Collectors are seeing an increase in the share of executed payments

According to the National Association of Professional Collection Agencies (NAPCA), based on the results of the third quarter, the share of promises kept by debtors in the banking cession segment may reach 91.2%. This is the highest figure since the beginning of 2022. However, the situation is very different for different players, and in the regions the share can be no more than 15%. And even the optimistic trend of large collectors is not seen by market participants as long-term: the economy is volatile and there is no guarantee of stability of debtors’ incomes.

Based on the results of the third quarter, the share of promises kept by debtors in the banking assignment segment may reach 91.2%, NAPCA calculated. This is the highest figure since the beginning of 2022. For comparison: a year earlier this figure was at 85.3%, according to industry association data.

NAPCA is confident that such a high level was achieved “thanks to the use of an individual approach to debtors by collectors: establishing a comfortable payment amount for the client.” The action of the macroprudential limits (MPL) of the Central Bank should also have had an impact on better execution of overdue payments, believes Alla Khrapunova, an expert of the ONF project “For Borrowers’ Rights”. “The introduction of MPL always has a delayed effect – loans and borrowings are issued of better quality, which means that dealing with arrears will be easier. The Bank of Russia notes that overdue debt on loans issued during the second quarter (NPL 1-90) stabilized at 10% due to a restrained approach to selecting borrowers,” she explains.

The positive dynamics of kept-to-promise (conversion of the promise to pay into actual payment) is recorded by market participants. At the end of the first half of the year, this figure in this debt niche increased by almost 50%, notes Alexander Vasiliev, CEO of the ID Collect service for the recovery of problem debts: “Now the MFO assignment portfolio is being updated with loans issued by primary lenders after tightening scoring models for clients with a fairly stable income , in profile as close as possible to banking ones. The solvency of such debtors is higher than in previous periods.”

According to ID Collect estimates, over the past year the income of MFO debtors has grown within 10% and is as close as possible to the income of bank debtors (see “Kommersant” dated September 4). Against this background, in the third and fourth quarter, the conversion of promises into payment for MFO assignments will at least remain at the current level, ID Collect concludes.

However, not all foreclosure market participants are optimistic about trends in borrower behavior. Thus, small regional agencies see rather negative dynamics. For example, according to Pravo Online, the share of those who pay has been declining for the third quarter in a row and is below 15% at the end of the first half of the year. This is probably due to the fact that positive dynamics, with more than 90 percent fulfillment of promises by debtors, are observed by the largest market players who have the opportunity to buy expensive debts at an early date (see Kommersant on August 11).

Bank arrears are always of higher quality than microfinance debts. This is due to the approaches to assessing the solvency of borrowers used in banks and microfinance organizations – in the first case, scoring is more conservative, a larger number of documents and aspects of clients are analyzed. MFOs have traditionally issued loans to borrowers with the worst credit history and high maximum debt load (MLL). In addition, Alla Khrapunova notes, according to the Bank of Russia, in the second quarter there was a high volume of independent work with problem debt on the part of microfinance organizations, which means that the debts transferred to the market were of poorer quality – the oldest, most hopeless debt.

Experts assess the prospects for the development of the situation with caution. “On the one hand, MPLs are being tightened, which means that the quality of loans and borrowings should improve,” explains Alla Khrapunova. “However, the share of funds issued to borrowers with a MPL of 50–80% is still high. This means that risks remain.” Because of the MPL, there is a flow of borrowers with high personal income to financial institutions that “have the reserves to issue loans of such categories,” the expert adds. This way, she emphasizes, “borrowers with debt still have the opportunity to get money.”

Polina Trifonova