Continued accelerated lending to state-run enterprises in Belarus raises inflation and depreciation risks – Sberbank
<p> MINSK, Dec 8 - PrimePress. The continued accelerated lending to state enterprises as compared with lending to other economic entities of Belarus may lead to accelerated inflation and undermine the national currency, reads a review by the Russian Sberbank’s Center for Macroeconomic Research. </p> <p> </p> <p> According to the experts, despite severe constraints in the lending market, the loan portfolio of Belarusian banks resumed growth in October to +1.8% at month end (minus 1.8% in September). Loans were mostly provided to state-run enterprises, the debts of which increased by 5% in just one month. Loans grew rapidly in both foreign exchange and Belarusian rubles by 5.5% and 4%, respectively. </p> <p> </p> <p> Experts say that this policy may lead to accelerated inflation, a drop of the national currency and, accordingly, household incomes. </p> <p> </p> <p> Other segments of the credit market, on the contrary, show underperformance. Crediting of the population decreased in October 2020 by 0.3% (up 0.5% in September); debts of private businesses grew by 0.4% (down 2.2% in September). </p> <p> </p> <p> “Banks continue to operate in extremely harsh conditions. The National Bank of Belarus (NBB) limits the provision of liquidity, causing an increase in market rates. Despite a recently achieved liquidity surplus, the resources seem to be unevenly distributed among the credit institutions. The average rate on new one-year deposits of households increased in October by 0.4 percentage points to 15.5%, the refinancing rate standing at 7.75%. The rates on consumer loans given by some banks range from 25% to 30%,” reads the review. </p> <p> </p> <p> The National Bank of Belarus thus maintains the estimated standard risk rate on new loans to individuals around 13%, making lending at the rate above this threshold unattractive due to high regulatory requirements, say the experts. </p> <p> </p> <p> In this situation, banks’ profits are reducing. Their net profit in January-October 2020 fell by 16.3% mainly due to the doubled deductions to reserves. </p> <p> </p> <p> Sberbank says that in view of the concentration of risks in the system, Fitch revise the outlook for five Belarusian banks from ‘Stable’ to ‘Negative’, while the long-term issuer default rating remained at ‘B.’ End </p> <p> </p>
2020-12-09
Primepress
MINSK, Dec 8 - PrimePress. The continued accelerated lending to state enterprises as compared with lending to other economic entities of Belarus may lead to accelerated inflation and undermine the national currency, reads a review by the Russian Sberbank’s Center for Macroeconomic Research.
According to the experts, despite severe constraints in the lending market, the loan portfolio of Belarusian banks resumed growth in October to +1.8% at month end (minus 1.8% in September). Loans were mostly provided to state-run enterprises, the debts of which increased by 5% in just one month. Loans grew rapidly in both foreign exchange and Belarusian rubles by 5.5% and 4%, respectively.
Experts say that this policy may lead to accelerated inflation, a drop of the national currency and, accordingly, household incomes.
Other segments of the credit market, on the contrary, show underperformance. Crediting of the population decreased in October 2020 by 0.3% (up 0.5% in September); debts of private businesses grew by 0.4% (down 2.2% in September).
“Banks continue to operate in extremely harsh conditions. The National Bank of Belarus (NBB) limits the provision of liquidity, causing an increase in market rates. Despite a recently achieved liquidity surplus, the resources seem to be unevenly distributed among the credit institutions. The average rate on new one-year deposits of households increased in October by 0.4 percentage points to 15.5%, the refinancing rate standing at 7.75%. The rates on consumer loans given by some banks range from 25% to 30%,” reads the review.
The National Bank of Belarus thus maintains the estimated standard risk rate on new loans to individuals around 13%, making lending at the rate above this threshold unattractive due to high regulatory requirements, say the experts.
In this situation, banks’ profits are reducing. Their net profit in January-October 2020 fell by 16.3% mainly due to the doubled deductions to reserves.
Sberbank says that in view of the concentration of risks in the system, Fitch revise the outlook for five Belarusian banks from ‘Stable’ to ‘Negative’, while the long-term issuer default rating remained at ‘B.’ End