“A soft monetary policy will increase business lending by 10 %,” says Aleksander Matyushenko

This opinion was expressed by Alexander Matyushenko, Director of Corporate Banking at Pivdenny Bank during the round table “Will 2020 be the year of lending to the economy?”, organised by the Financial Club.

“In the corporate segment, we see avenues of growth as long as monetary policy is loosened. This will enable lending to businesses. We expect growth in this segment by 10 % in 2020 after a fall in 2019,” Aleksander Matyushenko emphasised.

The participants of the round table – representatives of financial institutions – noted that the main factors that hamper lending to businesses today are the high cost of resources and the lack of quality borrowers.

“The active attraction of funds by the state at the expense of sovereign bonds to a certain extent has become more profitable than lending to real producers. Also, with a reduction in the discount rate, banks began to hold a more expensive resource for legal entities,” explained Aleksander Matyushenko. “In the near future, a reduction in the discount rate will contribute to growth of the so-called financial depth of the economy. As a result, such a decrease and increased competition among banks for a long hryvnia resource will lead to a decrease in the interest margin of the banking sector. It is against this background that banks will give preference to retail lending and small and medium businesses, where profitability is higher and segment risks are lower.”

The round table also discussed the operation of existing laws and the role of the National Bank in the resumption of lending.

“The issue of protecting creditors' rights and the significant costs associated with exercising the creditor's right to repay debts are forcing banks to consider new potential borrowers mainly with quality collateral. This significantly narrows the circle of potential borrowers, even with high-quality business processes that could and should be credited under normal conditions,” said Aleksander Matyushenko.