OREANDA-NEWS. August 03, 2010. According to the CBR Russian lending growth accelerated in June to +2.1% MoM in corporate and to +1.6% on the retail side.  Thus corporate and retail portfolios reached RUB13.0tr, and RUB3.7tr, respectively. Retail deposits were up 3.2% MoM to RUB8.4tr. The capital base of Russian banks expanded +0.5% after several months of decline, reported the press-centre of OTKRITIE Financial Corporation.

View: Even though part of lending growth reflects forex revaluation, adjusted for this revaluation June lending growth was about +1.4% for both the retail and corporate segments, representing the highest rate since growth restarted.  Savings rates remained high, especially on the retail side, despite the continued decline in deposit rates.

Numerous concerns regarding the stability of the domestic deposit base reflect the fact that Russian deposits accelerated last summer, many with 1-year terms. Meanwhile, deposit interest rates dropped sharply, from 12.5% in June 2009 to 7.9% in June 2010. The loan-to-deposit ratio remained flat at 91%, which ensures that banks have a strong potential to expand lending.

We believe that the growth in bank capital reflects better margins as their provisioning charges in RAS are virtually unchanged over the past several months and spreads expanded. In June, the lending rate showed a minor MoM increase (from 11.4% to 11.5%), while deposit rates declined from 8.2% to 7.9%. Thus banks now seem more optimistic on better demand for loans, which is a positive development.