Bank lending fell off in September, driven mostly by the sharp appreciation of the ruble, while overdue corporate loans fell for the first time in recent months, Central Bank data showed Monday.

Russian banks’ corporate loan portfolios decreased 0.7 percent over September, while the amount of overdue corporate loans fell 2.4 percent to 717 billion rubles ($25 billion).

“We note that the decline of corporate loan portfolios by 0.7 percent was entirely driven by the ruble’s sharp appreciation, and — adjusted for foreign currency revaluation effects — we estimate the system returned monthly loan-book growth of 0.3 percent in September,” said Maxim Raskosnov, an analyst at Renaissance Capital.

He also said the loan growth would continue by the end of the year, as it was the only way for lenders to preserve their interest margins.

Retail lending also slowed, falling 1.1 percent in September, the figure’s eighth consecutive decline.

The Central Bank last week cut its refinancing rate to 9.5 percent — its lowest level ever — in hopes of spurring on lending.

Central Bank First Deputy Chairman Gennady Melikyan said at a conference Monday that banks need to resist the urge to cut their reserves as bad loans fall.

“It’s still too early to relax. We need to maintain the current level of provisions,” he said, adding that several big banks had recently cut the amount of money that they keep on hand to cover possible losses.

In September, banks set aside 1.82 trillion rubles to cover overdue debt, an increase of 3.2 percent from the month before.

Nevertheless, banks’ reserves were only 40 percent higher than the amount of overdue loans, Melikyan said. Russian banks only count the amount of missed payments into the overdue loans calculation.

Russian banks are holding only one-third to a half as much reserves as they should, according to Moody’s estimates.

Many lenders have moved to buying companies’ bonds instead of giving loans directly, he said, adding that banks’ bond holdings had grown by 7 percent in September.

Moving to the other side of the balance sheet, Melikyan advised lenders against raising interest rates too high, saying some banks are offering interest of over 17 percent on deposits. He said the growth in high-interest deposits — which allow banks to raise funds but strain cash flow and increase short-term liabilities — is currently a bigger problem than the rise in bad loans. “It would be very difficult to get the same returns after you raised money at rates of 18 percent to 20 percent,” Melikyan said. “This will be a problem for banks.”