Household deposits and corporate loans trend up in April
Key indicators of the banking sector were moving quite diversely in April, including due to the restrictions and exchange rate fluctuations. These are the findings given in the information and analytical review Russian Banking Sector Developments in April 2020.
Credit institutions’ corporate portfolio demonstrates substantial growth for the third consecutive month (+0.6 trillion rubles, or 1.4%), although this is a more moderate increase compared to March (+1 trillion rubles, or 2.6%). This rise was recorded amid a decline in companies’ money flows (according to the weekly monitoring of sectoral financial flows), contraction of the bond market, and expectations for a tightening of non-price lending terms.
Conversely, the retail loan portfolio shrank (-0.7%, or 128 billion rubles). The probable reasons behind this were banks’ tougher requirements for borrowers, the restrictions in place, and households’ declining demand for loans due to their uncertainty about the stability of their incomes.
A positive aspect in April was that households’ deposits expanded by 371 billion rubles (1.2%), after the outflow in March (-315 billion rubles, or −1.0%). Contrastingly, legal entities’ funds decreased by 589 billion rubles (1.9%), primarily because the deposits of a number of large clients with individual banks expired in April according to relevant contracts. Concurrently, there was recorded a notable inflow of liquidity through the budget channel.
In April 2020, the banking sector’s net profit approximated 32 billion rubles, which is substantially below the readings of the previous three months. This decline in financial performance was largely caused by the negative revaluation on foreign currency transactions in certain banks against the background of the strengthening ruble.