Deposits grow robustly, loans edge up in March

Banking sector deposits increased 1.5% mom (+13.2% yoy) in March, supported by strong inflows in both retail and corporate facilities, the National Bank of Ukraine reported yesterday. Loans added a mere 0.2% mom, decelerating in year-on-year terms to 6.6% last month from 8.3% in February. Banks’ retail portfolios continued shrinking (-1.5% mom and -5.9% yoy) and are now 30% below their peak in December 2008. Corporate loans expanded, but the pace decelerated (+11.2% yoy in March vs. +13.5% yoy in Feburary).

Banking sector loans and deposits, USD bln                                   
——————————————–
                               Mar.2012    mom    yoy
——————————————–
Total loans                   99.2   0.2%   6.6%
   corporate loans         75.4   0.7%  11.2%
   retail loans                23.8  -1.5%  -5.9%
Total deposits               62.3   1.5%  13.2%
   corporate deposits     21.3   1.4%  12.3%
   retail deposits           41.0   1.6%  13.7%
——————————————–
Source: NBU  

Olena Zuikova: Banks’ loan portfolios remained virtually unchanged in 1Q12, supporting our view that lending will remain muted this year. While we expect loan portfolios might start growing since 2Q on improved liquidity in the banking sector, we believe full-year growth is unlikely to exceed 5% yoy (vs. 9% yoy in 2011). Deposit inflows should remain strong (we project +11% yoy in 2012), enabling banks to decrease their reliance on external wholesale funding. We project the banking system’s loan-to-deposits ratio to improve to 153% by end-2012 (down 9 pp yoy).