The volume of retail and corporate deposits with the banks grew significantly in Q2, and the banks expect it to rise further in the next quarter. This is according to the quarterly Bank Funding Survey.
In Q2, retail and corporate deposits increased in volume, as did wholesale funding, which had risen for three straight quarters, primarily in some large banks.
The financial institutions expect further growth in the volume of retail and corporate deposits in Q3. At the same time, the banks project the volume of wholesale funding to edge lower.
Some of the large banks hope to receive wholesale funding from the EU and international financial institutions in Q3 already, in particular under recovery projects.
Overall, the average cost of funding decreased in Q2 for the fourth quarter in a row. The share of the respondents that reported a decrease in the cost of funding was the largest since the survey’s launch in Q2 2021. The cost of wholesale funding also went slightly down for the first time in three quarters.
Almost all of the banks anticipate a further decline in the rates on retail and corporate deposits and in the cost of wholesale funding in Q3.
The share of FX funding shrank in Q2. A large share of respondents expect this trend to continue in Q3.
The maturity of funding shortened somewhat for three straight quarters. That said, this was reported by fewer financial institutions in Q2. This trend will continue into the next 12 months, the banks estimate.
Around 90% of respondents note that the total volume of bank capital has risen over the past 12 months. Three quarters of respondents expect this trend to last over the next 12 months.
Since Q3 2022, profitability has remained the key driver of capital growth in the near term.
For the third quarter in a row, the respondents pointed to a decline in the cost of capital over the past 12 months. The banks also expect the cost of capital will decrease going forward.
The Bank Funding Survey was carried out from 17 June through 8 July 2024 among bank managers in charge of liabilities management. The answers were provided by 26 financial institutions, which together held 96% of the banking system’s total assets. Survey findings are based on the views of respondents and do not necessarily reflect the NBU’s assessments or forecasts. A survey featuring expectations for Q4 2024 will be published in October.