Banking loans, deposits remain weak in April

Ukraine’s banking sector loans increased 0.5% mom in April, with annual growth decelerating to 5.3% from 6.4% in March, the National Bank of Ukraine reported yesterday. The aggregate loan portfolio increased 0.8% mom in the corporate sector (+9.9% yoy) but declined 0.6% mom in retail (-7.1% yoy). Deposits decreased 0.8% mom (+9.8% yoy).

Key banking sector statistics, USD bln
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USD bln, stock   Apr.2012     mom     yoy
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Total loans                99.4    0.5%    5.3%
   corporate loans      75.8    0.8%    9.9%
   retail loans             23.7   -0.6%   -7.1%
Total deposits            62.1   -0.8%    9.8%
   corporate deposits  21.0   -3.0%    4.9%
   retail deposits        41.1    0.3%   12.5%
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Source: NBU

Olena Zuikova: Lending remains extremely weak and we do not have any reason to upgrade our conservative 2012 growth projection for sector loans of just 5% yoy. The retail segment is especially disappointing as households continue to deleverage, which we attribute to high interest rates and growing uncertainty regarding future income. An NBU representative recently expressed concern over extremely weak lending and indicated the central bank might take more steps to loosen monetary policy. Yet, we think the key constraints for revival of lending are on the demand side due to a lack of creditworthy borrowers.