The banking sector slowed the pace of lending in November

The banking sector slowed the pace of lending in November, but profits were supported by one-time factors: reduced spending on reserves and the strengthening of the ruble. In December, pressure on banks’ incomes will increase, experts expect, this will be facilitated not only by the “rise in price” of deposits for banks, but also by the weakening of exchange rate differences.

At the end of November, a local two-month decline in the net profit of banks gave way to growth, but symbolic: banks earned 268 billion rubles. (4.7% more than in October), according to data from the Central Bank (.pdf). The total profit of banks for 11 months amounted to almost 3.2 trillion rubles. The autumn average monthly profit, despite the increase in November, remains lower than the summer results, which were consistently above 300 billion rubles.

The growth in profits occurred against the background of a slowdown in lending, primarily corporate (to 2% from 2.3% in October), consumer lending increased by 1% against 1.1% in the previous month, mortgages grew by 2.8% against 2.9% . Profit before provisions remained at the October level – 387 billion rubles.

As the regulator notes, the financial results of banks were supported by volatile income: credit institutions reduced losses from the revaluation of securities and from currency revaluation due to the strengthening of the ruble (an increase of 4.9% in November). In addition, banks “severely reduced the cost of loan reserves” – to 60 billion rubles. against 100 billion rubles. in October.

December “may turn out to be the weakest in terms of financial results this year,” believes Yuri Belikov, managing director of Expert RA: “In November, there were signs of a slowdown in retail lending, and in December they will intensify significantly.” Banking expert Olga Ulyanova clarifies that, as a rule, such a slowdown in the retail segment is quickly reflected in the loss of commission income, in contrast to interest income, the volume of which will be supported thanks to the already formed portfolio. Mr. Belikov, in turn, warns that the dynamics of the interest flow from these portfolios will slow down.

As Ms. Ulyanova notes, in December pressure on the margin will be exerted by an increase in deposit rates, which follows the dynamics of the Central Bank rate and pushes clients towards saving behavior.

“Therefore, it is possible that in December the growth in lending usually observed by the end of the year will not be realized,” the expert believes. “Banks are afraid to issue expensive loans to individuals who are already overlendered.” New issuances and regulatory measures will be limited, adds Yuri Belikov.

In the corporate business segment, Olga Ulyanova also expects a fall in credit demand. High interest rates and ongoing geopolitical instability are not conducive to the launch of new projects, she explains, and business revenue is generally sufficient to finance current ones. In total, during the year, according to the Central Bank, banks will receive less than 0.6 trillion rubles. net interest income due to an increase in the key rate (see “Kommersant” dated December 1).

“As an indicator of interest income, you can take Sberbank, which predicts a good interest margin for the next year (on average above 5.7%).— “Kommersant”), and this means that we can expect the overall good indicator to continue for the entire banking sector,” notes Ms. Ulyanova.

Among the limiting factors, experts note not only the rising cost of funding. The weakening of the ruble will not support bank profits as much as at the beginning of the year, says Yuri Belikov, since “now exchange rate differences are not so significant.” He also draws attention to the devaluation that occurred during the year. In addition, systemically important banks may begin to choose limits on credit lines from the Bank of Russia in order to meet liquidity requirements in January, the relaxations for which will be lifted, the expert notes, and this means additional interest expenses.

Olga Sherunkova