Corporate and mortgage lending rises quickly, but consumer lending slows down in December
The corporate loan portfolio grew by 1.8% in December and by a record high of 20.1% in 2023 overall. Corporate loans were used to finance large business acquisitions. Financing of housing construction increased. In addition, the substitution of external debt continued. Businesses still had a high need for borrowings to fund current operations.
In December, the growth rate of mortgage lending remained high (+2.9% adjusted for securitisation). The annual growth reached almost 35%, which was 1.7 times more than in 2022 (20.4%). Growth in mortgages was stimulated by available subsidised loan programmes coupled with increased demand amid high inflation expectations.
Consumer lending contracted by 0.1% in December due to macroprudential restrictions and higher interest rates. However, its annual growth rate reached 15.7%, which was relatively high compared to the low reading of the crisis 2022, namely +2.7%.
Households’ funds with banks increased by 6.9% in December owing to the usual advance payment of pensions due in January and the payment of annual bonuses. As of the end of the year, the annual growth of households’ funds with banks was 19.7% thanks to significant social and welfare payments from the budget, salary raises and high deposit rates following the increase in the Bank of Russia key rate.
In December, the net profit of banks slumped to ₽64 billion, excluding dividends paid within banking groups. This was associated with an increase in provisioning and operating expenses. Nevertheless, taking into account the significant profits of the previous months, the banking sector earned ₽3.3 trillion. This result, however, should be assessed in light of the 2022 modest profit (nearly ₽0.2 trillion).
More details are available in the information and analytical material Russian Banking Sector Development in December 2023.