‘Panicked’ Russians withdrew $9.8 billion in FX from banks in March

(Reuters) – Russian households withdrew overseas foreign money price $9.8 billion from their accounts in March and banks reduce new company lending by round one third, the central financial institution mentioned on Wednesday, as western sanctions over occasions in Ukraine spooked shoppers.

“The quarter was troublesome, to place it bluntly. It was very worrying at sure moments, however most significantly, the scenario managed to stabilise,” mentioned Alexander Danilov, director of the central financial institution’s banking regulation and analytics division.

“The banking sector confronted vital outflow of the inhabitants’s funds … on the finish of February,” he mentioned. “Individuals took cash out of their accounts in a panic, fearing for his or her security.”

Funds held in deposits fell by 1.2 trillion roubles ($14.72 billion) in February, the financial institution mentioned in a month-to-month report on the event of the Russian banking sector, and the decline continued in March, with outflows of 236 billion roubles.

In distinction to earlier experiences on this sequence, the central financial institution didn’t disclose banking sector income.

An financial rebound that revived loans progress and boosted curiosity in actual property belongings noticed Russian banks make a file 2.4 trillion roubles of revenue final 12 months, however the penalties of Russia’s actions in Ukraine have made any repeat unlikely.

Client lending fell by 1.9% in March because the banking sector took successful from an emergency charge hike by the central financial institution, rising costs squeezed shoppers’ disposable incomes and uncertainty about employment prospects unfold, the financial institution mentioned.

The central financial institution greater than doubled its key rate of interest to twenty% on Feb. 28 as the primary wave of sanctions hit, earlier than trimming it to 17% on April 8. It’s anticipated to decrease it additional on the subsequent board assembly on April 29.

Mortgage loans quantity elevated by 2.1% in March to round 300 billion roubles, which the central financial institution put right down to a state-run mortgage programme.

Nevertheless it mentioned it expects mortgage mortgage progress to gradual to 10%-15% in 2022, from greater than 30% in 2021.

($1 = 81.5400 roubles)

(Reporting by Reuters; Modifying by Angus MacSwan and Barbara Lewis)