In 2023, the volume of household loan restructuring decreased
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Last year, the volume of restructuring of household loans decreased, according to Sberbank data. Overall, this may also reflect the data for the sector as a whole. In 2024, against the backdrop of rising interest rates, the number of requests for changes in loan terms may increase, but this is unlikely to result in a significant increase in the number of actually completed restructurings.
Sberbank reported that by the end of 2023 it had reduced the number of restructurings by more than a third, to 138 thousand loans totaling 60 billion rubles. The bank provides data on retail clients without taking into account statistics on credit holidays for military personnel. The bulk – 85% – are consumer loans. VTB told Kommersant that their volume of restructuring has not changed compared to the previous year.
At the same time, according to the Central Bank, the number of applications for restructuring grew last year: 527.5 thousand were submitted in the first quarter, 555.7 thousand in the second, and 583.7 thousand in the third. Data for the fourth quarter has not yet been made public. According to Central Bank statistics, the share of approved applications, and primarily for banks’ own programs (which accounted for about 85% of those considered), was declining. In particular, at the beginning of the year it exceeded 41%, and in the third quarter it dropped below 35%.
Traditional practice for banks is to provide restructuring from a date of at least six months after taking out a loan. Restructuring can change both price and non-price parameters of the loan (changes in the interest rate, debt payment schedule, collateral, borrower, etc.). From January 1, 2024, the right to credit holidays in the consumer loans segment will be valid on an ongoing basis.
Roman Koenigsberg, head of the internal audit and risk management department of the FBK audit and consulting group, believes that a decrease in the volume of retail loan restructuring may be characteristic of the entire banking sector. He points out that in 2022, against the backdrop of sanctions restrictions, the Central Bank recommended that banks provide credit holidays for clients (including restructuring), similar to those launched during the pandemic. Many retail clients took advantage of this opportunity, so the decline in 2023 may be associated with a peak in holiday bookings in 2022. The decrease may also be due to an increase in the key rate (last year it more than doubled, to 16%).
“When the rate falls, clients have a desire to save on payments by re-issuing a loan. When the key rate rises, there is no demand for restructuring associated with this factor,” explains Mr. Koenigsberg.
According to the head of the ACRA financial institutions ratings group, Valery Pivnya, “restructuring in conditions of high rates may be unprofitable for the lender: banks are less interested in increasing the service life of a relatively cheap loan.”
At the same time, despite the rise in interest rates, citizens willingly took out loans, largely on preferential terms, while consumer lending began to slow down. In total, over the past year they took out loans in the amount of 16.8 trillion rubles, according to data from Frank RG (see. “Kommersant” from January 12). Managing Director of the Expert RA rating agency, Yuri Belikov, admits that in 2024 the intensity of filing applications for restructuring may increase. “This will be due to the expected increase in the frequency of difficulties with debt servicing against the backdrop of general debt load,” he believes.
Elvira Nabiullina, head of the Central Bank, at a meeting of the President of the Russian Federation with members of the government on November 8, 2023:
“One would think that such a standard (comprehensive debt settlement – Kommersant) would be given the force of law, so that it would be mandatory for all banks, so that people could solve the problem with different banks.”
However, VTB does not expect a significant change in the scope of restructuring in 2024. According to the head of the bank’s financial settlement department, Evgeniy Novikov, “this will be affected by both the Central Bank’s measures to cool retail lending and the liberalization of restructuring by banks, including the use of a comprehensive settlement, as well as proposals from individual players.”
For a bank, restructuring can have both positive and negative effects, explains Mr. Koenigsberg. “The negative thing is a decrease in cash flows from loan repayments and an increase in liquidity risk. The positive thing is a reduction in the volume of overdue debts and associated credit risks, therefore, the bank will have to spend less of its own capital to cover risks,” says the expert. In addition, for banks with excess liquidity, restructuring is a tool in the fight for the client, the expert concludes.
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