Ukrainian banks could increase lending by 8% in 2011 and 13% in 2012, according to consensus forecast

Kyiv, February 10 (Interfax-Ukraine) - Ukrainian banks could increase lending by almost 8% in 2011 and by 13% in 2012, one of the authors of a consensus forecast of the Ukrainian banking system's development, Erste Bank analyst Maryan Zablotsky, said at a press conference at Interfax-Ukraine on Wednesday.

Experts from the Forum of Leading International Financial Institutions (FLIFI) prepared the forecast.

"In 2011-2012, the increase in the issue of loans will be less than the growth of nominal GDP. The increase in the issue of credits could be about 8% in 2011 and about 13% in 2012," he said.

According to the FLIFI's experts, the rather high level of defaulted payments on loans and bad debts will prevent more rapid growth in the issue of loans.

The experts believe that interest rates on loans will continue falling in 2011, but its pace will be slower compared to that in 2010.

Zablotsky also noted there could be a more dynamic increase in the banks' deposit portfolio compared to the loan portfolio, which means the high liquidity of the banks could be forecast.

"In 2011, we will see that the growth of deposits will be greater than the increase in loans, and this will mean that the banks will have enough free funds in the future. The government plans to attract UAH 52 billion on the domestic market: the banks should have sufficient free liquidity to buy government securities," he said.

According to the experts, the level of bad credits in the banking system, which is estimated at 45%, has reached its peak. It is expected that in 2011 the banking system could gain profit, but the banks' financial indicators will much depend on the policy of redundancy and the optimization of the banks' own business processes.

According to the consensus forecast, the banks' assets could grow by 10% in 2011 and by 14.5% in 2012.