In May, banks attracted the minimum volume of loans from the Central Bank since February last year

In May, the volume of loans attracted by Russian banks from the Central Bank turned out to be the lowest over the past almost a year and a half. Experts attribute this situation to a surplus of ruble liquidity in the banking system. At the same time, market participants note that if the key rate increase predicted by the head of the Bank of Russia happens in the near future, this will only increase the excess ruble liquidity of banks, which means that new lows can be expected ahead.

According to data Bank of Russia, published on Friday, June 9, in May this year, the volume of intraday loans provided by the regulator to banks decreased to 8.45 trillion rubles. This is the lowest figure since February last year. It fell closest to this value in January of this year (to 8.7 trillion rubles). However, seasonality played a significant role then – in January, the size of intraday loans traditionally decreases to local minima.

At the same time, in December last year, an absolute record was set for this indicator in the entire history of observations – 27.6 trillion rubles.

And after a failure in January, it again returned above the level of 20 trillion rubles, but then it began to gradually decline and ceased to be double-digit already in April, stopping at a level slightly above 9 trillion rubles.

Interbank rates also testify to the low demand of banks for short-term borrowings. According to the Central Bank, in late April – early May, they fell below 7% per annum, while the key rate remained at 7.5%. A similar situation was observed almost throughout January and part of February. And at such low rates, banks willingly borrowed from each other – the volume of overnight loans often exceeded 500 billion rubles. in a day.

Market participants attribute these records to excess liquidity in banks. However, Validation Managing Director of Expert RA Yuri Belikov, drawing attention to the fact that banks are indeed in a state of ruble liquidity surplus, considers it a conditional indicator.

“This surplus is traditionally conditional, because it is largely associated with the deficit and uneven (by banks) availability of long-term sustainable funding,” he notes. According to him, the volatility of liabilities requires maintaining excess liquidity instead of profitable placement of funds for medium and long terms. “Accordingly, now the need for additional short liquidity is on average low – most banks do not need it to compensate for volatility, and from the standpoint of earning on short margin transactions, it is excessive,” says Mr. Belikov.

At the same time, by the end of May, interbank market rates went up and exceeded 7.2% per annum. In early June, they even reached 7.4% per annum. It is worth noting that this Friday, after the Bank of Russia decided to keep the key rate, the head of the Central Bank, Elvira Nabiullina, said that the regulator confirms its “determination to return inflation to the target next year and keep it on target in the future.” In May, according to Rosstat, annual inflation rose to 2.5% (in April – 2.3%), while the Bank of Russia expects inflation to continue growing and forecasts it in the range of 4.5–6.5% by the end of 2023 . Next year, the Central Bank expects the indicator to return to the target value of 4%.

Therefore, Mrs. Nabiullina admitted that in the context of growing inflationary pressure, in order to contain inflation, an increase in the key rate would be needed already at the next meetings.

“The step of changing the rate will be determined by the extent to which incoming data will influence our assessment of the balance of risks to achieve the 4% goal in 2024,” she said. In the event of an increase in the key rate, the rates on loans and deposits of banks will also go up. “An increase in market rates, other things being equal, only contributes to an increase in the liquidity surplus, respectively, such an event does not stimulate the demand for short-term refinancing,” summed up Mr. Belikov.

Maxim Buylov