·         Credit growth for 2021 met our expectations as demand recovered during the end of the year and the SBV granted more quotas. Deposit growth however missed out on our predictions due to weak retail deposits. We consider ramping up economic activities as a pivotal driver to higher credit and deposit growth in 2022.

·         The recent adjustment in quoted deposit rates at several commercial banks is expected to not signal a trend but is due to seasonal factors. We look forward to deposit rates being stable in the first half of 2022. Liquidity constraints caused by the continuously widening gap between credit and deposit growth and regulatory liquidity ratios might lead to upward pressure on rates in the second half.

·         The outlook for the banking sector in 2022 continues to improve on the basis of the expansionary monetary policy, the recovery of the economy and improved perceived risks, while the pressure to raise interest rates is expected to arise only at the end of 2022 and will be polarized among banks. We expect the state-owned banks’ performance to be supported by stories such as dividends and  expectations of private placement to foreign investors in 1Q22, while the private banks are timed to have positive news and pose outstanding growth from 2Q-3Q/22.