Yesterday, First Deputy Chairman of the CBR Alexey Simanovsky announced that the regulator had returned to its previous outlook for FY12 loan growth (20-25% YoY) from the 24-28% voiced in July. According to Simanovsky, the loan book expanded modestly in September. He does not see significant changes in the corporate lending trend or a substantial effect on lending growth from the recent increase in interest rates by the CBR.
Separately, concerns over fast retail lending growth might force the CBR to increase provisioning on unsecured consumer loans, considering the current coverage ratio is insufficient.
In other news, Simanovsky stated that liquidity conditions would remain broadly unchanged in the near term and that there were no grounds for the CBR to pump additional liquidity into the banking system.
The more cautious tone signals that we might see further deceleration in corporate lending growth by year-end as well as a cooling down of the robust expansion of the retail portfolio. This is in line with our expectations, as we consider tighter economic conditions, rising interest rates under pressure from the high cost of funding and the increase in penetration in the various segments of the retail market will likely limit demand for loans. We are reiterating our FY12 loan growth forecast of 19.3% YoY (Corp – 12.9%, retail – 39.8%).
From a monetary policy point of view, the rather hawkish CBR comments on liquidity conditions coincide with its September key rates hike. Meanwhile, slower lending growth underpins our view that GDP growth will moderate in 2H12 and provides an additional argument for the regulator to maintain its ‘on hold’ stance.