, or by 10 percent, and for January 1, 2017 constituted 3211, 4 million US dollars.

Term and conditional bank deposits (deposits) of legal entities in national and foreign currencies in ruble equivalent for January 1, 2017 constituted the 6th 224, 9 million rubles, or 58,6 of percent of all bank deposits (deposits) of legal entities.

1.3.1.3. Efficiency and stability of banking sector

The National Bank in 2016 carried out the work aimed at providing stability of banking sector, increase in efficiency of its functioning and interaction of banking sector with real production sector.

The amount of the normative capital of banks for January 1, 2017 made 8, 7 billion rubles, having increased for 2016 by percent 11,4 in nominal terms. The main sources of growth of the normative capital on banking sector in 2016 were increase in the registered authorized fund, growth of the funds created by profit of banks, resource support of owners in the form of the subordinated credits (loans). The relation of the normative capital to GDP for January 1, 2017 developed at the percent 9,3 level.

In 2016 the following structure of the income of banking sector was created: interest incomes - percent 75,3, the commission income - percent 13,4, other bank incomes - percent 9,2, other operating incomes - 2 percent, receipts on earlier cancelled debts - percent 0,1.

In expense structure * interest expenses constituted percent 45,8, other operating expenses - percent 24,5, other banking expenses - percent 6,3, commission expenses - percent 4,5. Net contributions to reserves following the results of 2016 constituted 17 percent.

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* The expense amount is specified contributions to reserves less the amount of the income from reduction of reserves.

The profit got by banks in 2016 constituted 884, 9 million rubles (in 2015 - 585, 9 million rubles). Increase in profit is generally caused by growth of net interest incomes owing to decrease in interest expenses.

The got profit allowed banks to keep the capital and to provide resistance to possible shock impacts.

Following the results of work for 2016 return on assets of banking sector developed at the level 1, of percent (for 2015 - at the level of 1 percent), profitability of the normative capital - at the percent 10,8 level (for 2015 - at the percent 8,4 level).

The credit risk remained the most substantial risk in banking sector. Troubled assets of the operating banks (the assets classified by III, IV and V risk groups) for January 1, 2017 reached 5, 1 billion rubles. The assets carried to III risk group increased since the beginning of year by 75,8 of percent and for January 1, 2017 constituted 3, 5 billion rubles (percent 68,4 from the total amount of troubled assets), the assets carried to the IV risk group - on percent 62,1 (percent 16,9 from the total amount of troubled assets), the assets carried to the V risk group - on percent 227,6 (percent 14,7 from the total amount of troubled assets). The share of troubled assets in the assets subject to credit risk, for 2016 increased with 6,8 to percent 12,8.

Deterioration in financial performance of activities of the companies of real production sector (first of all the state companies) against the background of the proceeding economic decline, and also their high debt load was basic reason of growth of potential of credit risk.

For the purpose of ensuring stability of activities, non-admission of creation of the conditions menacing to investors and other creditors banks incurred essential expenses during creation of special reserves on covering of possible losses on the assets subject to credit risk, and the transactions which are not reflected in balance. The amount of net contributions to reserves for 2016 made 1, 4 billion rubles.

In 2016 concerning 9 largest banks the most authoritative international audit companies carry out special audit inspection which allowed to estimate the level of the credit risk accepted by banks, possibility of its compensation for the account of the available capital. The quality evaluation of assets of the remained banks will be carried out during annual audit of accounting (financial) records for 2016.

For leveling of the developing situation by the Government of the Republic of Belarus and National Bank number of measures for decrease in problem debt, including by transfer of part of troubled assets to JSC Asset Management Agency, and also implementation of presidential decrees of the Republic of Belarus about debt restructuring of the companies of agro-industrial complex was accepted. As a result the share of troubled assets in the assets subject to credit risk, from the maximum 14,9 value of percent for November 1, 2016 decreased to percent 12,8 for January 1, 2017.

Despite deterioration in situation in real production sector, in 2016 banks observe the main standard rates of safe functioning:

sufficiency of the normative capital of banks (ratio of the size of the normative capital and the risks assumed by banks) - percent 18,6 (in case of the established minimum prudential standard rate for separate bank of 10 percent);

the relation of quick assets to total assets - percent 30,8 (in case of the established standard rate at least 20 percent);

short-term liquidity (the relation of the actual liquidity to required) - 2,1 (in case of the established standard rate 1) suffice;

instant liquidity (the relation of assets poste restante to liabilities poste restante) - percent 142,3 (in case of the established standard rate at least 20 percent);

current liquidity (the relation of the current assets to the current liabilities) - percent 131,8 (in case of the established standard rate at least 70 percent).

Thus, the level of stability of banking sector by the end of 2016 was characterized as satisfactory.

1.3.2. Financial market
1.3.2.1. Foreign exchange market

The amount of the domestic foreign exchange market in 2016 made 70, 1 billion US dollars that there is 3,6 percent below than the level of 2015. The amount of exchange segment developed in the amount of 9, 3 billion US dollars, having reduced by percent 46,2, amount of off-exchange segment - in the amount of 49, 7 billion US dollars, having increased for 2016 by percent 15,3. Redistribution of amounts of currency transactions for benefit of off-exchange segment is caused by removal in May, 2015 of the restrictions on carrying out currency transactions set earlier in the curb market, and also decrease since September 1, 2016 for the Belarusian organizations - exporters of the amount of obligatory sale of foreign currency from 30 to 20 percent from revenue amount in foreign currency.

The size of the market of cash foreign currency constituted 11, 1 billion US dollars, having decreased for 2016 by 10 percent.

For 2016 subjects of managing - residents:

it is sold foreign currency on the amount 16, to one billion US dollars that there is lower than the level of 2015 on percent 10,1 (on 1, by 8 billion US dollars);

it is purchased foreign currency on the amount 16, by one billion US dollars that there is lower than the level of 2015 for 11 percent (for 2 billion US dollars) (appendix 1.10).

The main amount of the foreign currency purchased by subjects of managing - residents in the domestic foreign exchange market in 2016, went for repayment of the credits (6, 1 billion US dollars, or percent 37,3 from the total amount of purchase of foreign currency), payment of raw materials and materials (2, 3 billion US dollars, or percent 14,3), the equipment and accessories (1, 7 billion US dollars, or percent 10,7), food and agricultural products (1, 2 billion US dollars, or percent 7,2). In total on these purposes 69,5 of percent of the foreign currency purchased by subjects of managing - residents was used.

As a result net demand for foreign currency from subjects of managing - residents for 2016 developed in amount 0, of 2 billion US dollars (in 2015 - 0, 4 billion US dollars). At the same time the main purchasing amount was created in January and December, 2016 (0, by 5 billion US dollars), for February - November, 2016 net sale of currency constituted 0, 2 billion US dollars.

In January, 2016 the population acted as the net buyer (0, in 2 billion US dollars), for February - December, 2016 - the net seller of foreign currency (2, in 1 billion US dollars). In total for 2016 the population on net basis sells 1, 9 billion US dollars (for 2015 - 0, 1 billion US dollars). At the same time on transactions with cash foreign currency the net offer of foreign currency the population constituted 2, 4 billion US dollars, on transactions with non-cash foreign currency there was net demand in amount 0, of 6 billion US dollars (appendix 1.11).

The majority of transactions with foreign currency in the foreign exchange market of the Republic of Belarus was performed in US dollars (percent 56,9). In comparison with 2015 the share of this currency in transactions with foreign currency decreased by 3,7 of percent point in case of increase in specific weight of euro with 22,8 up to 23,9 of percent and Russian ruble with 16,3 up to percent 18,8. The amount of transactions with other foreign currencies remained insignificant (less than 1 percent).

1.3.2.2. Interbank credit market

In 2016 interbank credits in national currency remained one of the main instruments of regulation of liquidity of banks. Resident banks of the Republic of Belarus, and also nonresident banks acted as participants of this segment of the money market.

In reporting year the interbank credit market was characterized by transition from structural deficit to structural surplus of liquidity. The amount of the transactions made by banks in the interbank market in 2016 was lower, than in 2015 and made 23 billion rubles (in 2015 - 28 billion rubles) that is caused by the structural excess of ruble liquidity created in April, 2016 and increasing until the end of the year.

The structure of the interbank market changed in comparison with 2015 towards reducing terms of crediting. If in 2015 daily interbank credits constituted 66 percent, then in 2016 such credits constituted 73 percent of all market size. At the same time the share of the bargains concluded for a period of 2 up to 7 days decreased to 26 percent from all market size (in 2015 - 32 percent).

Besides, in 2016 banks continued practice of attraction and placement of resources in the interbank market in national currency by means of repo transactions. The specific weight of such transactions in total amount of the interbank market in reporting year on remaining balance of debt averaged 29 percent (in 2015 - 40 percent).

Interest rates in the one-day ruble interbank market were mainly within the corridor of interest rates set by rates on constantly available transactions of regulation of liquidity of banks (appendix 1.12).

The weighted average interest rate in the one-day interbank market decreased with annual interest rate 29,4 in January, 2016 to annual interest rate 10,5 in December, 2016.

1.3.2.3. Interest rates of the credit and deposit markets

The situation with liquidity in banking sector, and also in the currency and cash markets determined dynamics of interest rates in the deposit and credit markets in 2016 (appendix 1.13).

At the same time the basic principles of percentage policy - ensuring excess of profitability of savings in national currency over currency savings, and also providing positive interest rates in economy in real terms remained. Special attention from National Bank was paid to improvement of structure and balance of the deposit market by means of increase in share of long-term domestic currency deposits and increase in gap of profitability on long-term and short-term deposits.

Realization of the measures taken in 2016 promoted more considerable decrease (in comparison with forecast) the level of interest rates for the new credits and new term deposits (deposits) of physical persons and legal entities which consistently decreased throughout the entire period.

Interest rates for new term bank deposits (deposits) of physical persons in national currency in March, 2016 reached maximum and constituted annual interest rate 25,5, having decreased in December, 2016 to annual interest rate 14,3 (decrease since December, 2015 on 10,3 of percent point). Interest rates for new term bank deposits (deposits) of physical persons in foreign currency in December, 2016 developed at the percent 2,3 level, having decreased by 1,5 of percent point in comparison with December, 2015.

Average interest rates on new term bank deposits (deposits) of legal entities in national currency in February, 2016 reached the highest value and constituted annual interest rate 26,8, having decreased in December, 2016 to 8, annual interest rate (decrease since December, 2015 on 15,9 of percent point). Average interest rates on new term bank deposits (deposits) of legal entities in foreign currency in December, 2016 developed at the annual interest rate 2,5 level, having decreased by 2,3 of percent point in comparison with December, 2015.

At the same time in December, 2016 profitability on long-term new irrevocable bank deposits (deposits) in national currency exceeded profitability on short-term new irrevocable bank deposits (deposits) on 7,3 of percent point (average short-term interest rates developed at the annual interest rate 12,5 level, average long-term interest rates - at the annual interest rate 19,8 level), in January, 2016 - on 4,7 of percent point (average short-term interest rates developed at the annual interest rate 24,3 level, average long-term interest rates - at the level of 29 annual interest rates).

The average interest rate on all credits of banks in national currency in December, 2016 constituted 12 annual interest rates, having decreased on 5,3 of percent point in relation to December, 2015. The average interest rate on the new credits * banks to legal entities in national currency in December, 2016 constituted annual interest rate 20,8, having decreased on 13,5 of percent point in relation to December, 2015.

Average interest rates on the new credits * banks to legal entities in foreign currency in December, 2016 constituted annual interest rate 8,3, having decreased on 1,7 of percent point in relation to December, 2015.

______________________________

* Without the loans granted on favorable terms according to decisions of the President of the Republic of Belarus, the Government of the Republic of Belarus at the expense of means of republican and local authorities of public administration.

1.3.2.4. Market of government securities

According to the Ministry of Finance, the amount of the government securities placed in the domestic market for 2016 increased on 489, 8 million rubles, or by 5 percent, and for January 1, 2017 made the 10th 234, 2 million rubles, including:

the government long-term bonds nominated in national currency - 1594, 2 million rubles (percent 15,6);

the government long-term bonds nominated in foreign currency - 8639, 3 million rubles (percent 84,4);

other government securities - 0, 7 million rubles (percent 0,01).

For January 1, 2017 in portfolio of government securities the government long-term bonds constituted 100 percent. The structure of government securities of 34,5 of percent constituted bonds with the variable income, percent 65,5 - bonds with permanent interest income (for January 1, 2016 the share of government securities with the variable income constituted percent 42,9, with the permanent income - percent 57,1).

In 2016 the amount of primary biddings by government bonds in the organized market made 1089, 9 million rubles that is 4,2 times more, than in 2015, the number of transactions made 1433 transactions (in 2015 the trading volume constituted 257, 3 million rubles, the number of transactions - 866 transactions).

The amount of the secondary biddings by government bonds made 4851, 1 million rubles that is 1,2 times less, than in 2015, the number of transactions made 952 transactions (in 2015 the trading volume constituted 5646, 2 million rubles, the number of transactions - 489 transactions).

1.3.2.5. Security market of National Bank

In 2016 the National Bank placed the bonds nominated in Belarusian rubles on the amount of the 28th 712, 4 million rubles at the placement price, or on the amount of the 28th 850, 5 million rubles at par value, at the same time repayment constituted the 27th 033, 8 million rubles at par value. For January 1, 2017 the amount of the bonds of National Bank nominated in Belarusian rubles in the address made 1 816, 7 million rubles at par value. For January 1, 2016 the bonds of National Bank nominated in Belarusian rubles in the address were absent.

The National Bank in 2016 also places the bonds nominated in freely convertible currency:

in US dollars - on the amount of the 2nd 330, of 3 million US dollars on actual cost, or on the amount 2327, of one million US dollars at par value, at the same time repayment constituted 2130, 8 million US dollars at par value. For January 1, 2017 the amount of the bonds nominated in US dollars in the address made 1701, 3 million US dollars that is 13,1 percent more, than I will eat around in the address for January 1, 2016 (1504, 3 million US dollars);

in euro - on the amount 1 022, of 2 million euros at the placement price, or on the amount 1021, of one million euros at par value, repayment constituted 680, 7 million euros at par value. For January 1, 2017 the amount of the bonds nominated in euro in the address made 779, 9 million euros that is 77,5 percent more, than I will eat around in the address for January 1, 2016 (439, 3 million euros).

The amount of investments of banks in debt and equity instruments of the security market for January 1, 2017 made the 16th 217, one million rubles * from which 5556, 6 million rubles, or 34, percent, made securities of National Bank, including 3749, of 5 million rubles, or percent 67,5, - the bonds nominated in freely convertible currency.

______________________________

* According to balance sheets of banks without the income in type of percent planned to obtaining.

In 2016 in the secondary stock exchange market in trade system of JSC Belarusian Currency and Stock Exchange with bonds of National Bank 474 bargains on the amount 974, were concluded by 7 million rubles that on 811, 9 million rubles are more (by 5 times), than in 2015 (16 transactions on the amount 162, of 8 million rubles). The share of repo transactions in the total amount of the secondary stock exchange market of bonds of National Bank constituted percent 21,6, or 248 transactions on the amount 210, of 1 million rubles.

The amount of transactions with the bonds of National Bank nominated in freely convertible currency made 439 transactions on the amount 941, of 8 million rubles in equivalent, having increased in comparison with 2015 on 799, 5 million rubles (12 transactions by the amount 142, of 3 million rubles).

The amount of transactions with the bonds of National Bank nominated in Belarusian rubles made 35 transactions on the amount 32, of 9 million rubles, having increased in comparison with 2015 on 12, 4 million rubles (4 transactions by the amount 20, of 5 million rubles).

In the over-the-counter market in 2016 the amount of the registered transactions of purchase and sale on transactions with the bonds of National Bank nominated in freely convertible currency made 160, 1 million rubles in equivalent (in 2015 transactions with these bonds in the curb market were not registered) **.

______________________________

** Transactions with the bonds of National Bank nominated in national currency are resolved only in JSC Belarusian Currency and Stock Exchange.

1.3.2.6. Market of corporate securities

In 2016 the share of corporate segment of the security market continued to be reduced. The amount of share issue and corporate bonds decreased almost twice and made 4965, 4 million rubles (in 2015 - 8283, 3 million rubles). The share of this segment in the total amount of share issue and bonds in 2016 reached percent 50,1 (in 2015 - percent 59,5) (appendix 1.14). At the same time the specific weight of the market of corporate bonds was reduced with 32,7 to percent 20,4.

Reducing corporate segment of the market is connected with growth of share of the state segment (share of issue of government securities and bonds of local executive and administrative organs, and also bonds of National Bank) that in case of limited market size led to reducing the resources available to borrowing by corporate issuers.

The amount of the share issues registered in the State register of securities in 2016 made 2939, 3 million rubles that is 21,3 percent less, than in 2015 (3733, 6 million rubles).

For January 1, 2017 the amount of the registered share issues of the acting issuers reached 29 168 million rubles, having increased on 11, percent in comparison with January 1, 2016 (the 26th 228, 7 million rubles). At the same time the relation of amount of the shares which were in circulation to GDP constituted percent 30,9 (for January 1, 2016 - percent 29,2).

For 2016 133 releases of corporate bonds of 60 issuers on the amount 2026, by 1 million rubles, including bonds of banks on the amount 520, in 3 million rubles were registered. This amount is lower than an amount of issue of 2015 (4549, 7 million rubles). The amount of bond emission of banks in 2016 in comparison with 2015 decreased by 4 times (in 2015 - 2232, 3 million rubles). The share of bonds of banks of issue of corporate bonds continued to decrease with percent 49,1 in 2015 to percent 25,7 in 2016.

The share of the corporate bonds issued in foreign currency in 2016 reached percent 65,8 from the total amount of issue (in 2015 - 58 percent).

As a result for the beginning of 2017 554 releases of corporate bonds of 221 issuers for the total amount of the 13th 072, of 1 million rubles, or GDP percent 13,9 were in circulation (for January 1, 2016 - the 12th 712, 9 million rubles, or GDP percent 14,1). Thus, the amount of corporate bonds in the address in year grew by percent 2,8.

The amount of the corporate bonds nominated in foreign currency for January 1, 2017 made percent 50,1 from the total amount of the corporate bonds which were in circulation (for January 1, 2016 - percent 43,6).

Growth of share of the corporate bonds nominated in foreign currency specifies the proceeding upward tendency of currency risk and degree of vulnerability of the security market as the risks connected with currency conversion both in case of the securities redemption increased and in case of payment of the income.

The organized market of derivative financial instruments which are one of management tools currency risk is provided by non-deliverable (settlement) futures contracts on the US dollar exchange rate, euro, Russian ruble to Belarusian ruble, euro exchange rate to US dollar. However in 2016 in the stock exchange market bargains with derivative financial instruments were not concluded.

At the same time for the purposes of hedging of currency risks banks offered off-exchange forward contracts on purchase, sale or conversion of currency, and also the transaction of SVOP with foreign currency.

The market of derivative securities in the republic is absent.

In 2016 the amount of the registered releases of the housing bonds certifying introduction by their owners of money on construction of certain size of total area of premises made 191, 3 million rubles that is 1,2 times less, than in 2015 (235, 9 million rubles).

The presidential decree of the Republic of Belarus of August 28, 2006 No. 537 "About issue of bonds by banks" to banks is given opportunity of bond emission, by the provided right to claim of return of the main amount of debt and interest payment on the credits for construction, reconstruction or acquisition of housing issued by them on the security of the real estate (mortgage bonds). In 2016 state registration of mortgage bonds was not performed. The total amount of the mortgage bonds which were in circulation for January 1, 2017 constituted 210 million rubles.

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