The growth of consumer lending in October 2021 slowed down, amounting to 1.4% against 1.7% in September. This follows from the Report on the Development of the Banking Sector in October 2021, which was published by the regulator.
According to the Central Bank, the trend most likely reflects a gradual rise in the cost of loans against the background of an increase in the key rate, as well as the strengthening of the effect of the previously introduced macronutrients.
On October 22, the Central Bank raised the key rate by 0.75 percentage points at once (either an increase of 0.25 or 0.5 percentage points was predicted). Now the key rate is 7.5% per annum. This is the sixth consecutive increase against the background of unceasing inflation and, as follows from the comments of the Bank of Russia, certainly not the last. As the Central Bank now expects, in 2021 inflation will be 7.4-7.9%, now the annual inflation (October to October 2020) is 7.8%, in September it was 7.4%.
As RG previously reported, the Board of Directors of the Bank of Russia decided to increase the premiums to the risk ratios on unsecured consumer loans in rubles provided from October 1, 2021, in July. The highest markups are set for loans at 35% per annum or more – 500 pp. The minimum markups are valid for loans at 10% per annum for borrowers without a personal income tax (an indicator of debt burden). PIT is calculated as the ratio of the borrower’s average monthly payments for all loans, including for a newly issued loan, to his average monthly income.
“In the context of the dynamic recovery of the Russian economy, the trend towards accelerated growth of debt in the segment of unsecured consumer lending continues,” the Bank of Russia said in a statement. “Compared to April 2021, when … lending dynamics noticeably accelerated: in May, the debt of citizens on unsecured loans increased by 2.2%, in June – by 2.0%. consumer lending to diversify their business. A number of retail banks are also showing high lending activity. “
Higher markups make the issuance of unsecured consumer loans in rubles less profitable for banks.