The portfolio goes into the risk zone

Analysts note the likelihood of a deterioration in the quality of the loan portfolio of Russian banks in the next 12–18 months. Despite high rates, lending to individuals is growing rapidly, creating overheating in some segments; companies are also “beginning to experience difficulties servicing their debt.” Given the lack of growth in real disposable income, borrowers may show a deterioration in discipline in the medium term. According to statistics, it takes them about six months to return to the payment schedule.

“Kommersant” got acquainted with the ACRA study “Lending in the period of high rates”, which talks about the growing prospects for a deterioration in the quality of the loan portfolio of Russian banks due to increased costs for servicing loans in the next 12-18 months.

The corporate segment, where the share of loans at floating rates is high, is more at risk, according to ACRA. Despite the low level of delinquency, borrowers “are beginning to experience difficulties servicing their debt.” An indirect sign may be a slowdown in the growth rate of the corporate loan portfolio in the second half of 2023, with consistently high rates of new issues.

“This combination of factors may indicate that, in an environment of elevated rates, some borrowers refuse to renew loans that have expired,” ACRA notes.

The retail segment, according to ACRA estimates, is still more protected by increased premiums on risk weights, which help reduce potentially problematic loans as the total cost of the loan (FLC) increases. But there are risks here too: a trend towards rising rates on unsecured loans is developing, and the impact of cutting preferential programs on the cost of mortgage lending “has yet to be assessed,” analysts explain.

“Given the high growth rates in 2023, certain retail segments are showing signs of overheating, so we do not rule out an increase in overdue debts… in the medium term,” agrees Ivan Uklein, senior director for bank ratings at the Expert RA agency. The most problematic loans may be those issued in 2023, adds Alexander Shneiderman, head of the sales and customer support department at Alfa-Forex, since by this time incomes have decreased as much as possible and rates have increased. Rates on unsecured cash loans in offers on marketplaces reach 43%, PSK – almost 50%.

The banks surveyed by Kommersant did not answer questions about the risks of increased delinquency in the portfolio. Foreclosure market participants emphasize that the situation looks quite stable so far. Up to 90% of clients who were unable to make payments on time faced temporary financial difficulties, which took them an average of six months to resolve, according to the National Association of Professional Collection Agencies. If pessimistic forecasts come true, unsecured loans will be at risk first, the association believes.

The main share of retail debts put up for sale are cash loans, credit cards and POS loans, notes Alexander Vasiliev, general director of the ID Collect overdue debt collection service. These types of retail loans form more than 90% of the banking cession market: in the unsecured lending niche, borrowers traditionally fall into arrears earlier than on more stable car loans and mortgage loans, he explains.

This year, the banking cession market will grow primarily due to the sale of retail portfolios of overdue loans issued during the pandemic, adds Mr. Vasiliev. At the same time, at the end of 2023, a significant “rejuvenation” of portfolios was observed in the banking segment of the assignment (see “Kommersant” dated February 19). “Therefore, we can expect that banks will put up for sale pools of retail loans issued in the first months after the events of February 2022, overdue up to 720 days,” he clarifies. In any case, Mr. Vasiliev believes, in the banking assignment, the quality of retail portfolios formed in 2023–2024 can be assessed starting in 2025, when lenders begin to sell overdue loans issued during this period.

Polina Trifonova