The duration of bank funding increased for the first time since the survey was introduced in 2021, and this trend will continue in the next 12 months.
This is evidenced by the results of a quarterly survey of banks on funding conditions, Ukrainian News Agency reports.
According to respondents, the average cost of funding in the first quarter of 2023 has increased.
Financial institutions noted that since the start of the survey in 2021, deposit rates for individuals have been constantly increasing.
In the current survey, 93% of banks reported an increase in the cost of borrowing from the public, and this is a record value.
Respondents continue to expect an increase in the value of clients' funds in the second quarter, mainly from household deposits.
The price of wholesale funding, which includes issuing bonds, raising loans from international financial institutions (IFIs) or parent banks, long-term refinancing, etc., will also increase somewhat.
The volume of bank funding in the first quarter as a whole increased.
This is also evidenced by the results of the survey, however, estimates of growth in the volume of liabilities are more restrained compared to the record values of the fourth quarter of 2022.
According to respondents, higher interest rates on deposits and regulatory requirements were the determining factors for the growth of clients' funds.
Additional factors are business intentions to change the funding structure and proposals of the corporations themselves.
Banks in general expect an increase in borrowings in the second quarter from both households and corporations, but the volume of wholesale funding will not change.
As for capital, its total volume increased in the majority of banks over the past 12 months, while this trend is expected to continue in the next 12 months.
About 80% of respondents noted an increase in the cost of capital in the last 12 months, but such an increase in price is not expected in the future.
The Bank Funding Survey was conducted from March 17 to April 7, 2023 among bank managers responsible for liability management.
Answers were provided by 26 financial institutions, whose share in the total assets of the banking system is 96%.
The results of the survey reflect the opinion of the respondents and are not estimates or forecasts of the National Bank.
As Ukrainian News Agency earlier reported, banks have improved their expectations regarding lending prospects: the share of respondents expecting an increase in the volume of business lending has returned to the pre-war level.
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