Banks’ Funding Grows in Volume as Average Cost of Funding Declines – Bank Funding Survey

During Q4 2024, the volume of retail deposits rose at almost all of the banks, and some of them also reported a significant increase in the volume of corporate deposits. Most banks highlighted a decline in the cost of borrowing. This is according to the quarterly Bank Funding Survey.

In Q1 2025, the financial institutions are generally not expecting their liabilities to grow in volume: deposits from households will edge higher, while those from businesses will remain unchanged, the survey showed.

The average cost of funding declined for six consecutive quarters, but over the past two quarters, fewer and fewer respondents mentioned such a downtrend. The cost of wholesale funding decreased for three straight quarters.

In Q1, the cost of corporate deposits will rise, and that of retail and wholesale funding will remain almost unchanged, the banks anticipate.

In Q4, the share of FX funding shrank at banks that jointly account for 73% of banking sector assets. The same proportion of respondents said there will be a decrease in the share of FX liabilities in Q1 of this year.

In Q4, the maturity of funding declined somewhat at banks that together hold almost half of banking sector assets. In the next 12 months, the respondents are not expecting any changes in deposit maturity.

The banks that together hold three-quarters of the sector’s assets reported that their total capital had increased over the past 12 months. Almost all surveyed banks anticipate the same uptrend will persist in the next 12 months.

Since Q3 2022, the survey’s participants have been citing profitability as a core driver of capital growth going forward.