Transcript Title – Maximum Two Lines

CBBH and
SEESOX
High Level
Seminar
South East Europe in an
Environment of Volatile
Capital Flows
June 6, 2014
CESEE Deleveraging and Credit Developments
Ruben Atoyan (IMF)
BIS reporting banks continue to reduce funding to CESEE;
pace remains the same
CESEE: External Positions of BISreporting Banks, 2013:Q1 - 2013:Q4
CESEE: Change of External Positions of BISreporting Banks, 2011:Q1-2013:Q4
(Percent
(Change, Percent of 2013 GDP*)
of 2013 GDP)
1.5
4
CESEE, all sectors and instruments
1
0.9
Vis-à-vis all sectors
gross
2
CESEE excl. Russia and Turkey, all sectors and instruments
-0.1
0
-0.4
-0.2
-0.2
-0.3
0
-0.2 -0.2
-0.2
-0.4
-0.5
-0.7
-1
0.5
0.1
-0.2
-0.3
-2
-0.3
-4
2013 Q3
-0.6
-6
-0.8
-8
-1.5
-1.4
2013 Q4
2013 Q2
2013 Q1
Total
-1.5
-10
Sources: BIS, Locational Banking Statistics: and IMF staff calculations.
2013:Q4
2013:Q3
2013:Q2
2013:Q1
2012:Q4
2012:Q3
2012:Q2
2012:Q1
2011:Q4
2011:Q3
2011:Q2
2011:Q1
-2
CESEE
CESEE ex. RUS & TUR
-0.5
0.0
-0.2
0.2
-1.6
0.6
Slovenia
Latvia
Hungary
Bulgaria
Slovakia
Croatia
Romania
Macedonia
Serbia
Ukraine
Moldova
Poland
Bosnia-Herzegovina
Lithuania
Belarus
Russia
Turkey
Albania
Montenegro
Czech Republic
0.5
Sources: BIS, Locational Banking Statistics; and IMF staff calculations.
2
Cumulative reductions significant for many
1000
900
800
700
600
500
400
(Change,
US$194 b
(4.1% of
2013 GDP)
US$77 b
(1.6% of
2013 GDP)
10
US$175 b
(10.1% of
2013 GDP)
US$114 b
(6.6% of
2013 GDP)
-10
Percent of 2013 GDP)
Vis-à-vis all sectors
gross
5
0
-5
-3.0
(Billions of US$, exchange-rate adjusted, vis-à-vis all sectors)
CESEE: External Positions of BISreporting Banks, 2009-2013
-9.4
CESEE: External Position of BIS-reporting
Banks, 2003:Q1-2013:Q4
-15
-20
2013
-25
2011-12
-30
2009-10
CESEE
-35
Total
CESEE ex. RUS & TUR
-40
300
200
CESEE
CESEE ex. RUS & TUR
2013:Q4
2013:Q1
2012:Q1
2011:Q1
2010:Q1
2009:Q1
2008:Q1
2007:Q1
2006:Q1
2005:Q1
2004:Q1
2003:Q1
0
Hungary
Latvia
Slovenia
Lithuania
Bulgaria
Croatia
Romania
Ukraine
Serbia
Bosnia-Herzegovina
Moldova
Slovakia
Russia
Czech Republic
Belarus
Poland
Albania
Montenegro
Macedonia
Turkey
100
Sources: BIS, Locational Banking Statistics; and IMF staff calculations.
3
Credit growth to NFCs remains subdued outside CIS & Turkey
Credit to Private Sector, Jan 2009 - Jan 2014
(Percent change, year-over-year, nominal, exchange-rate adjusted)
35
(Percent change, year-on-year, nominal, exchange-rate adjusted)
40
Total: CESEE excl. CIS & TUR
30
CESEE: Growth of Credit to Households and
Corporations, Dec 2013
Total: CIS & TUR
30
NFCs: CESEE excl. CIS & TUR
NFCs: CIS & TUR
20
25
Households
Corporates
Total
10
20
0
15
-10
10
0
-5
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Sources: National authorities and EBRD staff calculations.
Jan-14
CESEE excl. CIS & TUR
CIS & TUR
-30
5
Slovenia
Latvia
Hungary
Serbia
Romania
Lithuania
Croatia
Albania
Bulgaria
Estonia
Poland
BiH
Slovakia
Montenegro
Macedonia
Ukraine
Russia
Moldova
Belarus
Turkey
-20
Sources: National authorities and EBRD staff calculations.
4
HH credit shows signs of revival, deposit growth continues
CESEE: Growth of Credit to Households, Jan 2009
to January 2014
(Percent change, year-on-year, nominal, exchange-rate adjusted)
14
35
30
CESEE. Evolution of Main Bank Funding
Sources, 2007Q1 – 2013Q4 Total (percent of GDP)
CEE
Baltics
SEE
Δ Domestic deposits
10
25
8
20
6
15
4
Total
2
10
0
5
-2
0
-4
-5
-6
2007:Q1
-10
Jan-09
Δ Foreign banks
12
2008:Q2
2009:Q3
2010:Q4
2012:Q1
2013:Q2
* Excludes Montenegro and Kosovo because of data unavailability.
Jan-10
Jan-11
Jan-12
Sources: National authorities and EBRD staff calculations.
Jan-13
Jan-14
Notes: CESEE excl. Russia and Turkey; y-o-y change in BIS banks’ exposure
and domestic deposits in percent of GDP, exchange-rate adjusted.
Sources: BIS Locational Banking Statistics; IMF, International Financial
Statistics; and IMF staff calculations.
IIF survey suggests no improvement in bank funding
conditions and still tight credit standards
EM Europe Bank Lending Conditions Survey
Q4 2013 (Values above 50 indicate improving conditions; values
below 50 indicate deteriorating conditions)
80
Credit Standards
Demand for Loans
80
70
Funding Conditions
Overall
70
60
50
50
40
40
30
30
20
20
09Q4
10Q1
10Q2
10Q3
10Q4
11Q1
11Q2
11Q3
11Q4
12Q1
12Q2
12Q3
12Q4
13Q1
13Q2
13Q3
13Q4
60
Sources: IIF.
6
What Matters for Funding: Domestic Factors Important
Explaining Change in BIS Banks’ Positions
since 2008Q2: Relative Importance of
External and Domestic Factors
10
16
21
47
6
Global liquidity
conditions
Parent bank
characteristics
Host country macro
characteristics
Host bank
characteristics
Dummy variables
Sources: CESEE Regional Economic Issues Spring 2014, forthcoming
7
LD ratio coming down, NPL outlook more upbeat
CESEE. Evolution of Loan to Deposit Ratio,
2004M3 – 2013M12
CESEE. Evolution of NPLs during last 3
months and expected evolution in the next 3
months (Values above 50 indicate improving conditions; values
below 50 indicate deteriorating conditions)
170
70
75th percentile
160
Average (simple)
150
60
25th percentile
140
50
130
120
40
110
30
100
90
NPL Q4
NPL outlook
20
80
10
2013M12
2013M3
2012M6
2011M9
2010M12
2010M3
2009M6
2008M9
2007M12
2007M3
2006M6
2005M9
2004M12
2004M3
60
Sources: IMF, Monetary and Financial Statistics; IMF, International Financial Statistics; and IMF
staff calculations.
* Excludes loans and deposits from other financial institutions. Derived from Standardized
Reporting Forms. May differ from "headline" ratios reported by national authorities. In the case of
Russia, derived from IFS as ratio of claims on the private and nonfinancial public sectors to all
deposits.
0
09Q4
10Q1
10Q2
10Q3
10Q4
11Q1
11Q2
11Q3
11Q4
12Q1
12Q2
12Q3
12Q4
13Q1
13Q2
13Q3
13Q4
70
Sources: IIF.
8
Portfolio flows rebounded in Q4
But market conditions remain volatile
Capital Flows (excluding Turkey and
Russia), 2009:Q1 – 2013:Q4
(Billions of US dollars, bop data)
30
CESEE: EMBIG Spreads Indices,
2013 Jan - 2014 Apr
(May 21, 2013 = 100)
170
25
160
20
150
15
BLR, HRV, SRB, & TUR (simple avg.)
Others (simple avg.)
140
10
130
5
120
0
110
-5
100
Other investment
90
Portfolio investment
FDI
Sources: Haver Analytics; IMF, World Economic Outlook
database; and IMF staff calculations
Apr-14
Feb-14
Mar-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
2013:Q1 2013:Q4
Aug-13
2012:Q1
Jul-13
2011:Q1
Jun-13
2010:Q1
May-13
2009:Q1
Apr-13
80
Total
-20
Feb-13
Mar-13
-15
Jan-13
-10
Sources: Bloomberg; and IMF staff calculations
9
Main points and issues for discussion:
 Western banks’ pullback from CESEE region continues, pace seems
slower (excluding Russia and Turkey).
Q-n: Is there a risk of pick-up? Is it largely complete in countries
where loans-to-deposits ratios are around or below 100 percent?
 Credit decline seems to be bottoming out at least in the HH sector;
credit still declining for NFCs.
Q-n: What is holding back investment demand? What does this imply
for a return of domestic demand outside CEE? With funding and credit
conditions still tight, if demand picks up, will there be supply
constraints?
 Q4 saw an improvement in financial conditions, but going forward,
further tightening and bouts of volatility is likely.
Q-n: Are there significant risks for CESEE?
10