Companies borrow downstream – Newspaper Kommersant No. 189 (7390) dated 10/12/2022

The share of loans with a floating rate in the corporate segment has updated its maximum since the beginning of 2019, reaching 42%. Banks thus now insure interest rate risks when issuing long loans. At the same time, a significant part of loans is pegged to the key rate of the Central Bank, which has been steadily declining in recent months. Experts expect that, based on current conditions, the share of floating rate loans will stabilize before the end of the year.

The share of floating rate loans in the corporate portfolio reached its highest since the beginning of 2019 in summer. As of the end of July, it was about 42%, Kirill Tremasov, director of the Central Bank’s monetary policy department, said on Tuesday, October 11, at the Cbonds conference “Corporate lending in Russia – 2022”. At the beginning of 2019, such loans accounted for less than 30% of the portfolio. Even taking into account a slight decrease in the share of such loans in August to 41.6% in absolute terms, they reached a record of 19.7 trillion rubles. (growth by 1.4 trillion rubles since the beginning of the year).

In recent months, the corporate loan portfolio has also increased. At the beginning of September, its volume increased to 47.3 trillion rubles. (7.8% since the beginning of the year). According to Mr. Tremasov, the observed growth in lending is mainly due to the increase in the issuance of preferential loans. According to him, today the share of concessional lending in the corporate portfolio is approaching 15%, having almost tripled since the beginning of 2020. VTB, for example, has issued over 259 billion rubles since March 2022. financing to various companies within the framework of state programs to support backbone enterprises.

At the end of February, the key rate rose sharply to 20%. And then the banks had to – sometimes unilaterally – revise interest rates on loans already issued, revaluing them to 23-25%, Kommersant’s interlocutors say. Now the floating rate may in some cases be lower than the fixed rate under the same conditions. As Alexander Proklov, senior managing director of the NKR rating agency, explains, a significant increase in the share of loans with a floating interest rate is the banking sector’s response to the instability of lending conditions and their unpredictability in the long term. “By using floating interest rates tied to the key rate of the Central Bank or market indicators, banks first of all reduce the risks of a sharp drop in margins in the event of significant volatility in the financial market,” he notes. Currently, the bulk of the portfolio consists of loans at a rate tied to the key rate of the Central Bank – 15.6 trillion rubles. against 13.5 trillion rubles. at the beginning of 2022 and 8.8 trillion rubles. a year earlier. As one of the bankers notes, depending on the quality of the borrower, the premium to it can range from 1.5-2 percentage points to 4-5 percentage points. To a lesser extent, the share of loans is tied to such indicators of the interbank market as MosPrime rates, RUONIA, LIBOR, etc. At the same time, according to Kommersant’s interlocutor, fixed rates are acceptable in the segment of lending to small and medium-sized businesses, since financing terms are usually short.

“However, loans with a floating rate create additional risks for the borrower of an increase in the cost of servicing a loan,” Mr. Proklov notes. At the same time, in the context of relatively low demand for corporate loans, the offer of floating rates is an element of competition, adds Valery Piven, head of the financial institutions rating group at ACRA. Among the minuses – the revision of the rate in favor of the borrower can be perceived as a restructuring and lead to the need to create reserves, he adds.

According to the NKR, in the short term until the end of 2022, the likelihood of a significant increase in the share of floating rate loans is low, since there is a stabilization of interest rates in the whole market. “In the future, the position of the banking sector in relation to the floating rate will depend on the realization of new risks, both political and economic, such as a recession in the largest countries, falling prices on commodity markets, etc.,” he concludes.

Olga Sherunkova