The Economic Outlook in 2009
BANKING SECTOR
Declining policy rates together with the rise in banks’ securities portfolios have played a significant role in the growth of the banking sector in 2009.
Despite the contraction in the economy, the banking sector continued to grow in 2009.
Declining policy rates together with the rise in banks’ securities portfolios have played a significant role in the growth of the banking sector in 2009.
The downward trend in credit volume that had begun in the last quarter of 2008 resumed in the first quarter of 2009. In the following period, spot loans grew as well as consumer loans and retail credit cards, both as a result of the domestic stimulus package targeted to revive domestic demand. However, installment commercial loan and other loan volumes continued to fall in general.
In 2009, the drop in CBRT’s policy rates and the non-competitive conditions in the sector helped in reducing costs of deposits, which is the major funding source for banks. On the other hand, since deposit interest rates were not attractive for investors, growth in deposit volumes remained constrained compared to 2008.
