Corporate portfolio growth slows, mortgage lending accelerates in June
Corporate portfolio growth in Russia's banking sector slowed to 0.4 percent in June, while mortgage lending significantly accelerated to 1.0 percent. This surge in mortgages was driven by 'Family Mortgage' amid anticipated tightening of conditions.
Lending Dynamics: Corporate Slowdown, Mortgage Surge
Corporate lending growth in Russia's banking sector decelerated to 0.4 percent in June, down from 1.5 percent in May, partly due to companies' scheduled quarterly interest payments.
Ruble-denominated corporate loans increased by 0.7 percent, while foreign currency debt contracted by 2.5 percent.
In contrast, mortgage lending significantly accelerated, growing by 1.0 percent in June compared to 0.3 percent in May.
This surge was primarily driven by the 'Family Mortgage' program, as borrowers reacted to news of impending stricter conditions, pushing state-supported mortgages to approximately 65 percent of total new issuances.
Overall mortgage issuances increased by nearly 1.5 times to 483 billion rubles.
Market-rate mortgages also saw a slight increase, reaching 162 billion rubles, with average rates around 18 percent annually.
Unsecured consumer loans continued active growth, rising by 1.3 percent, consistent with summer holiday spending, while auto lending growth slowed to 0.1 percent.
Profitability, Funding, and Asset Quality
The banking sector's net profit slightly increased in June, driven by positive foreign exchange revaluation, despite higher provisions for non-core business.
Client funds growth slowed significantly, with household deposits weak due to seasonal spending and high cash demand, while corporate funds remained largely flat.
Balance sheet capital increased, but substantial dividend payouts limited this growth.
Asset quality remained broadly stable for retail loans, though problematic corporate loans saw a slight uptick.
The CBR extended support for restructured corporate loans, while the bond portfolio decreased by 0.4 percent due to negative government bond revaluation.
Policy-Driven Shifts and Underlying Risks
The surge in state-supported mortgage lending, fueled by pre-emptive borrower behavior, highlights how policy signals can significantly distort market dynamics.
While the banking sector's net profit saw a modest increase, this was largely due to positive FX revaluation, masking underlying concerns like increased provisioning and negative debt security revaluations.
These factors suggest that despite headline growth, the sector faces persistent challenges that require careful oversight beyond immediate financial results.