The Central Bank is trying to restrain consumer lending
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The growth rate of the retail lending market is increasingly worrying the Central Bank, the regulator is considering the possibility of a new tightening of macroprudential limits already in the fourth quarter. Also, high-risk borrowers can be classified as those whose marginal debt burden is at the level of 50%, and not 80%, as it is now. Bankers consider the new restrictions unnecessary. But even if they are introduced, they will be able to expand their offer for wealthy clients who will be forced to resort to lending in the face of rising prices and falling incomes.
The Bank of Russia estimates the growth rate of the retail credit market at 20% per annum, said Elizaveta Danilova, Director of the Financial Stability Department of the Central Bank, at the Financial Congress. In August, the regulator will determine macroprudential limits (MPL) for the fourth quarter, allowing for their tightening if lending continues to grow, she stressed.
At the moment, restrictions apply only to borrowers with a maximum debt burden (PTI, the ratio of the borrower’s income to payments on debt obligations) of 80%.
The share of unsecured loans provided to such borrowers should not exceed 20%. But, according to Ms. Danilova, the PDN of 50% is also too high.
“We are taking measures to ensure that with a fairly rapid growth in consumer lending … this does not happen at the expense of high-risk lending,” Central Bank head Elvira Nabiullina said at the same forum. According to the Central Bank, more than 60% of unsecured consumer loans are issued to borrowers with more than 50% PTI. “Therefore, the regulator is thinking about applying the limiting tool here as well in order to avoid the accelerated growth of high-risk lending,” Nabiullina explained.
According to the results of June 2023, banks issued loans to individuals for a total of 1.47 trillion rubles, estimates Frank RG. This is a record result for the entire time of observation. Since the beginning of the year, the volume of loans issued has reached 7.32 trillion rubles, which is 1.8 times higher than in the first half of 2022.
The bankers themselves are skeptical about the possible tightening of regulation, explaining that the measures taken may lead to a slowdown in the country’s economic recovery, a decrease in the population’s access to quality credit, but not to a decrease in risks for the banking system.
“In the current design, when only the formally confirmed income of the borrower or, if not, the average per capita income is taken into account for the LPL, this leads to inefficient solutions. Banks are forced to refuse borrowers who have an acceptable level of risk according to internal models. As a result, satisfaction with financial services is declining, while the level of risk in the banking system is not,” explains Maxim Kondratenko, member of the VTB Management Board. “The measures already taken by the Central Bank should have a positive impact on high-risk lending. Further tightening of regulation may lead to limited lending to the population, which may negatively affect the pace of economic recovery,” says Vyacheslav Dusaleev, Director of Retail Business at Rosbank.
New regulatory measures will affect loans with high PTI (while the cut-off level will continue to decrease) and loans with long terms, says Mikhail Doronkin, Managing Director of the NKR rating agency. And a much greater impact on the growth rate of lending to individuals can be exerted not by the IPL, but by an increase in the key rate, Dmitry Gritskevich, head of banking and financial market analysis at PSB, believes.
In any case, the expected amendments to the law “On consumer credit”, limiting the possibility of imposing additional products and services, together with increased lending requirements for borrowers with a high debt load and a likely tightening of the MPL, will force the market to reconsider its business models, the expert of the “People’s Front” project believes. » «For the rights of borrowers» Alla Khrapunova. At the same time, she doubts that lenders will resort to raising prices for unsecured loans, since even without changes and tightening in the market, “there is a real battle for a good client and competition is seriously growing” (see “Kommersant” dated July 3).
Elvira Nabiullina, head of the Central Bank, at the “Financial Congress” on July 6:
“This is precisely a measure aimed at curbing too rapid growth in the debt load of the population.”
“The market still has a fairly large potential for growth in terms of involving borrowers with a low debt burden,” Mr. Doronkin believes. With “stagnant incomes and rising costs of large purchases,” he explains, citizens who previously had limited access to credit are entering the market.
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