Spread between money market rates and key rate continues to decline
This July saw a slight decline in a structural liquidity surplus following major tax payments that proved in excess of the volume of funds banks received through the budget channel, with other liquidity factors also impactful. Against this backdrop, the spread of overnight interbank rates moved to narrow compared to the Bank of Russia key rate, the 29th issue of the commentary ‘Banking sector liquidity and financial markets’ notes.
The period between late July and early August in the Russian market is a time dividend payments are made. With the impact from this factor on the ruble exchange rate being overall neutral, payments to investors within this period may send the ruble higher and then lower.
Mortgage lending continued to expand in the second quarter of 2018. The market gained support from banks’ conservative posture, low credit risks in the segment and interest rates at a fresh all-time low by the end of the second quarter.
Corporate lending proceeded on a moderate expansion path, with a recovery emerging in lending to wholesale operators and retailers, in a sign of both growing propensity to consume and a gradual rebound in lending to sectors most sensitive to a changing business climate.