Major tendencies of deposit and credit market 

(the 1st half of 2008)  

In the first half of 2008, the deposit base of commercial banks was still increasing, despite its reduction in February, which was mainly related to a reduction of deposits in a foreign currency. There was also kept a tendency of credit portfolio increase of the banking system though the growth of its rate slowed down in comparison with the similar period of 2007. In general, the deposit base of operating commercial banks increased by 13.5% in January-June period of 2008 and credit portfolio increased by 18.5%.  

As a result of advanced growth of the banking system debt, ratio of credits to deposits increased by 3.9 percentage points and amounted to 92.8% by the end of the period (diagram 1).  

Duration of the deposit base in the reporting period reduced by 0.7 month and constituted 5.9 months owing to increase of short-term deposits. At the same time, in the category of fixed deposits, this rate reduced from 16.9 months to 14.2 months. In the time structure of credit portfolio, ratio of long-term credits reduced by 2.6 percentage points and amounted to 64.9%, whereas duration of credits by the end of the period reduced from 25.2 to 24.0 months (diagram 2). 

Indexes of the deposit base and credit debt concentration changed inconsiderably during the reporting period and constituted 0.09 by the end of July (diagram 3). This could be compared with the presence of 11 members with equal shares in the market and it proves a low concentration of deposit and credit market.  

In the regarded period, a weighted average rate of balance deposits in the national currency increased by 0.9 percentage points and constituted 5.6% by the end of July, whereas the rate of deposit balance in a foreign currency decreased by 0.2 percentage points and constituted 2.4%. Herewith a weighted average rate of deposit balance of operating commercial banks in the national currency increased by 1.7 percentage points and the credit rate in a foreign currency increased by 0.8 percentage points. As a result, spread of deposit-credit operation of commercial banks in the national currency increased by 0.8 percentage points and constituted 17.5%, whereas spread of credits and deposits in a foreign currency increased by 0.9 percentage points and constituted 16.8% from the beginning of the year (diagram 4).  

Totally in January-June period of 2008, the overall volume of deposits attracted into the banking system increased by 15.1% in comparison with the same period of 2007and constituted 37.3 billion soms. The volume of obtained credits in the first half of 2008 constituted 12.7 billion soms, inconsiderably increasing by 13.5% owing to a growth of obtained credits in the national currency (diagram 5).  

In the first half of the current year, an average level of interest rates on newly-attracted deposits in the national currency increased by 0.5 percentage points and constituted 2.5% owing to reduction of demand deposits and increase of short-term deposit rates. Thus an average rate of fixed deposits in the national currency increased by 0.2 percentage points and constituted 7.0% mainly due to increase of short-term deposits’ share. Interest rate of deposits in a foreign currency increased by 0.1 percentage points and amounted to 0.8% in comparison with the first half of 2007 due to decrease of demand deposits share and increase of long-term deposit rates. The rate of fixed deposits in a foreign currency increased by 0.5 percentage points and amounted to 5.1% due to increase of long-term deposit rates.  

An average interest rate on the newly-issued credits in the national currency increased by 3.1 percentage points and constituted 25.7%. There was an increase of new credits cost in almost all branches of a real sector, excluding credits for social services. On an average, the rate on new credits in a foreign currency, during the reporting period, increased by 0.9 percentage points and constituted 20.3%; there was an increase of the rate in almost all branches of a real sector, excluding credits to social services sphere. 

In general, situation development in deposit and credit market in the first half of 2008 was characterized by the following positive tendencies: 

· The growth tendency of the deposit base and credit portfolio of the banking system was kept during the reporting period; 

· The interest rate on newly accepted deposits in the national and foreign currencies increased; 

· The rate of the deposit base dollarization reduced;  

· The growth tendency of fixed deposits was kept; 

· The share of individuals’ deposits increased in the total volume of the deposit base; 

At the same time, there were some negative issues: 

· The volume of newly-obtained credits reduced in comparison with the same period of 2007;  

· The concentration of credit portfolio remained on a high level in some banks and branches; 

· The interest rate on newly-obtained credits in the national and foreign currency increased; 

· The number of prolonged credits increased; 

· An average interest rate of deposit base in a foreign currency reduced;  

· The volume of newly-accepted deposits in a foreign currency reduced; 

· An average interest rate of credit portfolio in the national and foreign currencies increased;  

· Cost spread of credits and deposits in the national and foreign currencies increased.