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SME loans have been restructured, up from RUB555bn a week ago.
She also said that the sector's NPL growth would likely peak in 4Q20-1H21. She also mentioned that a decrease in the minimum down payment from 20% to 15% under the state mortgage support program would lead to higher demand but would not increase the risks for the banking system.
8.1.7 Banks specific issues
RUB liquidity was tight in April, the first full month of the COVID-19 self-isolation regime, due to the increase in demand for cash (RUB671bn) and the CBR’s FX selling operations (RUB360bn).
In light of this, the average RUONIA-key rate spread printed at +5bp, compared with -25bp in March. This was the first time the average monthly spread has been positive since February 2017 (when the Russian banking system was just entering its structural liquidity surplus regime).
The Treasury increased its provision of funding, which helped the liquidity balance: the volume expanded RUB414bn in April, mostly in the form of short-term repo (+RUB389bn). The largest banks were the key recipients: the ‘Big 4’ (+RUB237bn) and FCBS (+RUB150bn).
In the environment of shrinking RUB liquidity, banks followed a cautious averaging approach. They have kept a huge cushion of excess reserves on their correspondent accounts at the CBR, thus providing less funds on deposit and for COBR operations. The average level of the CBR’s liquidity indicator shrunk from RUB3.2bn in March to RUB2.4bn in April, the lowest since 2017.
In April, our measure of FX liquidity was up $2.1bn vs. the $4.8bn drop in March. April’s dynamics were mostly driven by a $2.8bn net increase in accounts abroad. Meanwhile, FX loans declined $1.0bn in April, while FX deposits were little changed: the $1.3bn uptick in corporate deposits offset a $1.2bn shortfall in retail deposits.
Although FX liquidity picked up, banks scaled down their onshore FX liquidity provisions by $1.5bn. However the impact from the RUB liquidity shrinkage was more pronounced, resulting in the overnight basis ticking up from -28bp to -8bp in monthly average terms.
VTB began issuing loans for business at 2% per annum. The bank approved the first applications for 13bn. to its customers under the new state employment support program, VTB said . According to the bank, among the first companies to receive loans at VTB at 2% per annum are Zenden and Rendez-Vous shoe stores, Finn Flare clothing retail chain, and Akyan St. Petersburg and others. In total, already at the beginning of the first day of work, customers signed agreements with the bank in the amount of about RUB4bn. VTB predicts "a large volume of loans at 2% per annum" and began to accept applications from customers for loans under the new preferential program, without waiting for June 1.
Mortgage rates are at record lows with the average mortgage rate with state support at 6.1% (7.7% without state support), supporting demand, while online issuances accounted for 50% at Sberbank – an important
78 RUSSIA Country Report July 2020 www.intellinews.com
