By Oksana Kobzeva
ST PETERSBURG, Russia (Reuters) – Demand for investment loans by Russian companies might resume only next year, a senior banking executive said on Friday, indicating the country’s struggling economy will still have to wait for support from corporate spending.
The price of oil, Russia’s main export, has started to recover recently, giving something of a boost to the economy and the rouble. But bank lending remains sluggish, with interest rates high and borrowers reluctant to take on additional risks.
“If the current situation continues when oil prices are not below $40 per barrel and the rouble is stable, demand (for investment loans) will recover, but not in 2016, only in 2017,” Igor Bulantsev, a deputy president of Sberbank CIB, the corporate and investment banking business of the state bank,
Despite tentative signs of economic recovery, capital investment – money put into tangible assets such as buildings and machinery – is expected to fall by 3 percent this year according to the Economy Ministry.
In the first four months of this year, banks’ corporate loan portfolios were down 4.4 percent, according to the most recent central bank data.
Bulantsev said clients are still waiting for borrowing costs to go down and for sustainable stabilization of the money market. Rates have been going down, because the central bank is cutting its rates, but more is needed, he said.
“Decreasing rates is not enough to encourage companies to start actively taking investment decisions. We do not see that for now,” he said.
“Should the situation continue to stabilize in 2017 and beyond, then companies will return to investing.”
(Writing by Lidia Kelly, editing by Jason Bush and Adrian Croft)