Banks will continue to increase volume of funding and predict decrease in its cost

The volume of bank funding continued to grow in Q3 of 2023, while in Q4, most financial institutions expect the trend to continue and the cost of deposits to decrease.

This is evidenced by the results of a quarterly survey of banks on funding conditions, Ukrainian News Agency reports.

In contrast to previous periods, obligations to the population, rather than business, increased primarily.

The majority of respondents reported an increase in the volume of household funds, while the volume of funding from corporations increased in 59% of respondents compared to 95% in Q2.

For the first time since the beginning of the full-scale war, the volume of wholesale funding remained unchanged thanks to the attractive price of such borrowings.

43% of banks plan to attract such funding in the future.

This is one of the highest figures since the survey was introduced in 2021.

The level of interest rates on deposits remains the determining factor in the growth of the volume of funding.

However, the average cost of funding declined for the first time since mid-2021.

First of all, due to the decrease in the cost of business funds and wholesale loans, because most financial institutions noted an increase in interest rates on deposits for households.

In October - December, most banks expect a decrease in the cost of corporate and household deposits, while the price of wholesale funding will remain unchanged.

The share of funding in foreign currency, according to banks, has been decreasing for two quarters in a row.

Almost half of the respondents have the same expectations for Q4.

In Q3, the maturity of funding did not change, but banks forecast its growth in the next 12 months.

Almost all respondents noted that the total amount of their capital has increased over the past year.

In the next 12 months, banks expect an increase in the amount of capital, this trend continues from the beginning of 2023.

For the fifth time in a row, respondents named profitability as a determining factor in increasing the amount of capital.

The majority of respondents noted an increase in the cost of capital over the past 12 months, but do not expect the cost to change in the future.

The Bank Funding Survey was conducted from September 15 to October 6, 2023 among bank managers responsible for liability management.

Answers were given by 26 financial institutions, their 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 of Ukraine.

As Ukrainian News Agency earlier reported, banks earned a record-breaking UAH 95.1 billion in the entire history of Ukraine's independence in 8 months; in August, banks' profits amounted to UAH 11.9 billion.

In the first half of 2023, banks earned a record profit, at least for the last 15 years, in the amount of UAH 67.6 billion.

In 2022, banks reduced their net profit by 68% to UAH 24.7 billion.

In 2021, the profit of banks amounted to a record-breaking UAH 77.5 billion.

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