The volatility of the financial markets in February has increased significantly

The situation in the financial markets after stabilizing in the first half of February has deteriorated in the second half of the month on the backdrop of the spread of coronavirus infection outside of China, which led to the sales of assets noted in the next issue of the review “the Liquidity of the banking sector and financial markets”.

Structural surplus liquidity in February increased, helped by a temporary decrease in Bank balances on correspondent accounts in Bank of Russia. It compensated the outflow of liquidity due to the reduction of the debt of banks on operations of the Federal Treasury, the placement of OFZ by the Ministry of Finance, as well as increasing the volume of cash in circulation. The spread of rates MBK to the key rate of the Bank of Russia narrowed including in connection with absence of significant liquidity inflows compared to the previous averaging period.

Rates in the segment of “currency swap” remained mainly near loans / borrowings on the background of the conservation of foreign exchange liquidity in the banking sector at a comfortable level and to reduce long positions of non-residents on the ruble and the corresponding reduction of ruble lending in the segment of “currency swap”.

The slowdown in corporate lending in January was of a technical character, due to the exhaustion of the effect of the reclassification requirements in the beginning of the previous year. Lower activity in the retail credit market continued in January, with consumer and mortgage lending have made a comparable contribution to the slowdown in the growth of the portfolio of loans in annual terms. In December of 2019 continued reduction of interest rates in the segment of corporate loans. In January of this year, the mortgage rate reached a new historic low.

12 Mar 2020