January inflow of public funds to banking system offsets seasonal decrease in customer funds
The long holidays affected the sector’s performance in January, notes the information and analytical commentary ‘Russian Banking Sector Developments in January 2020’.
In January, the total loan portfolio decreased somewhat following large repayments by some banks. Moreover, customer funds declined slightly, which is typical of this month, given the long holidays.
Retail lending continued to slow down (+0.8% vs +1.0% last December); this may pertain to the Bank of Russia’s measures to cool the unsecured loan segment and the seasonality.
The corporate portfolio (including loans to non-financial and financial organisations other than banks) shrank by 0.9%. A significant decrease was registered in several large banks and mostly affected ruble loans to financial organisations; this may pertain to large repayments by a number of borrowers.
The decrease in household deposits typical of this time of the year totalled 1.5%. Corporate deposits and funds contracted slightly (by 0.1%), too, following large tax payments.
The inflow of public funds to the banking system offset the seasonal outflow of customer funds. These developments, coupled with the reduction of cash in circulation due to the New Year holidays, increased the liquidity surplus (3.6 trillion rubles as of the end of January).
In January, the net profit of the banking sector totalled 197 billion rubles, which is considerably higher than the monthly average profit in 2019. The increase in profits may pertain to, among other things, the FX revaluation amid the appreciation of the US dollar at the beginning of the year.
Starting from the materials as of the end of January 2020, the Banking Sector Development report shows the assets of the banking sector on a net basis (less loss provisions and profit tax). This will allow, among other things, the more adequate estimation of the share of individual obligations in liabilities. In addition, the corporate lending indicator now includes not only loans to non-financial organisations, but also to financial organisations other than banks. The latter category includes, for instance, leasing and factoring companies (including subsidiary financial companies of banks) and organisations associated with large corporate customers.