ST. PETERSBURG — Banks' loan growth slowed in June even as lending to households rose for a fourth month, the longest stretch of increases since 2008, the Central Bank said Thursday.
Total lending rose 2 percent on the month after a 2.6 percent gain in May, with retail loans increasing 1.2 percent from 1 percent a month earlier, said Mikhail Sukhov, a Central Bank board member. Bank deposits increased 3 percent in June after a 1.6 percent gain in May, he said.
The data exclude Sberbank, the country's biggest lender.
"Lending will expand at a rather fast pace in the second half," said Alexei Simanovsky, who heads the Central Bank's financial regulation division.
Gains in consumer spending and growing demand by corporate borrowers have reignited lending by banks after portfolios began shrinking at the end of 2008. Lending to households fell for 18 months out of 20 starting in November 2008 before rising in March this year, Central Bank data show.
Central Bank Chairman Sergei Ignatyev has forecast loan growth of 15 percent this year after retail lending shrank 11 percent in 2009 and loans to companies stagnated, gaining 0.3 percent last year.
Loan portfolios grew "by 3 percent, perhaps 4 percent" in the second quarter, Ignatyev told lawmakers in Moscow on Wednesday.
Further increases in consumer demand may give companies the confidence to boost investment and keep hiring as the Russian economy recovers.
Retail sales growth accelerated in May to an annual 5.1 percent, for a fifth month of gains, while real wages rose 7 percent and disposable income 2.8 percent. Fixed capital investment added an annual 5.5 percent, its third monthly gain.
"Retail banking, comprised largely of consumer lending, should be the main driver of industry expansion, while corporate lending should be subdued," UniCredit analyst Rustam Botashev wrote in a report this week.
UniCredit downgraded its forecast for loan growth to 7 percent this year from an earlier prediction for an 11 percent expansion.
"We believe that the rapid banking industry growth observed from 2005 to 2008 is unlikely to recur in the near future," Botashev wrote.
Loans to companies advanced 34 percent in 2008, while retail lending surged 35 percent. Russia's outstanding retail loans make up 9 percent of gross domestic product, less than half the ratio of 20 percent in Romania, which has the lowest retail banking penetration in Eastern Europe, according to UniCredit.
The share of Russian corporate loans to GDP may drop 2.8 percentage points to 29 percent, UniCredit estimates.
Russian banks in June increased reserves for loan losses to 7.13 percent of total lending, excluding Sberbank, from 7.05 percent in May, Simanovsky said, adding that most banks are continuing to set aside more money as provisions instead of releasing reserves.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.