Russian bank lending falls again
A total of 20 billion dollars has been pumped into Russian banks since the outbreak of the crisis – something many believe saved them from catastrophe. Still, the banks are failing to increase efficiency and supply the real sector with enough liquidity says Aleksey Simanovsky, Head of the Central Bank Department for Bank Regulation
“So far January hasn’t showed any growth in lending. According to our preliminary estimates lending volumes have decreased. However, the decline wasn’t significant both for corporate borrowers and individuals. Banks have enough short-money and traditionally lack long-term liquidity.”
Bankers say another problem is a lack of quality borrowers. The number of non-performing loans is still growing and is expected to reach 11% in the first half of the year. Anatoly Aksakov, President of the Association of Regional Banks the economic outlook is adding to the risks.
“We keep facing a microeconomic misbalance when borrowing remains expensive and the profitability of the industry is about 5-7%. Having low profits, enterprises can’t afford expensive money. We have fears that such disproportion will remain and even increase and that may lead to emerging of new bubbles.”
Banks are expected to gradually reduce lending rates, as the Central Bank's key refinancing rate has already been slashed to 8.75% to help kick start the economy. However bankers say further cuts are premature, as fears of growing inflation remain.