The corporate loan portfolio grew in October due to loans with floating rates

The share of the portfolio of corporate loans with floating rates approached 50% of the volume of debt of legal entities. The main share of such borrowings is tied to the key rate of the Central Bank, which doubled from July to November, to 15%. In such conditions, it is simply risky for banks to issue fixed-rate loans. This also threatens the loss of borrowers during the key rate reduction cycle, as it will push them to refinance with other banks. However, experts do not expect the rate reduction to begin until the second half of 2024.

At the end of October, the portfolio of loans to legal entities with floating and variable rates exceeded RUB 31 trillion for the first time. Over the month, it grew by RUB 1.1 trillion, which is almost eight times more than the growth of the corporate fixed-rate portfolio.

So far, the share of fixed-rate loans (52%) exceeds the share of floating-rate loans (48%). But the difference is steadily decreasing – at the beginning of the year the ratio was 55.5:44.5. For the largest banks, loans at floating rates already account for a significant share of the portfolio. For example, at Sberbank they make up about 50% of the portfolio, at VTB – 75%.

A similar trend is typical for the bond market, where issuers placed large issues with floating coupons (see Kommersant on December 4).

Judging by the data of the Central Bank, the float portfolio grew mainly due to loans tied to the key rate of the Central Bank (in October it was 13%, now – 15%), by 1.14 trillion rubles, to 27.2 trillion rubles. A symbolic increase was also shown by loan portfolios linked to RUONIA (interbank deposit rate). At the same time, the volume of loans linked to the MosPrime, LIBOR and EURIBOR indicators decreased (by a total of RUB 135 billion).

In 2022, the Bank of Russia announced a transition from the MosPrime indicator to RUONIA. The reduction in the portfolio at rates linked to LIBOR and EURIBOR (this includes a portfolio of loans in US dollars and euros) is associated with a general decrease in the volume of foreign currency loans, says Roman Koenigsberg, head of the internal audit and risk management department at FBK. According to him, the current dynamics are not related to revaluation, but rather reflect structural changes in companies’ foreign currency debt.

The overall current level of interest rates on business loans looks “quite high,” notes Gennady Shinin, head of the department for work with financial institutions at B1. According to the Central Bank, in October 2023, weighted average rates for terms over three years were 12.35% per annum, the maximum since April 2022. For loans for a period of 1–3 years, the weighted average rate was 12.6% per annum, the maximum since March 2022. That is, the maximum rates will be even higher. In particular, the RUONIA rate in October was 12.4–13.2% per annum, and at the end of November it rose above 15% per annum.

“By issuing such loans, banks hedge their interest rate risks,” Mr. Koenigsberg believes. On Friday, December 15, the next meeting of the Central Bank will be held on the key rate; most analysts expect it to be raised by another 100 bp, to 16%.

However, high fixed rates also create risks. Many banks include in their plans the possibility of reducing the key rate in the second half of 2024, notes Mr. Shinin. At the beginning of a key rate reduction cycle, a bank may lose a borrower with a loan at a high fixed rate, who, as expected, will want to refinance the debt cheaper in another bank. A rate tied to a variable indicator, explains Mr. Shinin, will reduce such risk, since it will begin to decrease following the key one.

Olga Sherunkova