The CBR has announced Russian banking sector statistics for October. The key takeaways are as follows.
The corporate loan book increased 1.4% MoM (in September, excluding the FX factor, the portfolio grew 1.5%) while retail loans expanded 2.9% MoM (up from 2.5% in the previous month). In YoY terms, corporate lending decelerated to 17.1%, from an
The deposit base increased at a strong rate: retail and corporate accounts were up 1.1% and 3.4% MoM respectively, vs. 0.2% and 1.7% in September. This kept LDR unchanged at 90%.
Provisions increased 0.9% MoM in absolute terms (7.0% YoY). However, their share in the portfolio declined further to 7.85%. Overdue loans increased 1.4% MoM, with their share flat MoM.
The further moderation in YoY loan growth in the corporate segment suggests muted demand, while the retail portfolio continues to grow robustly. We expect the seasonally active 4Q12 to keep lending momentum high but still see the YoY expansion decelerating by YE12 (and further in 2013). Meanwhile, the strong growth in the deposit base comes at the expense of higher interest rates and could well put further pressure on banks’ earnings by limiting the NIM recovery in 2H12 and pushing it down in 2013.
The weak corporate lending data is in line with weak investment expenditures, and so growth here is likely to stay negative. Stabilised retail lending and weaker deposit inflows likely helped to stabilise consumer expenditures in October, but this trend is unlikely to continue, especially in early 2013 when new macroprudential measures aimed at curtailing consumer lending activity kick in.