Borrowers return from vacation – Newspaper Kommersant No. 36 (7481) dated 03/02/2023

Approval of applications for restructuring citizens’ loans in January barely exceeded 68 thousand, having rolled back to the value of October last year. The hype, intensified, among other things, by partial mobilization, has already subsided, and market participants expect a further reduction in the number of applications, including against the backdrop of economic stabilization. However, the share of approvals for loan holidays is unlikely to grow, moreover, the criteria for their provision should be reviewed, experts say.

According to the Bank of Russia, at the end of January 2023, 68.2 thousand applications for loan restructuring (banks’ own programs, mortgage holidays, credit holidays and restructuring under the programs of the Bank of Russia) were satisfied in the amount of 31.4 billion rubles. Such data follows from the statistics of the Bank of Russia (.pdf). Thus, the volume of restructuring approvals for individuals fell to the level of October last year, demonstrating a decrease for several months in a row. Then the banks approved only 64.8 thousand restructurings and vacations in the amount of 22 billion rubles. At the same time, in November last year, there was a local peak – 85 thousand applications were approved for 39.3 billion rubles.

As a Kommersant source in a large retail bank explained, the demand for restructuring began to grow rapidly in October, after the announcement of partial mobilization.

However, that month, the level of approval did not yet show a sharp increase, as financial institutions were waiting for additional clarifications, the source of Kommersant describes the situation. After November, however, interest in restructurings and vacations began to decline. “Everyone who wanted them has already received them, in addition, the completion of mobilization was announced,” explains the interlocutor of Kommersant.

Of course, applications for restructuring are still being received, but their volumes are declining, bankers say. In particular, according to VTB, the bank continues to restore payment schedules for its customers’ loans. “Over the past year, more than 1.6 million retail customers have coped with loan debt. This is about 95% of the total number of borrowers who faced financial difficulties in 2022. After the restructuring of loans, more than 80% of customers return to their usual payment schedule,” VTB notes.

In general, over 70% of borrowers return to the schedule in the market after a credit holiday, Elman Mehdiyev, deputy chairman of the Central Bank’s expert council for protecting the rights of consumers of financial services, cites data.

In the conditions of a more stable economic situation and the absence of new “black swans”, one can expect a further decrease in the number of applications for credit holidays or their stabilization, Mikhail Doronkin, managing director of the NKR rating agency, agrees. In addition, the introduction of a permanent opportunity to apply for loans is unlikely to seriously strengthen the trend, notes Valery Piven, head of the financial institutions rating group at ACRA, “this requires a deterioration in the situation on the labor market, which is not happening now.”

However, loan holidays, as well as restructuring, inevitably mask the real quality of loan portfolios, experts say. And in the future, a delayed increase in bad loans and the level of delinquency in portfolios is possible, and an increase in the number of defaulting borrowers threatens banks with lost income in the event of their bankruptcy, says Natalia Bogomolova, an analyst at NRA banking ratings.

At the same time, a significant increase in the level of approval of appeals (now it is just over 40%) seems unlikely, regardless of changes in legislation. The standard reasons for applications – a decrease in income – do not always adequately characterize the real situation of borrowers and require formal evidence that is not always available, explains Yuri Belikov, managing director of the Expert RA rating agency. In the future, it could be proposed to consider not only the dynamics of income, but also changes in the overall level and structure of the debt burden as grounds for granting vacations, he believes.

Polina Trifonova, Ksenia Dementieva