Daily Insight-In the spotlight: Loans volume growth in December 2010; Northern GOK

The overall volume of loans in Ukraine fell slightly MoM in December, to UAH732.82bn from their November level of UAH735.84bn, according to the data published on the National Bank\'s website yesterday. At the same time, on a YoY basis, loans volume posted growth of 1.3% in December. Just as during the whole of 2010, loans to corporate clients made up all of the overall increase, growing 8.4% YoY, while the volume of loans to retail clients fell 13.1%. Banks\' clients continue to prefer to take out loans in the national currency to loans in the foreign currency, a tendency that emerged in Ukraine only after the financial crisis of 2008. This tendency, i.e., dedollarisation of banks\' balance sheets, is positive in that it will help reduce currency risks on the banks\' balance sheets and systemic risks in the economy. The volume of loans in national currency to corporate clients grew 14.4% YoY in December, and by only 2.7% in foreign currency. The volume of loans to retail clients in the national currency fell by merely 2.9% YoY in December, and in foreign currency fell much more, by 16.6%. Deposits by residents rose by 24.4% YoY in December, reaching UAH417bn. Households contributed most (28.5%) to the overall growth of deposits, while corporate clients\' deposits grew less, but still by a meaningful 22.5%. With deposits, we also see the trend of dedollarisation continuing. The volume of deposits in the national currency rose by 41.4% for households and 37% for corporate clients, while the volume of deposits in foreign currency rose to a lesser extent, by 22.5% for households and 1.7% for corporate clients.