The population is switching to a saving behavior model

In December 2023, the influx of citizens’ funds into banks was a record high and exceeded the expectations of market participants. However, an atypical situation has developed in lending: the usual end-of-year growth in lending did not occur in all segments. The growth of retail lending was ensured by mortgages and car loans, while unsecured lending showed a decrease in issuances by November 2023. The dynamics indicate a transition of the population to a saving model of behavior, which is facilitated by the Central Bank’s policy of increasing the key rate, leading to an increase in the cost of both loans and deposits.

As VTB told Kommersant, in December 2023, the portfolio of ruble funds of the bank’s retail clients increased by almost 550 billion rubles, to 6.2 trillion rubles. The result was more than 80% higher than the results of November 2023 and became an absolute record for the bank for the month. “The trend is typical not only for VTB, but also for the market as a whole,” notes Natalya Tuchkova, head of the VTB Savings department. “It is noteworthy that during the New Year holidays, when clients traditionally increase their spending, Russians this year continued to adhere to savings tactics.” .

These same tactics have slowed down credit growth. According to preliminary estimates by Frank RG, in December 2023, the volume of loans issued to individuals increased by 1.42%. The largest increases over the month were shown by mortgages (by 7.2%) and car loans (by 5.5%). But in the consumer loan segment in December 2023, there was a decrease in issuances. The maximum drop was observed in the cash loans segment – by 9% by November 2023, to RUB 429.9 billion.

Traditionally, December is a month with a high volume of loans, but this did not affect the non-targeted lending segment, which was largely influenced by the Central Bank’s measures to cool the market, agency analysts explain.

Market participants confirm the trends. “December was one of the most productive for Rosbank in terms of attracting deposits,” says Vyacheslav Dusaleev, director of retail business at the bank. “More than 25 thousand new depositors came. But in the segment of unsecured consumer lending, every month of the fourth quarter there was a negative trend compared to the previous one. December was no exception.” Starting in the fall, clients continued to issue cash loans at previously approved rates, but interest in them decreased and in December turned out to be minimal, VTB added.

In 2023, under the influence of high deposit rates, “there will certainly be an increase in the savings activity of clients,” admits Mr. Dusaleev.

PSB Banking and Financial Markets Analysis Manager Dmitry Gritskevich believes that already in the first quarter of 2024 it will be possible to confidently talk about the “transition of the population to a savings model.”

“It is too early to judge how long such sentiments will last among citizens. So far we are not talking about a sustainable change in consumer behavior, even in the medium term,” believes Andrey Spivakov, Chief Managing Director of HKF Bank.

However, experts do not see the potential for a recovery in lending activity. “Lending has a cooling effect from high rates, as well as tightening in regulation and subsidies of certain segments, for example mortgages,” explains Vladimir Teterin, senior director for banking ratings at Expert RA. “This gives reason to believe that the dynamics of development of key credit segments in 2024 will be more restrained.” If the key rate level remains close to the current one, we can expect a further increase in the propensity to save, agrees NKR analyst Sofya Ostapenko. This, in her opinion, could lead to a cooling of the dynamics of retail lending, the volume of issuance in which by the end of 2024 will decrease by 15–20%.

Natalia Bogomolova, junior director of bank ratings at NRA, clarifies that in general banks “are constantly adapting to changing conditions, compensating for growing costs on deposits, including expanding transaction business, increasing commission income; working more actively in the interbank lending market, optimizing costs and releasing excessively created reserves.”

Ksenia Dementieva, Polina Trifonova