Interfax has quoted the Head of the CBR, Sergey Ignatiev, as saying that lending rates have reached their peak and, in his view, are going to decline in the near future, along with deposit rates. Ignatiev also said that in March, the loan portfolio grew 1.9% MoM (1.7% net of the FX effect). To recap, in January- February, the loan book declined 0.7% (with the corporate portfolio dropping 1.8%) under pressure of seasonal factors and the 10% rouble appreciation (net of the FX effect, it would have grown 1.1%). Ignatiev also said that he expected retail lending to outperform in 2012, supported by an expansion in mortgage lending.
The strong rebound in loan growth in March suggests further solid demand and supports banks’ 20% YoY guidance for FY12. It also implies upside risks to our forecast of the loan book expanding 15% YoY.
Meanwhile, the CBR’s outlook on rates echoes banks’ estimates voiced during the recent reporting season, including the statement by Sberbank CEO German Gref that deposit rates would start to decline soon. The February data on interest rates already suggests that deposit rates are decreasing (40bp MoM for term deposits), which we see as positive for NIM in 2H12. Even though lending rates rebounded 10bp MoM in February, after the sharp decline in January, in our view this also suggests no further growth. Under a declining cost of funding, banks are likely to try and expand their loan portfolios further. This might at some point start a new price competition (and, in the longer term, put pressure on banks’ margins).