Page 72 - RusRPTAug23

Overall, the corporate lending landscape in Russia has shown resilience and positive momentum, reflecting a favourable economic environment for businesses seeking financing for various projects and ventures. As the economic conditions continue to evolve, it will be crucial to monitor lending trends to assess their impact on the broader financial market and the economy.
Consumer lending in June saw a growth rate of +1.6%, continuing the high level of consumer activity seen in the previous month, which recorded a growth rate of +1.7%. However, it is anticipated that the tightening of macroprudential limits from July 1, 2023, will have a cooling effect on the market. These measures are also expected to contribute to achieving a more balanced credit structure and reducing the level of over-indebtedness among the population.
As of the third quarter of 2023, macroprudential limits (MPL) are being reduced by 5 percentage points compared to the second quarter of 2023. This means that the proportion of loans issued to borrowers with a debt-to-income ratio (DTI) greater than 80% should not exceed 20% of total lending. Additionally, loans with a maturity of more than five years should not exceed 5% of total lending.
The percentages of problem loans and overdue debt slightly decreased in June, as shown on page 5 of the report. This trend indicates a positive development in the credit quality of consumer loans.
Mortgage lending in June saw a notable acceleration, reaching 2.5% compared to 2.2% in May. This represents the highest increase since December 2022, which recorded a growth rate of 3.3%.
The main driver of this surge was the market-driven mortgage, with lending growing by 11% to 307bn rubles, up from 277bn rubles in May. Additionally, mortgages with government support also saw moderate growth of 6% to 321bn rubles, compared to 307bn rubles in the previous month. This growth can be attributed to both the "Family Mortgage" (~150bn rubles compared to 142bn rubles in May) and the "Privileged Mortgage" (136bn rubles compared to 126bn rubles).
There has been a shift in demand towards the secondary real estate market, likely due to the outpacing price increases in the primary market. The allure of purchasing a property with ready-made renovations and furnishings is making the secondary market more attractive to buyers. Furthermore, the tightening of certain approaches in macroprudential regulation from June 1, 2023, may have influenced the primary market. Notably, the new requirement for an initial payment of at least 20% (30% from January 1, 2024) to qualify for preferential loans with government support could be a contributing factor.
Despite the increased lending activity, the share of problem loans remains at historically low levels, standing at 0.6%. For a more detailed analysis of the credit quality, please refer to page 5 of the report.
72 RUSSIA Country Report August 2023 www.intellinews.com