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The credit card segment was hardest hit, sinking the most: in January the number of new cards issued decreased for the first time in five years, reports RBC.
In January 2020, the number of credit cards issued by Russian banks collapsed by 21.7% compared with January 2019, and in monetary terms, sales fell by 22%, according to the data of the Equifax credit history bureau. According to other agencies (NBCH and the United Credit Bureau), in January, credit issuance fell by 11.2% and 16.8%, respectively.
The decline in the credit card segment began at the end of 2019, but did not go go quickly: in monetary terms, the issuance of credit cards in the fourth quarter of 2019 fell by a more modest 11.4%.
In money terms comparing January 2020 (RUB34.6bn) with December 2019 (RUB62.6bn), the difference is almost two-fold, reports RBC, but January is traditionally a weaker month for retail lending anyway as the holiday season comes to an end. The average limit on a credit card has also fallen from RUB67,600 in December to RUB64,000 in January.
Credit cards are the most exposed to the CBR tighten conditions on unsecured consumer borrowing as the debt is more difficult to get rid off if the borrower gets into trouble, according to experts cited by The Bell.
In 2019, retail lending growth slowed compared to the record year of growth in 2018 to 18.5% versus 22.4% the year before. In the segment of unsecured consumer loans the rates went to 20.9% versus 22.8% over the same period.
Since October 1, the regulator ordered banks, when issuing unsecured loans of RUB10,000 or more, to calculate the borrower's debt burden: the higher its value, the more reserves the bank must create for such a loan. As a result, the share of approved loan applications in 2019 fell to a two-year low: 36.9% against 41% in 2018.
Judging by the data for recent months, in 2020 the growth of retail lending may turn out to be noticeably lower than in 2019, but still higher than the growth of nominal incomes of the population, which were up 4.6% year-on-year in the fourth quarter of 2019.
13 RUSSIA Country Report March 2020 www.intellinews.com
