Defrost factors – Newspaper Kommersant No. 62 (7507) dated 04/11/2023
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The factoring market is recovering after a slowdown last year. According to the results of the first quarter, the factoring services portfolio reached 1.38 trillion rubles, exceeding the figure for 2022 by 1.4 times. Adjusted for data disclosure, the growth was 16%. This year the factors are going to work with higher risks, with new industries, products and new currencies. However, market participants note that the segment still faces risks that are not related to the assessment of credit quality of counterparties.
According to the Association of Factoring Companies (AFC), the portfolio of market participants in the first quarter of 2023 reached 1.38 trillion rubles. Compared to last year, the growth was 41.5%. However, as Dmitry Shevchenko, Executive Director of AFK, emphasized, “preliminary data indicate that the market is unfreezing not only in terms of transaction volumes, but also in terms of data disclosure. About half of the increase was due to the return to the sample of data from large market participants – VTB Group, Raiffeisenbank, as well as new participants.
Due to the outbreak of the military conflict in Ukraine, data for the first quarter of 2022 was not provided by some of the major players, including VTB (192.4 billion rubles in 2022, more than 13% of the market). According to the results of the first quarter of 2023, VTB Factoring has already provided data, taking into account the attached Otkritie Factoring (184.7 billion rubles). In the first quarter of last year, they were published separately. Taking into account these factors, the growth of the portfolio in the annual comparison is about 16%, which is nevertheless significant, given the high volatility of the markets.
The client base also continued to grow (see Kommersant of January 16). In the first quarter of 2023, it exceeded 9.5 thousand companies against 8.3 thousand companies in the first quarter of 2022. The increase in the client base is provided by new companies from the segment of small and medium-sized businesses, Mr. Shevchenko explained. In addition, the adaptation of the risk factor policy to work with the SME segment has been completed, and there is also a willingness to work with lower limits per client, confirms the growth in the number of clients, General Director of Rosbank Factoring, Boris Melnikov. “The largest Russian companies are forced to extend the terms of payment to their suppliers and contractors. In this case, this is a convenient tool for financing and supporting the supply chain,” GPB Factoring says.
The surveyed factors continue to offer the market greater product diversification and work in friendly currencies in 2023. “Along with classical services, companies pay advances for customers, integrate into the production chain of customers, control the process of movement of warehouse balances,” says Boris Sobolev, director of the factoring operations department at PSB.
The great potential of factoring in ABL-financing programs (asset-based lending), Igor Vnukov, CEO of VTB Factoring, is sure (see Kommersant of February 21). A promising direction could be an increase in the portfolio in mechanical engineering, taking into account the withdrawal of foreign players from the market, continues Mr. Sobolev. “In the first quarter, the company launched a new direction – “commodity factoring”. The solution is in demand by dealers, as it allows converting the current warehouse of equipment into working capital,” notes Igor Lysenko, General Director of SberFactoring. According to him, there is potential for factoring in the public sector, “in particular, financing of energy service contracts, as well as the inclusion of factoring in subsidy programs along with lending.”
Cross-border transactions are also of interest. Trade turnover with friendly countries near and far abroad is growing, this is especially noticeable in retail, says Mr. Vnukov. SberFactoring, for example, launched direct financing of non-resident suppliers from India in the national currency. The actual direction is non-recourse factoring with Belarus and financing of exporters to China in yuan, Mr. Lysenko is sure. According to AFK, the export factoring portfolio for the first three months of the year amounted to 17.3 billion rubles. (a year earlier – only 5.3 billion rubles), import factoring portfolio – 11.1 billion rubles. (a year earlier – 8.3 billion rubles).
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