Loans, deposits surge in 2011, to slow in 2012

Deposits held by Ukrainian banks surged 4.4% mom in December, bringing 2011 growth to 17.2% yoy, the National Bank of Ukraine reported yesterday. Deposits from corporates rose 25.8% yoy while the retail side added 12.7% yoy. Lending was up 9.2% yoy last year driven solely by corporate loans (+14.5% yoy) while retail facilities declined 4.3% yoy. As retail FX lending remains prohibited, the currency structure of the sector’s retail loan portfolio changed considerably in the past two years (the share of FX loans fell from 73% at end-2009 to 57% at end-2011) and we expect the trend to continue in 2012.

Ukrainian bank loans & deposits in December 2011

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USD bln, stock       12/2011   mom    yoy

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Total loans               99.3   0.0%   9.2%

Corporate loans       74.7   0.5%  14.5%

Retail loans             24.6  -1.6%  -4.3%

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Total deposits         60.9   4.4%  17.2%

Corporate deposits  22.4   9.9%  25.8%

Retail deposits       38.5   1.5%  12.7%

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Source: National Bank of Ukraine

Olena Zuikova: Last year’s growth in deposits was supported by positive macroeconomic trends and the continued recovery of consumer confidence in banks. As household incomes and business revenues are set to decelerate and economic uncertainty is likely to persist at least in 1H12, we project deposit growth to slow to 11% yoy by end-2012. We see lending also decelerating to 5% yoy as liquidity in the sector will likely remain weak due to the central bank’s tight monetary policy. Growth in loans will continue to be driven by corporate borrowing, +6.4% yoy, while retail lending should inch up 1.0% yoy, according to our projections. A stronger reliance on the hryvnya for lending is positive, enhancing the sector’s resilience to economic turbulence.