OREANDA-NEWS. October 01, 2010. CBR released banking statistics for August. Assets were up 1.1% to RUR31 trln, driven by 1.4% loan growth with the share of overdue loans staying virtually unchanged at 6.5% of total lending portfolio. Retail deposits were up 1.2% MoM to RUR8.7 trln, and non-financial organization accounts increased 1.8% MoM to RUR10 trln. The capital base increased for the fourth month in a row, by 1.2% MoM, reported the press-centre of OTKRITIE Financial Corporation.

View: The CBR banking data is in line with the previous months’ trend of 1%-2% monthly loan growth and stable overdues. In lending, retail with 2% MoM growth to RUR3.8 trln continues to outpace corporate growth of 1.2% MoM (to RUR13.2 trln). On the funding side, the retail deposits inflow slowed down slightly from a level of 2%-3% MoM to 1.2%, but we attribute this to seasonal factors and believe that despite a substantial decline in interest rates (deposit rates were down from 12.6% last August to 7.5%), the propensity to save remains strong.

As for the non-financial deposits inflow, 41% of it is derived from the increase in the Ministry of Finance's deposits. However, this means with a strong continued inflow of funding, the LTD ratio stays at the low level of 91% for the fifth month in a row, which is an explanation for the continued decline in lending rates. As such, this continues putting pressure on banks’ margins. However, with the stabilization of credit quality, lower provisioning charges allow banks to remain profitable and improve their capital base.