Page 62 - RusRPTJul19

8.1.2 Loans
In May the credit portfolio of the banking sector inched up by RUB65bn or 0.05%. The retail-crediting segment continued to outgrow the rest of the loans, expanding by 1.6% in May.
Retail lending is to slow down at the end of the year from 23.8% annually as of the start of May. “Taking into account gradual saturation of the retail market and measures of the central bank targeted at holding down excessive growth of some segments, we might expect retention of the current lending growth with subsequent slowing down by the year’s end,” the document read.
The Central Bank advises banks not to forget about loans to corporate clients. This segment is growing worse than retail lending - almost a third of the total loan portfolio of banks accounts for the population. To reorient banks to lend to the real sector, the Central Bank is ready to make such loans more profitable: it plans to allocate investment grade corporate borrowers for whom the risk ratio will be reduced from 100 to 65%, said Nabiullina in May. So far it is more profitable to issue loans to the population. Margin in retail is higher, so most banks want to come here, states Fitch analyst Anton Lopatin. Yield in retail last year amounted to an average of 14.7%, in the corporate segment - 11%, calculated the analyst of Gazprombank Andrei Klapko. And retail risk assessment procedures are more standardized, he admits. According to Fitch forecasts, retail loans this year will grow by 12-17%, corporate loans - by 5%.
Almost 60% of Russian with debt have faced problems with servicing that debt, according to a study by the by the World Bank and Rospotrebnadzor watchdog, RBC business daily reported on June 12. The central bank is becoming increasingly concerned by the possibility of a consumer credit bubble forming. Despite measures undertaken by the Central Bank of Russia (CBR) to cool the retail lending market, unsecured consumer loans in Russia keep growing, increasing by 25% year-on-year in January- March 2018. Unsecured loans accounted for RUB1.05 trillion of the total retail loans volume of RUB1.9 trillion issued, and as a class are growing faster than overall retail loans (16%) and mortgages (3.5%). The study by the WB reportedly found that 9% of the borrowers have an overdue loan, 10% had to restructure their loans, while 14% have reported problems with interest payments. Only 41% of the respondent borrowers did not experience any problems with servicing their loans. Notably, on the background of falling disposable incomes in Russia, over a fourth of respondents said that over 75% of their household income in spent on debt servicing, subsistence spending, and housing. In the first quarter of 2019 real disposable income of Russians declined by 2.3% year-on-year. In 2014-2017 disposable incomes declined too, only inching up by 0.1% in 2018. Declining disposable incomes are linked to the growth of consumer crediting, as well as curbing of the grey sector of the economy, the Minister of Finance Anton Siluanov said on June 13, as cited by RIA Novosti. "The [reasons] are the growth in consumer lending, mortgages, and growing servicing and interest payments," Siluanov argues. The Ministry of Economic Development links declining disposable income to growing wages, slow indexation of social transfers, and shrinking other forms of income, such as from entrepreneurship, real estate, and unregistered incomes.
Household borrowing and deposits
62 RUSSIA Country Report July 2019 www.intellinews.com