Banking sector improves its key indicators in June
In June, lending growth rates nearly returned to their pre-crisis level, and household deposits significantly increased, according to the information and analytical review Russian Banking Sector Developments in June 2020. These positive trends are evidence of stabilisation starting in the economy, on the one hand, and the result of the material effect of the governmental support programmes, on the other hand.
Over June, the corporate loan portfolio expanded by 204 billion rubles (+0.5%), while retail lending increased by 179 billion rubles (+1%), in contrast to May when both portfolios showed near-zero growth rates. The rise in retail lending was mostly driven by mortgage loans, including those granted under the Government’s 6.5% programme. The increase in corporate lending was predominantly accounted for by loans to financial companies (including those in the form of reverse repos). Lending amounts to non-financial businesses remained steady, largely owing to the implementation of the governmental programmes supporting corporate borrowers.
The situation with client funds improved, after the increase in their volatility in recent months. Corporate deposits expanded by 468 billion rubles (+1.6%). The growth of household deposits was even higher, specifically 585 billion rubles (+1.9%). However, the latter was largely associated with payments made under the budget-funded programme supporting families with children (according to our estimates, these payments totalled about 290 billion rubles in June).
Banks earned approximately 70 billion rubles in June 2020, which is better than near-zero performance in May, while still beneath last year’s average monthly profit.