Page 101 - RusRPTSept23

In the consumer loan segment, the share of problematic loans slightly decreased from 8.5% to 8.4%. Thanks to the existing measures implemented in 2023, the proportion of new loans with DTI ratios exceeding 80% has decreased, although it still constitutes around 30% as of 2023. In order to prevent further growth in the indebtedness of the population, the Bank of Russia has tightened macroprudential limits and increased macroprudential add-ons.
The quality of the loan portfolio in June continued to improve to the highs of recent times. The share of overdue debt in the corporate loan portfolio as of July 1, 2023 accounts for only 4.7%, which is the lowest value since the beginning of 2015. It should be noted that the positive effect of the decrease in the share of delinquency occurs mainly due to a significant increase in lending, and with the stabilization of loan portfolios, the share of delinquency may slightly increase.
The number of individuals defaulting on bank loans in Russia has surged to 17.7mn during the first half of this year, up by a quarter (23%), or 3.3mn more defaults, compared to the corresponding period last year, the Federal Bailiff Service (FSSP) said reports Izvestia on August 22.
Cases involving debt collection from individuals in favour of banks have been on a consistent rise. In the span of January to June in 2020, there were merely 9mn such cases. However, this figure increased to 12mn during the same period in 2021. The total amount planned for recovery in favour of credit institutions stands at a substantial 2.5 trillion rubles.
The rise in non-performing loans (NPLs) comes just as the banking sector is enjoying one of its most profitable years in the last decade. In July, the collective net profit of Russian banks surged by 4.1%, reaching RUB327bn ($3.5bn), their best month so far this year, the Central Bank of Russia (CBR) reported on August 21. (chart)
At the same time Presidential Aide Maxim Oreshkin said in an op-ed on August 14 that the fast pace of growing consumer loans is a cause of concern.
"If you look at the structure of the money supply formation, corporate and consumer lending played the key role in speeding up the demand. For example, corporate lending ensured the formation of RUB9.5 trillion worth of additional demand in the economy, while consumer lending added RUB3.3 trillion. Credit activity has been accelerating in recent months. The acceleration of consumer lending particularly raises concerns," he said.
The CBR has reported that credits are growing across the board in its latest monetary policy strategy report for July.
“The increase in retail lending for 12 months, as of July 1, 2023, amounted to + 17.3%. For comparison, as of July 1, 2022, the increase was 12.5%, and as of March 1, 2023, it was only 8.2%,” the CBR said in its latest monetary policy strategy paper. “Thus, as the weak performance of early-mid 2022 was replaced by the record monthly results of the current year, the annual growth rate of retail lending accelerated significantly. According to RIA Rating experts, the trend of improving dynamics in the moving segment will continue due to the
RUSSIA Country Report September 2023 www.intellinews.com