Page 87 - RusRPTOct23

It's worth highlighting that the increase in credit demand is predominantly observed in ruble-denominated loans, which experienced a rise of 2.2% or 1.209 trillion rubles. Conversely, foreign currency loans saw a marginal decrease of 0.9 billion US dollars, or 0.7% in ruble equivalent. This decline can be partially attributed to ongoing conversions of "toxic" currency loans into rubles.
Furthermore, a substantial volume of loans has been extended in yuan, estimated to exceed 2 billion US dollars in equivalent, primarily to chemical, oil and gas, and trading companies.
Looking ahead, it is expected that credit growth will adopt a more tempered trajectory in the remaining months of the year, taking into account rising interest rates. However, the corporate credit market's robustness remains, supported by high credit quality indicators.
These trends reflect the dynamic landscape of corporate credit in Russia, where businesses adapt to evolving economic conditions while maintaining a continued appetite for financing opportunities.
Consumer lending, according to preliminary data, continues to grow at a relatively high pace (+2.4% in August compared to +2.0% in July), despite the rise in interest rates following the key rate hike. Banks maintain a high risk appetite. Seasonal factors also contribute to the growth of lending, as August traditionally sees increased spending due to vacations and preparations for the new academic year.
To curb the risk of overheating in the market, the Central Bank of Russia continues to tighten its macroprudential policy, as the quality of new loans remains low (in 2Q 2023, loans with a Loan-to-Value ratio >80% accounted for 27%, and those with a Loan-to-Value ratio of 50-80% made up 33%).
Starting from October 1, 2023, significant macroprudential limits will be tightened (in 4Q 2023, loans to borrowers with Loan-to-Value ratios >80% and loans with a maturity of more than five years should not individually exceed 5% of total lending). Additionally, as of September 1, 2023, macro-add-ons to risk coefficients for loans with high values of the Credit Scoring System and Loan-to-Value ratios have been increased. It is expected that these measures will lead to a noticeable slowdown in the growth rate of the loan portfolio by the end of 2023 and make the lending structure more balanced.
In August, the shares of non-performing loans and overdue debt slightly decreased.
87 RUSSIA Country Report October 2023 www.intellinews.com