Source: Central Bank of the Russian Federation in English
In 2019, the number of brokerage and trust management (TM) clients doubled, to total 4.3 million and 341 thousand persons, respectively. The significant inflow of investors was associated with a rise in the equity market and a decrease in deposit interest rates, according to the Review of Key Indicators of Professional Securities Market Participants. Banks’ policy was also an important contributor to the expansion of the client base: banks attracted nearly one-half of the 2 million new retail clients receiving brokerage services by offering them conventional and structured bonds as an alternative to deposits.
Over the year, the value of bonds in individuals’ accounts with Russian depositories increased by 39% to 1.9 trillion rubles, with the amount of bank bonds doubling to account for 0.6 trillion rubles. There was a surge in the proportion of structured bank bonds with various levels of capital protection (from 10% as of year-end 2018 to 22% as of year-end 2019). Generally, banks offer their own bonds to clients, and purchasing them is almost as simple as opening a deposit.
Against the background of a rapid rise in the number of brokerage clients, the average amount of individual investment accounts (IIA) with banks declined from 96 thousand to 63 thousand rubles over the year: credit institutions are bringing beginner investors into the equity market. Contrastingly, the average amount of accounts held by professional market participants — non-bank financial institutions (NFI) increased from 175 thousand to 215 thousand rubles, which was associated with the professional skills of this group of clients. The number of IIAs was up 2.7 times over the year, to total 1.64 million, with a significant proportion of them remaining zero accounts (with no assets in them) or trial accounts (with a small amount of assets in them).
Banks continue to solicit trust management clients through their offices or mobile applications. The overall value of portfolios under standard management strategies grew by 45% over the year, to 236 billion rubles, while the average portfolio size shrank from 1.4 million to 0.9 million rubles. The average size of individuals’ portfolios under all strategies declined from 3.5 million to 2.1 million rubles. In 2019, returns under strategies available to non-qualified investors were higher as compared to strategies offered to qualified investors. The IIA strategies providing an extra benefit through a tax deduction and characterised by lower volatility ensured 9.8% returns, which is comparable with other strategies for non-qualified investors.
Although the market share in terms of the client base decreased in favour of banks, the net profit of professional market participants (NFIs) grew more than fourfold by the end of the year (35.2 billion rubles vs 7.3 billion rubles YoY). This was driven by a significant inflow of retail investors to the equity market and a rise in indices. The return on equity reached 12%, which is a two-year record high.
10 March 2020