Banks Expect Inflow of Funding, No Change in Its Cost – Bank Funding Survey

In Q3, the banks saw an increase in the volume and cost of client deposits and are expecting their inflow to continue and their cost to hold steady. This is according to the quarterly Bank Funding Survey.

Most respondents reported growth in deposits from households and businesses in Q3. Wholesale funding also rose for the second straight quarter.

The uptrend was driven by the cost of funding from households, while the cost of corporate funding slowed its growth.

A record share of the banks said they anticipate an overall inflow of funding next quarter from both households and businesses.

Wholesale funding will also increase in volume, the respondents said, yet the share of the banks planning to attract it shrank.

The average cost of retail and corporate deposits grew, while the cost of wholesale funding remained unchanged, the banks estimate.

Although the respondents see no change coming in the overall cost of funding next quarter, some of the large financial institutions project a higher cost of deposits from households.

The share of FX funding shrank over the quarter in a downtrend that the banks believe will go on into the last three months of the year.

The financial institutions noted an increase in the maturity of funding for the second consecutive quarter and project this indicator to rise in the next 12 months.

Almost all of the banks highlighted an increase in total capital over the past 12 months and expect this uptrend to hold. The respondents once again cited profitability as the key driver of capital growth going forward.

Most of the financial institutions expect the cost of capital to decline in the future.