Major Trends in Deposits and Credits Market 

(January – June 2009) 

In the first half of 2009, there was a tendency for further growth of resource base of acting commercial banks. However under conditions of economic growth deceleration in the country there was decrease in crediting activity. Expansion of the deposit base of banks was due to growth of deposits in the national and foreign currencies. At that the decrease in credit portfolio was provided by decrease in crediting activity in foreign currency whereas crediting activity in the national currency on the contrary increased.  

 

Generally, the deposit base of the operating commercial banks increased by 14.3 percent within the reporting period (in the corresponding period of 2008, the increment constituted 13.5 percent). Within this period, the credit portfolio decreased by 0.6 percent (in the first half of 2008 the increment constituted 18.5 percent). As a result of advanced growth of the banking system depositary base, the ratio of credits to deposits decreased by 11.3 percentage points in comparison with the beginning of the year and constituted 75.3 percent as of the end of the period (see the Diagram No. 1).  

The share of demand deposits increased from the beginning of the year by 4.6 percentage points to 69.5 percent. This affected the decreasing in duration of the deposit base by 1.1 month and made up 4.1 months as of the end of June. In the category of fixed deposits, duration decreased by 1.3 months and made up 13.4 months. 

 

In time structure of the commercial banks credit portfolio, there was decrease in long-term crediting (more than 1 year), which share decreased from 69.4 to 65.0 percent. As a result duration of credit portfolio decreased in comparison with the beginning of the year and constituted 24.2 months in (see the Diagram No. 2).  

 

Growth of deposits in one of the largest banks (which takes a considerable part in the deposits market) led to increase in concentration index of the deposit base from 0.13 (as of the beginning of the year) to 0.17 (as of the end of June), that is equal to presence of 6 participants with equal shares and testifies an average concentration in the market of deposits. The concentration index of credit portfolio decreased from 0.10 to 0.09 which is equivalent to presence of 10 participants in the credit market and testifies a low concentration of the credit market (see the Diagram No. 3). 

The weighted average interest rate of the deposit base in the national currency constituted 5.6 percent as of the end of the period, having decreased by 0.4 percentage points, and the rate of the deposits in foreign currency increased by 0.2 percentage points up to 1.8 percent. The weighted average rate of credit portfolio of acting commercial banks increased by 0.7 percentage points and constituted 24.4 percent, and the rate of credits in foreign currency increased by 0.4 percentage points and constituted 19.9 percent. As a result, the spread on deposit-credit transactions of commercial banks in the national currency increased by 1.0 percentage points and constituted 18.8 percent, on credits and deposits in foreign currency – by 18.1 percent, having increased by 0.3 percentage points (see Diagram No. 4). 

 

In general, within the reporting period, the total volume of newly-accepted deposits by commercial banks amounted to 38.5 billion soms, having increased by 3.4 percent in comparison with the corresponding period of 2008. The volume of newly issued credits in the reporting period constituted 9.7 billion soms, having decreased by 23.2 percent in comparison with the corresponding rate of 2008. The decrease was in credits issued in the national and foreign currencies (see the Diagram No. 5). 

 

The average interest rate on newly attracted deposits in the national currency constituted 2.4 percent, having inconsiderably decreased in comparison with the period of January-June 2008. The decrease was due to increase of fixed deposits share and decrease in rates on them. Interest rate of fixed deposits in the national currency constituted 8.6 percent, having increased by 1.6 percentage points. At that there was increase in rates on all types of maturity, excluding rates on deposits for the period up to 1 month and more than 3 years. The average interest rate on deposits in foreign currency increased by 0.9 percentage points in comparison with the first half of 2008 and constituted 1.6 percent. The average interest rate on fixed deposits in foreign currency constituted 8.2 percent within the reporting period, having increased by 3.1 percentage points. At that the growth of costs was registered for all types of fixed deposits, excluding the deposits for the period up to 1 month and more than 3 years. 

The weighted average interest rate on newly issued credits in the national currency constituted 26.8 percent, having increased by 1.0 percentage points in comparison with the corresponding index of 2008. At that the increase in interest rates was registered in all spheres of the real sector, except for credits on mortgage and other purposes. The weighted average interest rate on newly issued credits in foreign currency constituted 21.6 percent, having increased by 1.3 percentage points in comparison with the corresponding index of 2008. Increase in rates was noted in all sectors, excluding procurement and processing industries.  

On the whole, the situation in the deposit and credit market in 2008 was characterized by the following positive trends: 

· There was the tendency for expansion of the deposit base as well as for growth of attracted deposits by commercial banks; 

· There was an increase in the average level of interest rates on newly accepted deposits in foreign currency as a result of growth of rates on fixed currency deposits; 

· There was an increase in rates on fixed deposits in the national currency; 

· There was a decrease in dollarization level of the deposit base and credit portfolio.  

 

Meanwhile, some unfavorable trends were also observed: 

· There was decrease in the volume of credit portfolio of newly issued credits of commercial banks; 

· The credit portfolio concentration level in individual banks and industries decreased; 

· The share of long-term crediting decreased in the overall volume of credit portfolio; 

· The interest rate on deposits in the national currency decreased; 

· The interest rate on newly issued credits increased; 

· The share of demand deposits increased in the structure of deposit base; 

· The share of extended credits increased; 

· the spread of credit and deposit cost in the national and foreign currencies increased.