The growth of financial indicators of microfinance companies (MFCs) at the end of the third quarter slowed down relative to the previous period. This happened against the background of a reduction in the issuance of payday loans. The period of record growth is ending after stricter regulation of the industry came into force - reducing the maximum permissible rates, the amount of overpayments on loans and tightening macroprudential limits (MPL). Amid expectations of a further decline in growth rates, market participants are looking for new customer segments to develop and opportunities for consolidation.
Based on the results of nine months of this year, the net profit of 30 private MFCs reached 17.93 billion rubles, net interest income - 42.84 billion rubles. This is 42% and 37.3%, respectively, more than for six months. Such data follows from their reporting under OSBU. At the same time, the growth rate of financial indicators at the end of the last quarter slowed down. For comparison: at the end of the first half of the year, the increase in net profit for the largest multifunctional complexes amounted to 71%, and net interest income - 55%.
The trend toward slower growth in financial indicators emerged against the backdrop of a decline in loan issuance. Thus, according to NBKI, in the third quarter, 8.66 million payday loans were issued (PDL, for a period of up to 30 days in the amount of up to 30 thousand rubles). This is 0.3 million loans less than in the second quarter. Moreover, such a cooling of the market is not a seasonal factor: in 2020–2022, an increase in the number of issuances was recorded in the third quarter.
The period of record growth ended in the microfinance market after tightening regulation of the industry - reducing the maximum permissible rates, the amount of overpayments on loans and tightening the issuance to over-leveraged borrowers (see Kommersant on October 6). And the pace of market growth will slow down, admits Andrey Ponomarev, CEO of the online financial platform Webbankir. And the main reasons, according to him, are the introduction of macroprudential limits, the increase in the cost of attracting quality clients (see Kommersant on April 10), and the effect of a higher base.
In the fourth quarter, market participants expect traditional growth in demand for funds. “Taking into account the tightening of the MPL in the fourth quarter of 2023 (borrowers with a debt burden of 80% or more should account for no more than 15% of issuances.— “Kommersant”) closer to the New Year, an increase in the flow of applications is possible,” notes Moneyman. In particular, those who “are faced with the refusal of one or another lender, who have exhausted their limit on loans to clients with a high level of maximum debt burden, will turn to several microfinance organizations simultaneously,” experts explain.
“However, actual issues will depend on the internal policies of a particular MFO. Now the share of approvals is at a fairly conservative level and the overwhelming number of applications from primary clients do not pass scoring,” admits Chairman of the Board of SRO "MiR" Elman Mehdiyev. Taking into account tightening regulation, “the growth rate of lenders’ willingness to satisfy borrowers’ requests will lag significantly,” Moneyman confirms.
To maintain profitability, businesses are forced to constantly adapt their models. Now the issue of meeting regulatory requirements and maintaining financial indicators at an acceptable level “has been resolved through the introduction of new technologies,” says Mr. Mehdiyev. For example, according to SRO MiR, in the third quarter, 80% of active MFO borrowers (almost 16 million people) used online issuance. A year earlier, this figure was 70%. In addition, as follows from company reports, company expenses on advertising and marketing are growing. Over the nine months of 2023, they were 73% higher than the same indicator last year (see Kommersant on August 17).
But all this does not negate the fact that companies in the industry have exhausted the possibilities of organic growth, so the transformation of the next period involves mergers and acquisitions, as well as entry into new sectors, admits Elman Mehdiyev. One of the options for leveling out lost income could be the development of work with new client segments, in particular, with the segment of lending to small and medium-sized businesses, Moneyman believes. It is interesting for MFIs because there is not yet such a high level of competition for clients; attracting them is less difficult and costly than in the segment of working with individuals, the company expects.