OREANDA-NEWS. May 04, 2010. CBR published March banking sector statistics suggesting a 0.7% MoM increase in banking assets (to RUB29.3tr). On the funding side, the inflow of both retail deposits and corporate funding have continued (2% and 3% MoM growth, respectively), which allowed banks to redeem another RUB241bn of debt to CBR. On the asset side, growth was mostly directed to the bond markets, though loans increased for the first time in over a year (+0.1% in nominal terms), reported the press-centre of OTKRITIE Financial Corporation.

View: The nominal increase in lending was just 0.1%, but excluding the ruble appreciation effect on the portfolio – the growth amounted to 0.5% MoM, which we believe is quite good news. In addition, we take a positive view on the decline in provisions, which we attribute to the management of bad debt and the cleaning up of balance sheets (largely reflecting Sberbank activity).

This process is important for banks in order to resume lending growth, even though we believe high provisioning charges will be damage profits throughout the summer.
We believe the funding inflow to the banking system will continue as fiscal easing and CBR interventions in the forex markets lead to substantial liquidity inflows. Meanwhile, the level of uncertainty on the retail side and the reluctance to pursue investment programs in the corporate sector will continue to support deposits inflows, especially as interest rates are still positive in real terms.