At the end of November, the credit card market did not experience the traditional pre-New Year growth

At the end of November, the credit card market did not experience the traditional pre-New Year growth, according to materials from the United Credit Bureau (UCB). This is due to an increase in the key rate and the establishment of stricter macroprudential limits for banks from the fourth quarter. The segment is also under pressure from the development of more interesting installment payment services (BNPL) for consumers, which are not required to take into account the credit burden of citizens and do not affect it.

According to OKB (one of the top three Russian credit history bureaus), in November banks issued 2.27 million credit cards worth 270.37 billion rubles. The average bill was 119,298 thousand rubles. The volume of issuances in November did not show the traditional pre-New Year acceleration, but on the contrary, fell.

119.3 thousand rubles
set a limit for credit cards issued by banks in November 2023.

Thus, compared to October, the issuance of credit cards showed a decrease both in quantitative terms (by 0.5%) and in monetary terms (by 1%). In previous years, even at the height of the pandemic, in October-December the credit card market showed growth both in units and in the volume of issues. In 2022, 10% more credit cards were issued in November than in October, and 5% more in December than in November.

VTB confirmed that there is no rush in the credit card market. “Traditionally, in the pre-New Year period, we observe an increase in customer interest in credit cards, which is associated with holiday spending and the desire to resolve the last financial issues in the outgoing year,” explains Timur Smirnov, head of the VTB retail credit business department. “However, this year the usual surge was limited by an increase in macroprudential limits.” In particular, in the fourth quarter, the limit for clients with a maximum debt load (MDL) was reduced from 20% to 5%. In addition, a new limit of 20% has been introduced for PIT 50–80%.

Other factors also put pressure on the credit card segment, experts say. From a marketing point of view, credit cards are considered an effective channel for attracting customers thanks to various promotions and offers and are often issued in addition to other banking products.

But now cards are competing with BNPL installment services (buy-now-pay-later), actively offered by banks in partnership with various marketplaces and stores, notes Konstantin Borodulin, director of NRA bank ratings.

“Taking into account the growth of the key rate, as well as the regulator’s measures to cool the segment, the growth in issuances in December compared to November, if there is any, will be moderate,” believes Yegor Lopatin, director of the group of financial institution ratings of the NKR agency.

Next year, according to Mr. Lopatin, the segment “will most likely show restrained dynamics, which will largely be determined by the regulator’s policy to cool unsecured retail.” “Credit cards are historically the riskiest type of lending, and potential losses from non-repayment are included in the increased interest rate, that is, an increase in the key rate only makes this product more expensive for consumers,” adds Konstantin Borodulin.

So far, the credit card segment has not fully responded to the increase in the key rate.

As follows from the OKB data, the weighted average rate on credit cards has not changed significantly since September of this year, despite a series of key rate increases (the Bank of Russia began an increase cycle in July, during which time the rate increased from 7.5% to 16%), and remained at just over 27%. The market average total cost of credit (TCC) for credit cards showed a slight increase only in November, reaching 28.4%, which is 1 p.p. higher than in October. At the same time, on financial marketplaces the rates offered for credit cards reach 70%, and the PSC reaches 50%.

Polina Trifonova