In other words: the average consumer loan in August reached a seven-month low

The average size of the consumer loan issued in Russia in August 2024 reached the minimum for the last seven months - 159 651 rubles, it is also less by 23% of the same indicator a year earlier, follows from the data of BCI "Scoring Bureau". The Sovfed and the expert community told Izvestia that the trend towards a decrease in the volume of loans will continue. Why this is happening and how the changes will affect Russian banking - in the material "Izvestia".

Decrease in demand

Reduction in average checks - a natural consequence of increased regulatory pressure, said "Izvestia" director of the group of ratings of financial institutions ACRA Mikhail Polukhin. Banks are adapting issuance in the face of tighter macro-prudential limits, premiums to risk ratios and the abolition of the moratorium on the application of the limit on the full value of the loan.

- These measures are forcing banks to reduce both total disbursements and average loan amounts. It is likely that we will see a further decline in loan amounts, including against the backdrop of an additional increase in risk premiums from September 1, 2024 and a reduction in the amount of free capital available to banks. Loan terms may slightly increase, but here banks also have no significant maneuver for adaptation, - said Mikhail Polukhin.

The rising interest rate on loans also negatively affects the average amount - borrowers are trying to reduce the expensive credit load, the expert added.

The average size of the loan issued in Russia to buy a car, according to estimates BCI "Scoring Bureau", in August 2024 amounted to just over 1.448 million rubles, which is 1.15% less than in July and almost 4% - in annual terms. As for the check on mortgage loans, in August it exceeded RUB 4.095 million, which is 8.1% lower than in July and 2.6% lower in annual terms.

The size of the consumer loan issued in August 2024 reached the minimum for the last seven months - about Br160 thousand. This is also down 23% from a year earlier.

"The drop in the average check on consumer loans is caused by changes in the limit policy of lenders due to regulatory pressure. In addition, this indicator is also influenced by the growth of the key rate, the dynamics of which forces the most solvent consumers, capable of claiming large amounts of credit, to refuse to take out loans, while consumers currently receiving loans can afford a smaller amount of credit due to their own lower nominal income", - explained in turn the general director of BCI "Scoring Bureau" Oleg Lagutkin.

Tightening of issuance

The volume of loan issuance will directly depend on the state's monetary policy, Ivan Abramov, first deputy chairman of the Federation Council Committee on Economic Policy, told Izvestia. In particular, if subsidies for mortgage programs are reduced, the demand for such loans will also decrease.

- The Central Bank strengthens control and tightens the conditions for granting loans. For example, it recommends banks to check the solvency of individuals more thoroughly. Because sometimes people succumb to emotions under the influence of massive advertising along the lines of "take out loans now, pay later". As a result, they become insolvent on these loans. There should be a reasonable line so that citizens do not fall into credit bondage," said the senator.

According to the politician, it is necessary to regulate aggressive advertising and more often warn people about the possible consequences of short-sighted financial policy. In particular, on September 20, the State Duma committee supported for adoption in the first reading of the bill, which prohibits banks to increase the credit limit on bank cards without the consent of the borrower and the conclusion of a new loan agreement. However, politicians proposed to soften the initiative and introduce a system of notifications on limit increases instead of a ban on unilateral increases.

In addition, Russians want to give the right to "comprehensive settlement" of credit debts. The Bank of Russia proposes to legalize the practice of agreements between banks, MFIs and collectors to collect loans from "common" borrowers. They would be given up to 30 days to find an optimal solution with the client.

In spring 2023, the Central Bank announced the release of recommendations for banks, MFIs and collectors on "synchronization" of debt collection from individuals. The current standard assumes "comprehensive settlement" of a client's debt, but this is not a mandatory option for market participants. Last November, the Bank of Russia also proposed to introduce a mandatory procedure for pre-trial collection of debts of individuals, referring to the relevant presidential instruction. The new draft law actually takes both initiatives into account.

Banks, business and regions

At the same time, Ivan Abramov emphasized that the reduction in the volume of loans will not greatly affect banking.

- We look at analytics from year to year. The banking sector is almost always growing, their income is increasing, so the reduction in the volume of loans due to the strict policy of the Central Bank is unlikely to lead to serious losses. The Bank of Russia's policy is primarily aimed at ensuring that only solvent clients receive loans. Balance is extremely important here," added the deputy chairman of the SF Committee on Economic Policy.

Despite the reduction in the volume of loans for individuals, the authorities will continue to support business. In particular, the Ministry of Agriculture of the Russian Federation is waiting for additional funds to subsidize soft loans in connection with the growth of the key rate of the Central Bank, said earlier First Deputy Minister of Agriculture Elena Fastova.

"Additional money will be required, the need has been assessed. We have requested the Ministry of Finance, we are waiting for additional funds to be allocated," said Elena Fastova.

She recalled that this year's budget provides Br209 billion for subsidizing soft loans, of which Br28 billion - for new short-term loans.

"We will fulfill all the commitments (on subsidized loans)," Fastova stressed.

In addition to supporting entrepreneurs, the state is going to help the region. The Cabinet of Ministers clarified the mechanism of writing off debts on budget loans for the subjects of the Russian Federation.

"The government has improved the mechanism of directing by the regions of financing for the creation and reconstruction of infrastructure facilities for the implementation of new investment projects at the expense of funds released as a result of restructuring of budget loans. Also, the procedure for writing off the debt on budget loans at the expense of tax revenues from these investment projects has been clarified," the statement on the website of the Cabinet of Ministers reads.

The government noted that the regions will be able to allocate released funds for the creation of infrastructure facilities before the inclusion of the project in the consolidated list in the presence of an agreement of intent to implement between the region and the investor.

Since the amount of debt forgiveness on budget loans depends on the amount of taxes received by the federal budget from the implementation of investment projects, the Cabinet of Ministers has established the possibility of taking into account for this purpose confirmed but not accounted for in previous reporting periods tax revenues from the implementation of investment projects. It is expected that this decision will help the subjects reduce the debt burden on regional budgets and channel funds to the implementation of priority investment projects, the government added.

The Finance Ministry recommended Izvestiya to send an inquiry to the Central Bank. No response from the Bank of Russia had been received at the time of publication.