In Q4 2022, volumes of funding received from clients grew and its average cost increased. The share of foreign currency liabilities has been on the rise for two quarters running. For the first time since mid-2021, the banks expect growth in deposit maturity in the next 12 months.
Capital increased somewhat in 2022. In the next 12 months, the banks expect their capital to decline and become more expensive.
The share of banks reporting growth in liabilities was record-high
In October–December 2022, around 95% of respondents reported growth in both retail and corporate deposits. Volumes of wholesale funding, which includes long-term refinancing from the NBU, have been on the decline for four quarters in a row.
The financial institutions expect funding from households to rise in Q1 2023. At the same time, they project a decline in wholesale funding and corporate deposits.
Around a half of respondents informed about an increase in the cost of retail and corporate deposits in Q4. The share of the financial institutions reporting more expensive wholesale funding grew as well. The banks expect these trends to continue into the next three months.
The share of the banks’ foreign currency liabilities has been on the rise for two quarters running. However, the banks foresee no change in the share of clients’ FX deposits in Q1.
Funding maturity decreased, albeit less than in the previous periods. Meanwhile, for the first time since the launch of the survey in 2021, the banks expect growth in deposit maturity in the next 12 months.
The banks’ expectations of changes in capital improved
The banks’ total capital increased somewhat over the past year, especially at large banks. For the next 12 months, 39% of respondents (compared to 45% in Q3) forecast a decrease in capital, mainly due to a decline in assets, negative developments in the economy, and regulatory requirements. The banks’ expectations about shareholders’ intentions to increase capital improved gradually over the year.
The majority of respondents noted that the cost of capital had risen on average, with around of a third of respondents expecting this trend to continue.
The current Bank Funding Survey was conducted between 16 December 2022 and 12 January 2023 among 26 bank liability managers. The polled financial institutions accounted for 94% of the banking system’s total assets. The report compiles aggregate assessments and expectations of respondents regarding the volumes, costs, and maturities of various types of funding and bank capital, as well as the drivers of these indicators. The survey’s results reflect the views of respondents and are not assessments or forecasts by the NBU. The next Bank Funding Survey, featuring expectations for Q2 2023, will be published in April 2023.
The NBU highly appreciates the banks’ participation in the survey under conditions of martial law.