Russian financial market remains largely positive in July

In July, the Russian financial market was mainly positive. However, unlike in the previous month, its individual segments saw a moderate decrease in quotes mainly caused by local factors, notes the latest issue of the commentary ‘Banking Sector Liquidity and Financial Markets’.

The Bank of Russia’s decision to cut the key rate at the July meeting was in line with market participants’ expectations and did not have a significant impact on their forecast regarding the rate dynamics.

The structural liquidity surplus increased in July. This was largely associated with the placement of extra-budgetary funds in bank deposits and measures implemented to improve financial resilience of certain credit institutions.

The spread between short-term interbank loans and the Bank of Russia key rate slightly widened on the back of the expected key rate cut at the July meeting of the Board of Directors.

In June, both consumer and mortgage loans continued to slow down the growth of retail lending. The corporate segment of the credit market recorded a moderate rise in the annual growth rate of the loan portfolio. The trend towards the replacement of foreign currency loans with ruble-denominated ones and short-term loans with longer-term ones continued.