Page 75 - RusRPTApr20

8.1.2 Loans
Retail loan growth remained strong in February at 17.8% y/y, while seasonal factors and negative developments on the global markets kept corporate loan book growth muted.
The share of overdue amounts improved slightly m/m and the total coverage ratio was up 4pp m/m to 152%.
The February data only shows the beginning of the deceleration in loan book growth before the impact of the coronavirus. The global recession, effect from coronavirus-related bans in the country and low oil prices are going to have an adverse effect for demand in corporate loans that will be partially offset by an FX revaluation on the back of the weaker ruble.
The retail loan performance is going to be limited by the tight regulation of consumer loans, with banks becoming more sensitive to risk weights, while mortgage lending is set to be the main driving force on still low interest rates.
VTBC said its loan growth forecasts is more moderate than the CBR baseline, which is to be revised on 24 April with the new macro forecasts. In 2020, sector profitability is going to be pressured by higher provision charges, as we expect asset quality to deteriorate, with negative trends likely to persist in 2021.
75 RUSSIA Country Report April 2020 www.intellinews.com