The share of early repayments in the payday loans segment reached 67%

At the end of the fourth quarter of 2023, the share of early repayments in the payday loans segment reached a maximum of 67%. This is due to the stabilization of the economic situation in comparison with 2022 and a decrease in the daily rate in the microfinance market in the middle of the year. In 2024, market participants do not expect continued growth in early repayments. Moreover, given the tightening of scoring in the industry, borrowers may be wary of being denied new loans and will seek to make the most of already approved funds.

At the end of the fourth quarter of 2023, 67% of “payday loans” (PDL; short loans in the amount of up to 30 thousand rubles for a period of up to 30 days with a one-time repayment) were repaid ahead of schedule. This is the highest early repayment rate since January-February 2022, experts from the online financial platform Webbankir concluded. Other companies are confirming the trend. In the fourth quarter relative to the first quarter of 2023, the share of loans for which partial or full early repayment was recorded increased by 6.5 percentage points (pp), according to MoneyMan CEO Alexander Pustovit. “The share of clients who repaid their PDL loan early in the fourth quarter of 2023 was 54%. Moreover, already in January 2024, this share increased to 57% – the maximum value in two years,” notes Ion Boloboshencu, risk director of Eqvanta Group.

The authors of the study recorded the minimum level of early repayment since 2021 in the second quarter of 2022, which saw the first economic consequences of the outbreak of hostilities on the territory of Ukraine – 59%. “Against the background of socio-economic uncertainty, it was difficult for borrowers to plan cash flows,” says Ion Boloboshencu.

“In the second half of 2023, clients were interested in early repayment in the PDL segment 43% more often than in the same period the year before, and in the Installments category – 22% more often,” Grigory Burdenko, CEO of the financial marketplace “Vyberu.ru,” notes the trend. the greatest surge of interest occurred in December 2023: in this month, requests for early repayment in the PDL category were 67% more likely than at the end of 2022, and in the Installments category – 38% more often than in the same period in 2022.” “In addition, as past years have shown, during a crisis and any prolonged stressful situation that affects the financial component, Russians switch to a savings model, which often allows them to free up funds and repay previously taken loans ahead of schedule,” notes the SRO “ World”.

The rate of early repayment of PDL loans has been increasing since the beginning of last year. Webbankir analysts associate the trend with the stabilization of the situation in the economy: “Today people are able to calculate their budget much better.” “The process manifested itself in the middle of the year, when the daily interest rate decreased to 0.8% (from July 1, 2023.— “Kommersant”“,” points out commercial director of MigCredit MFC Marat Abbyasov. “Many clients then decided to take advantage of the situation, and the number of “prepayments” locally increased.”

So far, this behavior of clients has not affected the financial results of microfinance companies, and they have not experienced any lost interest income. The profit lost due to the increase in early repayments is compensated by the greater collection of loans in general, explains Webbankir CEO Andrey Ponomarev. The growth in early repayments is directly related to the growth of the base of repeat customers, adds Marat Abbyasov.

In the first nine months of 2023, the net profit of 30 private MFCs reached 17.93 billion rubles, net interest income – 42.84 billion rubles. (see “Kommersant” dated November 21, 2023).

However, market participants do not expect a further increase in the share of early repayments. The indicator is at its maximum; if further growth is possible, it will be within literally 1–2 percentage points, estimates Andrey Ponomarev. There are no economic prerequisites for growth, Marat Abbyasov agrees. “It is obvious that the number of “early terms” increases when clients have additional funds. Or the market situation simply changes, as a result of which it becomes profitable for borrowers to do this,” he continues. In addition, against the background of tightening regulation of microfinance organizations (see “Kommersant” on January 9), companies in the industry will inevitably continue to tighten their issuance policy, which will slow down early repayments; borrowers will strive to use the funds received until the last minute, since they will not have confidence in approval next loan, Kommersant’s interlocutors believe.

Polina Trifonova