Microfinance organizations ended the first half of the year with a profit

According to the results of the first half of 2023, microfinance companies (MFCs) received 27.3 billion rubles. net interest income, which is almost 60% more than a year earlier. But companies’ expenses are also growing (on personnel, on attracting customers, etc.), according to the results of the period, the growth was 30%, to 17.7 billion rubles. An increase in the key rate of the Central Bank raises the cost of debt service for the IFC. And the effect of the new regulatory restrictions that came into force in July will only be felt in September.

In January-June 2023, IFC received 66.6 billion rubles. interest income, which is 12.2% more than a year earlier, according to Kommersant’s calculations based on the data published by the companies. Net interest income showed an increase of almost 60% year-on-year in the first half of the year, to RUB 27.3 billion. At the same time, in general, the microfinance industry closed the first half of the year without losses.

However, new restrictions came into effect on July 1: a reduction in the maximum interest rate on loans from 1% to 0.8% per day, a reduction in the maximum allowable overpayment on a loan from 1.5x to 1.3x (x is the size of the loan body).

According to Ivan Uklein, Director for Banking Ratings at Expert RA, it will be possible to speak about the effect of these measures not earlier than in a month and a half. According to forecasts of the online financial platform Webbankir, this year portfolio growth will remain double-digit, but profits will remain at the level of last year. MFIs will actively look for additional ways to earn money, including on non-lending products (see below). “Kommersant” from June 22), says Marat Abbyasov, Commercial Director of MFC Migcredit.

At the same time, company reporting data indicate that the costs of general and administrative expenses have increased in the microfinance industry: in the six months of 2023, this figure reached the level of 17.7 billion rubles, which is a third more than in the same period last year . Earlier, Kommersant reported an increase in the expenses of microfinancers on advertising and marketing (see. “Kommersant” dated August 17).

“The increase in costs is caused by both industry factors and general economic factors (for example, an increase in operating expenses). A number of legislative changes required many market participants to increase their costs in order to meet the requirements of the regulator,” Elman Mehdiyev, Chairman of the Council of SRO Mir, explains the trend.

“Microfinance market players who have not yet collected sufficiently large volumes of loans to repeat customers will suffer more,” Marat Abbyasov believes. Against this background, about 200-300 companies may leave the market, Expert RA is sure; Seimer estimates that this figure could reach 600 companies. At the moment, there are 1053 MFIs in the register of the Central Bank.

“Less efficient companies will leave the market and transfer their client portfolio to larger players who will start introducing their technological solutions there and reduce operating costs,” notes Marat Abbyasov.

This market trend can also be explained by increasing competition, continues Roman Makarov, Director General of IFC Zaimer. “The period of active business transformation has come in those companies that intend to continue working: players are investing in themselves, paying great attention to information security and scoring technologies, developing customer service, expanding staff, and so on,” he notes.

“Not everyone will survive the race because of its high cost against the background of declining interest income,” Mr. Makarov describes the situation on the market. “The salaries of many high-class specialists have increased by 15-30% over the year. The cost of attracting an individual client has increased by about the same amount, ”Andrey Ponomarev, CEO of Webbankir, cites the data. Companies’ expenses will also grow against the backdrop of an increase in the key rate of the Central Bank by 350 bp. to 12% in August, adds Eqvanta CFO Yakov Romashkin: “Debt servicing costs will increase, which will have an impact on the overall margins of the business, albeit not so significant.” The fact that the IFC will soon have to go through the peak of payments on bonded debt, “Kommersant” wrote on August 22.

Polina Trifonova