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NBU: principle tendencies of monetary market of Ukraine
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17 May 2010
In April 2010 the situation in the monetary market was characterized by the accelerated rates of growth in the household funds in the banking system. At the same time, the trend towards an increase in the proportion of legal entities funds persisted. The growth of the banks' resource base on the back of the reduction in the inflation pressure facilitated a further decrease in the the value of lending resources. However, due to lack of solvent borrowers bank lending remained slow and banks channeled a considerable amount of free resources into financial instruments, in particular government securities.
In April deposits of natural persons grew by 5.1% (in March by – 2.3%, in February – by 1.2%, in Januarу – by 0.4%). Sustained growth rates of household deposits indicate a gradual resumption of confidence in the banking system.
Since the beginning of the year deposits of natural persons grew by 9.2% – to UAH 230.9 billion. At the same time their growth in the national currency (14.0%) exceeded three times the correspondent indicator in the foreign currency (5.0%) indicating a resumption of confidence in hryvnia and a decrease in the devaluation expectations.
April saw an increase in the legal entities funds in the banks for the second successive month. Their volume has increased by 0.8% this month (from the year start – by 2.3%) – up to UAH 119.0 billion. The cumulative (from the year start) indicator of growth in the proportion of legal entities funds was owing to an increase in the national currency deposits (by 4%), whereas the funds in the foreign currency decreased by 0.8%.
In April total volume of deposits rose by 3.6% (from the year start – by 6.8%) – to UAH 349.9 billion. А share of long-term deposits in their total volume grew from 24.4% to 25.3% over four months.
In April the cash outside banks climbed by 3.1% (from the year start by – 1.8%) – to UAH 159.9 billion). In April the share of cash in the money supply composition diminished to 31.3% in comparison with 31.4% in March and 32.2% at the beginning of the year.
An increase in the deposits and cash outside banks had a corresponding impact on the money supply dynamics, which augmented by 3.4% in April (from the year start – by 4.9 %) – to UAH 511.1 billion. At the same time in the context of more restrained monetary policy the growth of the monetary base was much slower – 1.8% increase (from the year start – by 2.6%) – to UAH 200.1 billion.
In April the dynamics of the money supply was influenced by the transactions on the purchase of foreign currency and government bonds of Ukraine performed by the National Bank of Ukraine. In particular, in April the volume of transactions on the purchase of the government bonds of Ukraine (at the nominal value without taking into account transactions on bilateral quotation) amounted to UAH 1.83 billion (from the year start – UAH 26.3 billion).
On the contrary, the dynamics of the budgetary funds somewhat restrained the growth of banks' liquidity. In April the amount of Government's national currency funds in its accounts with the National Bank of Ukraine increased by 16.6% – up to UAH 6.3 billion.
In April with the view to avoiding the monetary risks to stability of the monetary unit the National Bank of Ukraine continued to perform the mobilization transactions in the total amount of UAH 25.1 billion, whereas the refinancing transactions totaled only UAH 390 million (from the year start UAH 81.4 billion and UAH 3.8 billion respectively).
In April the average weighted interest rate on mobilization transactions amounted to 5.6%, whereas the average weighted interest rate on refinancing transactions totaled 12.2%.
In order to restrain liquidity growth the National Bank of Ukraine performed transactions on bilateral quotation of government bonds. As a result the government bonds (at the nominal value) were sold in the amount of UAH 3.2 billion (from the year start –UAH 6.1 billion) and purchased in the amount of UAH 0.2 billion (from the year start – UAH 2.2 billion).
Despite the fact that the National Bank of Ukraine intensified efforts to carry out the mobilization transactions, shortage of liquidity was not felt in the banking system. In April the bank correspondent accounts grew by 0.6% (from the year start – by 17.1%) – to UAH 20.4 billion.
In April the total volume of the mandatory reserves formed by banks amounted to UAH 11.5 billion, including UAH 5.6 billion transferred by banks to the separate account with the National Bank of Ukraine.
A gradual resumption of banks' resource base and sufficient level of liquidity on the back of the reduction in the price pressure facilitated the decrease in the value of funds in the national currency. In particular, the average weighted interest rate on loans in the national currency dropped from 16.8% in March to 15.6% in April, the the average weighted value of deposits in the national currency has diminished from 13.2% to 13.1% over this period.
The average weighted interest rate on loans in the foreign currency grew from 11.3% in March to 11.5% in April, the average weighted interest rate on deposits dropped from 8.9% to 8.3%.
The average weighted interest rate on agreements in the interbank credit market went down from 3.2% per annum (including on overnight loans –1.6% ) in March to 2.6% (on overnight loans – 1.4%) in April 2010.
Positive trends seen in the dynamics of deposits and the value of money did not lead to an adequate increase in the lending activity. In April the total balance of loans increased by 0.2% (since the beginning of the year it has decreased by 2.7%) – to UAH 698.0 billion. In April loans granted to legal entities augmented by 0.9%, whereas loans to households decreased by 1.3%.
In April 2010 as a result of allocation of bonds of internal government loan at the primary placement auctions (hereinafter – IGLB) UAH 4 425.63 million were transferred to the State budget (from the year start – UAH 18 067.42 million).
The Ministry of Finance of Ukraine has placed the IGLB worth UAH 24 457.42 million since the beginning of the year, including the IGLB issued for recapitalization of banks. In April the IGLB for recapitalization of banks were not issued.
In April, according to the results of primary placement auctions, the average weighted yield of IGLB made 13.44% per annum (from the year start – 16.04% per annum). The average weighted T-bills yield, including liabilities issued for recapitalization of banks, amounted to 14.33% per annum from the year start.
T-bills were fully and timely repaid. The yield of IGLB amounted to UAH 8 667.17 million, including UAH 5 756.58 million of principal debt, UAH 2 910.59 million of paid out earnings.
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