Wednesday, January 25, the Bank of Russia has published its latest report “trends in development banking sector” in December, which also summed up the results of 2016. According to the report, in the segment of retail lending in the last month of last year sprung a surprise. The increase in the volume of portfolio of loans to individuals in December was only 0.1%.
Traditionally, the end of the year — high season for retail lending, characterized by a large growth rate of the portfolio of loans to natural persons, than in other months. During this period, banks step up issuance, through various promotions, and demand from citizens spurred on by the upcoming holidays and the need to purchase gifts, as well as receiving additional rewards at the end of the year.
This time it was different. Even in the previous three, absolutely normal from the point of view of seasonality of month — September, October and November — retail portfolio of Russian banks grew on a monthly basis more than in December: 0.3, 0.2 and 0.4%, respectively. In the previous two years, 2015 and 2016, in December the growth rate of the retail loan portfolio was the same as now (0,1%), but then this rate was higher than in the previous months of the same years. Thus, even in the years of crisis in December there was a surge, not decline, as it is now.
To the new reality
Unusual situation, according to surveyed bankers, has several explanations. “Detailed analysis we have not yet produced but already seen abnormally large volumes of repayment of retail loans to individual borrowers in December, says Deputy Chairman of the Board of Raiffeisenbank Andrey Stepanenko. — It seems that citizens move to a new model of behavior and savings. This is understandable, given that their real incomes ceased to grow.”
Member of the management Board, head of Directorate for work with private clients of Citibank Michael Berner also connects the stagnation in December with a higher volume of redemptions. “Many cancel loans issued before the crisis — in the years 2011-2013. To growth, it is necessary to give more, but turmoil in the following years had a negative impact on results”, — he explained.
A similar assessment of the situation and gives the Director of retail sales UniCredit Bank Sergey Kasatkin. “The sector faces a “new reality,” he says. According to him, the peak demand for consumer loans in UniCredit Bank occurred in August and September, in October—November saw a slight decline in demand, and in December — a slight increase, not comparable to a traditional high growth. “We were surprised that sales in December were smaller than in August and September. It’s hard for me to comment on this fact, but there is a feeling that the rules of seasonality has changed and can not be considered December a sharp demand for credit products and cash loans. This is a new reality we faced this year,” he says. Vyatkin believes that it is also associated with the fall in real incomes and therefore more thoughtful approach to obtaining loans.
In December 2016, according to Rosstat, real income of population fell by December 2015 6.1%. “Citizens have learned how to allocate their capabilities and credit resources and a more balanced approach to the issue of expensive purchases, knowing that we live in a very simple time,” he concluded.
The change of season
However, the change of the behavioral model of borrowers from retail to consumer savings amid falling real incomes not the only reason. As another explanation, the number of surveyed bankers called changing behaviour of banks on the background of autumn strengthening of the ruble. Since the beginning of autumn until the beginning of December the ruble strengthened against the dollar by 7.2%. In December — a further 4.5%.
Strengthening of the ruble spurred bankers to aggressively cut rates on retail loans. So, only the leader of the market Sberbank several times during the fall reduced the rates on various retail credit products. Many banks followed suit, in particular its closest competitor VTB 24.
Such actions, the bankers are actually shifted high December season at an earlier autumn by pulling on him and a demand by the borrower, ascertain market participants. “There was a pretty strong appreciation of the ruble, people believed in economic improvement. Banks in parallel a very aggressive reduced interest rates on loans, promoting their loan products. Following the December demand was implemented earlier. The market in General about this situation,” — said a top Manager of the Bank of the top 10.
Forecast is moderate
All the interviewed experts are showing moderate optimism for the future. They expect a slight increase in the volume of credit portfolio of natural persons in connection with the improved economic performance in 2016 — early 2017, decrease the volatility of the ruble, a more positive news agenda. Against this background, bankers expect that the population will become less cautious about loans.
“The results of the two-and-a-half working weeks of January show that our predictions began to slowly explain. The failures in our customers ‘ demand for consumer loans, we do not observe, the result compared with January last year is significantly higher — 40%. In January, sales should be 70% from December,” says Vasechkin of UniCredit Bank. By the end of 2017, it expects growth of sales of credit products by 6-10%.
However, not all of the same optimistic forecasts. In particular, the baseline forecast of “Expert RA” for 2017, unsecured retail banking show for the year 0% growth and 9% show mortgage portfolio. In the negative scenario of the Agency, the reduction of portfolios of unsecured consumer credits will reach 8% and the mortgage portfolio will grow by 6-7%. Positive scenario envisages an increase in the portfolio of unsecured consumer credits in 2017 by 3%, mortgages 14%.