Bank of Russia expects lending to cool down this year after record highs in 2023

Following high levels of 2023 and a weak 2022, the sector’s profit may drop to ₽2.3—2.8 trillion as of the end of 2024 due to margin compression, a return of costs for provisions to average historical levels, and a much smaller effect of currency revaluation.

Corporate lending increased by 6.2% over the quarter and demonstrated record growth of 20.1% as of the end of 2023. In 2024, lending activity is expected to decline to 6–11% owing to tight monetary conditions and the need to restore the liquidity buffer of systemically important banks after the liquidity coverage ratio easing is lifted.

Retail lending slowed down in 2023 Q4. Mortgage lending slowed not yet very significantly owing to government subsidised programmes, whereas consumer lending saw a more notable slowdown due to macroprudential limits. In 2023, the share of mortgage loans grew by a record 34.5% and that of consumer loans — by 15.7%. A noticeable cooling in retail lending is expected in 2024: growth in mortgage lending is forecast to be 7–12% over the year, while that in consumer lending — 3–8%.

Corporate funds increased by 8.2% over the quarter owing to the inflow of budgetary funds and export revenues, and household funds grew by a record 10.7% due to advance payments of January pensions in December, budget and social payments, and growth in household incomes. It is expected that growth dynamics will be more restricted in 2024: company funds might increase by 7–12%, with household funds rising by 8–13%.

More details are available in the quarterly report Banking Sector.