Not long left for debts – Newspaper Kommersant No. 174 (7375) of 09/21/2022

The Central Bank intends to tighten the requirements for banks to issue unsecured loans to citizens for a period of more than five years. A number of market participants consider this measure excessive. According to the regulator, about 10% of loans may be subject to restrictions, and in three years citizens will not be able to borrow about 800 billion rubles. At the same time, experts believe that the changes will not drastically affect the availability and volume of issuance, but rather lead to a redistribution of the client base. A number of large banks will receive new borrowers from small retail monoliners that will not be able to fit into the new limits.

The Bank of Russia announced new measures to limit the risks of consumer lending, follows from the document (.pdf) published on the website of the regulator. In particular, from the beginning of 2023, it is planned to limit the provision of consumer loans without collateral for a period of more than five years to 10% of the total volume of disbursements per quarter. At the end of 2021, when such a limit was first discussed, the Central Bank was talking about a share of 25% (see below). “Kommersant” December 28, 2021). In the first quarter of 2022, it actually amounted to 18%, in the second – only 13%. However, some players have more than 50%.

Another limitation concerns loans to customers with a leverage ratio (LLL) exceeding 80%. That is, when more than 80% of the borrower’s average monthly income is spent on expenses on all loans. The share of such loans per quarter should not exceed 25%. Restrictions will apply to both regular consumer loans and credit cards with a limit. They will not affect banks with a basic license, since their contribution to the growth of the debt burden, according to the Central Bank, is minimal.

According to the regulator, the measures will not seriously affect the availability of credit. In particular, the share of borrowed funds subject to a quantitative term limit in unsecured consumer loans is 5%, in the credit card segment – 1%. In volume terms, up to 10% of loans may be subject to restrictions. Last year, quarterly cash loans, according to Frank RG, amounted to 1.4-1.9 trillion rubles. At the beginning of 2022, it decreased to 1 trillion rubles, and in the second quarter – to 660 billion rubles. According to the Central Bank, due to these measures in 2023-2025, the projected portfolio of unsecured loans will decrease by about 800 billion rubles. Experts also believe that in practice there will be not a decrease in loans, but a redistribution of customers between banks.

According to Anna Avakimyan, chief analyst at RegBlock, the most likely scenario is that mid-level banks will quickly run out of limits, and citizens will go to state banks or large private players for money.

The biggest impact, she explains, will be on banks “that have built their business model on cash loans and credit cards without the ability to replace new retail business with mortgages.” As an example, the analyst cites Post-bank, HKF-bank, Tinkoff-bank, Renaissance Credit bank, OTP-bank. However, Ms. Avakimyan clarifies, they will try to adapt – for example, through the launch of retail cash loans against liquid collateral (real estate or securities) to overcome quantitative restrictions.

In the structure of the portfolio and loan disbursements of HCF-Bank, the share of unsecured loans for a period of more than five years is small, says the chief managing director of the bank Andrey Spivakov: “Therefore, new regulatory measures will not have a significant impact on our business.” Renaissance Credit and MTS Bank clarified that there simply are no lending programs for more than five years. Other banks did not respond to Kommersant’s request.

Some bankers consider the Central Bank’s actions quite reasonable. There is a practice on the market of “overestimating” the loan term to improve the debt burden and reduce the burden on capital, adds Sergey Kapustin, Deputy Chairman of the Board of the Asia-Pacific Bank.

“However, for clients, this can create risks. Unlike a mortgage, a long-term consumer loan can cause “credit fatigue,” when the client reports that, according to his calculations, he has already paid his debt and does not want to pay more, ”the banker explains. According to him, it is to exclude this kind of “manipulation” with the parameters of the PDN that the regulator introduces restrictions.

But for a number of borrowers, long-term lending is the only way to comfortably pay off, spending no more than the recommended 30% of income on it, objected Elena Trofimova, director of product development and customer service at Novikombank. Therefore, such loans will continue to be in demand. “Given the existing limit for “long” loans when calculating PTI, limiting the share of loans with a term of more than five years in the portfolios of banks seems excessive,” she said. Kommersant’s interlocutor at a large bank adds that “now the market needs incentives rather than restrictions.”

Olga Sherunkova