lending. banks ’ nominal profits have recovered to the pre - crisis level of roughly one trillion rubles, though real profits are still below the pre - crisis readings. in relation to 2013 prices, profits are still 30 % lower. we expect banks to use their profits to boost growth in the banking business, and to step up lending. to do so, they should convert the bulk of their profits into capital. currently, financial statements suggest that 88 % of profits will be converted into capital. i hope that the final figure, after profit allocation between shareholders has occurred, will not differ greatly. furthermore, banks ’ profits increased by 212 billion rubles in the first two months of 2017, a growth rate 2. 5 times that of the same period of the previous year. despite the fact that the current situation in the banking system is quite good, we believe that changes are brewing, which will allow the banking system to more efficiently meet citizens ’ demand and economic development objectives. both bills which we consider to be pivotal - the proportional banking regulation bill and the new resolution mechanism bill - have passed the first reading at the state duma. we have already discussed these in detail on many occasions, therefore today i will dwell only on the amendments introduced to the bills to be considered by the state duma in the second reading. as regards proportional regulation, i would like to return to the promotion of competition. when we first proposed the concept, many small banks voiced concerns that they might face tougher competition. we took this concern very seriously and have held many discussions on the matter. however, we do not think that the three - tier system disrupts competition. instead, it will boost the stability of banks - irrespective of their size - and result in more realistic business models in the future. in addition, the system not only imposes restrictions on operations, but also considerably eases regulatory burden for banks holding basic licences. banks holding basic licences will have to comply with only five required ratios and will not have to meet new highly technical standards. along with two capital adequacy ratios, one current liquidity ratio and two credit concentration ratios will be applied. the current version of the bill, though aiming to focus small banks on servicing small businesses and individuals, provides a more flexible mechanism and allows lending to larger borrowers if they comply with both a more strictly concentrated ratio of credit risk per borrower and the related party risk ratio. we took these comments into account after the dialogue and

##ciation, and the oil price growth stipulated by the scenario. let me remind you that according to the scenario oil price will be $ 80. this is our baseline scenario. at the same time we are aware of the pessimistic sentiments in the market due to the dynamics of oil contract quotations observed over the last months. therefore, alongside with the baseline forecast, we have worked out an alternative scenario bis central bankers ’ speeches which we consider to be unlikely to develop and which provides for oil price fall to $ 60 per barrel from early 2015 and during the whole three - year period. in this case russian economy will require more profound adjustment to the new conditions in 2015 – 2016. in this scenario, the current account surplus will amount to approximately $ 40 billion in 2015. it will further increase due to the slight rise of non - oil and gas exports and decline of imports. economic growth rates will depend on the pace of import substitution. slow development of import - substituting production in 2015 – 2016 may result in “ mild ” recession. nevertheless, output and employment decrease will be considerably less than in 2008 – 2009. in this scenario we expect economic recovery growth to over 5 % in 2017. under this scenario, in 2015, inflation acceleration may be higher than in the baseline scenario due to the lower ruble appreciation during the year which is also expected due to the compensation of the exchange rate overshoot. during the following two years, due to the deeper output gap inflation will decrease even faster than stipulated in the baseline scenario reaching the target of 4 % before late 2017. meanwhile, the monetary policy will be aimed at stabilisation of inflation expectations, prevention of inflation spiral and its gradual decrease due to the prospects of economic growth. it is also possible that under this scenario we will be able to ease our policy even earlier. as the capital outflow during this period will mainly result from external debt payments, in this scenario we estimate the total capital outflow to be at the same level as in the baseline scenario. under this scenario we are ready to allocate about $ 85 billion for fx transactions in order to stabilise the balance of payments that is also acceptable from the foreign exchange reserve adequacy point of view. it should be noted that the reserve level will be restored following the economy adjustment to the new conditions as we intend to conduct mainly reverse transactions. the bank of russia will undertake operations in the foreign exchange market based on the balance of payments forecast and the estimation of balances