The microfinance market is expecting an increase in disbursements, but not profits

The microfinance market growth rate may remain at 15–20% in 2024, despite tightening regulation, analysts believe. Large companies have mostly adapted to the new conditions. But the profitability of this business is unlikely to improve, experts say, and some players will require additional capitalization.

The total loan portfolio of the microfinance market at the end of 2023 will grow by approximately 20% (instead of the previously predicted 10–15%), reaching 440 billion rubles, Expert RA analysts believe. Microfinance experts themselves are even more optimistic, talking about 450–480 billion rubles.

In expectations for 2024, the opinions of experts and players coincide – they expect growth of 15–20%. This is higher than the forecasts that were made earlier – at the end of the first half of last year, Expert RA forecasted market growth rates of 5–10% (see Kommersant, September 19, 2023).

“In 2024, we expect the industry portfolio to grow by 15–20% due to stable demand for loans, the efforts of the Central Bank to increase the transparency of the MFO market, as well as the partial flow of bank borrowers and refusers,” says Roman Makarov, general director of the Seimer IFC. . “There are no obvious prerequisites for a significant reduction in consumer demand,” agrees Summit Group commercial director Elena Malysheva. She expects portfolio growth in 2024 “by 10-20% depending on the influence of external factors.”

The improvement in forecasts, according to Kommersant’s interlocutors, is primarily due to the fact that the industry has already sufficiently adapted to the new rates (from July 1, 2023, the maximum rate on microloans was reduced from 1% to 0.8% per day) and a general tightening of regulation: macroprudential limits (MPL) have changed, the permissible share of borrowers with a debt burden of more than 80% has been reduced, the permissible amount of overpayment on loans has been limited, taking into account fines and penalties, etc. (see “Kommersant” dated October 6, 2023) .

However, there are also more pessimistic assessments, based on the fact that “not all measures taken by the Central Bank to cool the market will work equally.” For different companies, regulatory changes can lead to a reduction in issuance from 10% to 50% of current volumes, emphasizes Artem Bykov, general director of Migcredit. According to his estimates, the increase in the microloan market in 2024 could be only 10–12%. General Director of Eqvanta Group of Companies Sergei Vesovshchuk considers only 5–10% growth possible.

In many respects, the situation will be determined by the dynamics of the 20 largest companies, experts agree. “Their indicators are highly dependent on the precise adjustment of the MPL (it is planned to introduce a more fractional scale) and the accrual limit (no more than 100% of the initial debt versus the current 130%),” explains Ivan Uklein, director of banking ratings at Expert RA.

In addition, companies specializing in PDL (“payday loans” for up to 30 days in the amount of up to 30 thousand rubles) will face additional business restrictions in the first quarter due to the inclusion of microloans in the amount of up to 10 thousand in the MDL . rub. This, Mr. Uklein believes, will have a restraining effect on the rate of business growth. He also allows for the emergence of new regulatory initiatives; in particular, the relevant State Duma committee is discussing reducing the maximum rate from 0.8% per day to 0.5% per day.

Against this background, industry participants and experts do not expect an increase in profits in the segment proportional to the growth of issuances.

“Tightening regulation in 2024 will lead to the need not only for a global restructuring of business models and scoring, but also, possibly, additional capitalization. Without financial injections, the market will face stagnation,” explains Creditter CEO Igor Smirnov.

In such conditions, the share of unprofitable companies may increase, agree at Summit Group. They note that the gap between the largest technology companies and other players continues to widen. At the same time, Migcredit MFC clarifies, “there is no talk of a critical drop in profit in 2024; it will remain at the level of 2023.”

Polina Trifonova