Liability Structure
Funding
The bank’s liabilities consist primarily of current accounts and deposits from corporate and retail customers. Other sources of funding include domestic bonds and Eurobonds, borrowings in the Russian interbank market, borrowings from international financial institutions and syndicated loans. The bank also has access to Bank of Russia financing on a secured and unsecured basis.
MKB’s funding strategy pursues diversification in order to achieve an optimal balance between its equity, domestic and international borrowings to cover the growing needs of its business, both in terms of currency and maturity.
This increase was driven by retail deposits, accounts and deposits of credit institutions, and debt securities issued.

Funding Base
Current Accounts and Deposits by Customers
Accounts and deposits by customers represented 60.5% of total liabilities or RUB 1,339.5 bln in 2019, having grown by 5.3% y-o-y. The deposit base expanded due to a strong 29.6% inflow of retail deposits that reached RUB 486.2 bln or 36.3% of total deposits. Corporate deposits decreased by 4.9% y-o-y to RUB 853.4 bln due to the State Pension Fund’s withdrawal in the first quarter of 2019 after the eligible bank ratings were revised upwards. However, the three subsequent quarters saw a strong 17% inflow of corporate deposits. Customer deposits are a strong source of liquidity for the bank which grows steadily as the bank expands its customer base in the process of solidifying its positions in the Russian banking sector.

Term deposits decreased slightly to RUB 1,137 bln, representing 85% of the total deposit base. They account for 83% of all corporate deposits or RUB 711 bln and 88% of all retail deposits or RUB 425.7 bln.
Due to Credit Institutions
Due to credit institutions include payables under repurchase agreements, term deposits, current accounts and syndicated loans. Due to credit institutions represented 30.6% and 28.3% of total liabilities as at 31 December 2019 and 2018, respectively.
The increase in 2019 was attributable to a 29% increase in payables under repurchase agreements to RUB 629.9 bln and a 23% increase in syndicated loans to RUB 26.8 bln, driven mainly by the need to raise additional resources to finance reverse repos and loan portfolio expansion.
Debt Instruments
MKB issues debt securities in the domestic and international markets to fund its business growth. Debt securities issued represented 7.6% and 5.4% of MKB’s total liabilities as at 31 December 2019 and 2018, respectively. The total amount of debt instruments rose by 60.1% y-o-y to RUB 168.5 bln, primarily due to two FX-nominated Eurobond issues placed in February and March 2019.
2019 | 2018 | |||
---|---|---|---|---|
RUB bln | % of total | RUB bln | % of total | |
Bonds | 136.0 | 80.7% | 61.1 | 58.0% |
Subordinated bonds | 32.5 | 19.3% | 44.2 | 42.0% |
Total debt securities issued | 168.5 | 100.0% | 105.3 | 100.0% |
In February 2019, MKB issued its debut euro-nominated 5-year EUR 500 mln 5.15% senior Eurobond. Furthermore, MKB issued a 5-year USD 500 mln 7.121% senior Eurobond in March 2019. That transaction was the first public borrowing in US dollars by a Russian bank last year, and helped diversify the bank’s investor base by attracting new investors from Continental Europe and Southeast Asia.
