11 October 2011
In September, retail term deposits declined by UAH 200 mln or 0.1% m-o-m while deposits on demand dropped by UAH 2.6 bln or by 3.4%, according to data released by the National Bank of Ukraine yesterday. Overall, accounts by individuals declined by 0.9% m-o-m or UAH 2.7 bln. Meanwhile, accounts from legal entities increased by 0.9% m-o-m or UAH 1.6 bln. Banks’ equity rose by 2.3% m-o-m to UAH 155.2 bln or 15.0% of total liabilities (vs. 14.8% in August). As of October 1, total banking system assets were up by 0.3% m-o-m and 12.7% YTD thanks to a gradual recovery in lending, which increased loans in total assets from 67.9% in August to 68.7% in September. Svetlana Rekrut: This is now the second straight month that banks have seen a decline in retail funding, which is in our view, the result of low confidence in the national currency. On Friday, the NBU said international reserves dropped by over USD 3.0 bln while net purchases of FX by the population reached USD 2.1 bln (vs. USD 824.2 mln in August). In our view, this was partially driven by new NBU policies for exchanging currency (requiring residency documents), which has further fueled devaluation expectations. We think a slight account outflow is likely to continue in October-November due to seasonally high demand from the population for FX.