Loans are returned ahead of schedule - Newspaper Kommersant No. 20 (7465) dated 02/03/2023

Loans are returned ahead of schedule - Newspaper Kommersant No. 20 (7465) dated 02/03/2023



Microfinance specialists note the growth of early repayment of medium-term loans. This is due to the transition of borrowers to a savings model of behavior, as well as strict scoring by MFIs, when the most solvent clients got access to larger amounts. In case of early repayments, companies receive less interest payments. However, it is more profitable to let the borrower repay the loan when funds are available and keep him as a client than to allow a default.

According to MoneyMan, in the fourth quarter of 2022, the share of early repaid medium-term (Installment; IL) loans reached 34.2%. This is the maximum value for three years, says Sergey Vesovshchuk, CEO of the company. Moreover, if in 2020 the average share was about 20%, in 2021 it rose to 25%, then in 2022 it exceeded 30%.

In Eqvanta Group at the end of last year, 42% of IL-loans were repaid ahead of schedule. “In the Installment segment, since March, the issuance criteria have been tightened, so only the best customers remain in it, who more often extinguish ahead of schedule,” Andrey Kleimenov, CEO of the Group of Companies, explains the trend.

At Lime-Zym MFC, the share of loans in this category repaid ahead of schedule in the fourth quarter of 2022 amounted to 25.9%, which is more than four times higher than the figure for the previous year, said Olesya Kiseleva, director of the company.

According to the Bank of Russia, in the first nine months of 2022, the total volume of the microloan portfolio amounted to RUB 364 billion. The share of IL-loans accounted for more than a third - 140 billion rubles. The segment showed growth even though the total cost of a loan approached that in the PDL segment and amounted to 329-345% (for payday loans, the rate is 365%).

Installment loans are popular among individuals who are planning large purchases, as well as among individual entrepreneurs, for whom access to bank financing is difficult, participants in the microfinance market indicate. For some MFIs, the share of individual entrepreneurs in the Installment segment reaches 30% of borrowers.

“The share of people working for themselves, including individual entrepreneurs and LLC founders, is approaching 20% ​​among borrowers. It grew by 2.3 percentage points over the year, and by 4.7 percentage points over two years,” said Andrey Ponomarev, CEO of the online financial platform Webbankir. According to him, entrepreneurs take funds "both for personal needs and for operating expenses of the business."

“If there are free funds, people will always strive to repay more expensive loans in order to reduce the credit burden,” explains Mr. Kleimenov. Consumers of Installment loans in general are a more conscious audience, they fulfill their financial obligations much more accurately and calculate the savings in case of early loan closure, Igor Smirnov, CEO of Creditter, believes.

In 2023, early repayment volumes will grow, market participants believe, especially taking into account regulatory changes. “It is natural that clients who had a loan at a rate of 1% will want to reduce their debt burden, repay loans ahead of schedule in order to arrange them at a lower interest rate (0.8% per day.— "b"),” said Aleksey Perederiy, Risk Management Director at MigCredit MFC.

Early repayments do not bring obvious economic benefits to microfinancers, market participants admit. “The growth in the share of early repayment of loans in the Installments category reduces the yield on interest payments of borrowers,” explains Olesya Kiseleva. However, for MFIs it is better for the client to repay the loan ahead of schedule than to “delay,” Alexey Perederiy notes. Dealing with delays requires much higher costs from the company - informing, collecting, legal costs, explains Roman Makarov, CEO of Zaimer.

For the financial result of the industry as a whole, early repayments do not pose a big problem, Ivan Uklein, director of banking ratings at Expert RA, is sure. So, the most technologically advanced companies expected such behavior when modeling in the spring of 2022. In addition, large companies continue to earn on subsequent loans, the expert points out. Preliminary data on the results of the crisis year 2022 (see Kommersant dated December 29, 2022) show an increase in financial results by 10–15%.

Polina Trifonova



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