Banks report a decline in funding and a rise in its cost – NBU survey
This is evidenced by the results of a survey conducted by the National Bank.
According to the banks’ estimates, the volume of corporate funds declined in the first quarter – similar to the situation a year ago. By contrast, the volume of household funds increased slightly. As a result, the total volume of funding decreased, whilst its average cost rose, mainly due to the rise in the cost of retail deposits.
At the same time, banks forecast a change in trend for the second quarter. An increase in the volume of liabilities is expected, driven by both retail and corporate customers, as well as a revival in wholesale funding. Almost a third of banks plan to attract such resources, particularly to finance recovery projects involving the EU and international financial organisations.
It is noted that banks also expect a further increase in the cost of funding. This refers to rising rates on both retail and business deposits, whilst the cost of wholesale funding, according to market estimates, will remain unchanged.
Other trends include:
- the share of foreign currency funding has increased but may decline in the second quarter;
- the maturity of the funding base has been increasing for the fourth consecutive quarter and is forecast to continue rising;
- banks are recording an increase in capital volumes over the year, but at the same time note a decline in its cost and expect further reductions.
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