The Larger the Bank the Cheaper the Loan

The year 2012 was characterized by higher cost of a bank loan to borrowers of the real sector. In 2013, that trend continued.

 

So, in the 1st quarter the rate on ruble loans extended for the term of one year amounted to 9.5% per annum which is 0.5 p.p. higher than that in the 1st quarter of 2012, while that on ruble loans for the term of more than a year, to 12.2% per annum (growth of 1 p.p. on the 1st quarter of 2012).

In the above period, the cost of the loans extended in foreign currency remained either unchanged (8.2% on euro loans for the term of over a year) or reduced (by 1.7 p.p., 0.4 p.p. and 0.3 p.p. as regards USD loans for the term of up to a year, USD loans for the term of over a year and euro loans for the term of up to a year, respectively). However, as of May 1, 2013 loans in foreign currency accounted for the mere 17.8% of the aggregate loan debt, so, easing of the foreign currency component had virtually no effect on the average cost of a loan to the real sector.

 

 

Fig. 1. Interest rates on loans to legal entities


According to the analysis of reporting of 930 banks placed at the Web-site of the Central Bank of the Russian Federation, in the 1st quarter of 2013 the weighted average cost of the loan debt of legal entities to banks amounted to 9.6% per annum which is 0.5 p.p. higher than a year before.

 

It is to be noted that the dynamics of the cost of loans was of an unhomogeneous nature. At 448 banks which accounted for 17% of the loan debt the cost of a loan decreased (on average by 0.7 p.p.). However, in that group of banks a loan remains to be more expensive than on average in the sector (10.4% and 11.1% in the 1st quarter of 2013 and a year before, respectively) and such a decrease only draws the cost of the loan at those banks closer to the average market level.

Generally, on the basis of the sample it is observed that with a bank becoming larger the cost of a loan decreases. So, in the 1st quarter of 2013 as regards 30 largest banks the average cost of the loan debt amounted to 9.0% per annum (including Sberbank - 9.1%, VTB - 8.3% and Gasprombank - 8.8%), as regards banks with the rating of activity fr om 31 to 100 the cost of a loan was on average higher and amounted on average to 10.8% per annum, while as regards banks beyond the top 100 it was equal to 12.5% per annum.

 

It is to be noted that the highest appreciation of a loan took place in the segment of mid-sized banks (from 31 to 100) wh ere the average cost of a loan rose by 1 p.p., while in the segment of large banks (top 30) and small banks (which are not included in the top 100 as regards the size of assets) the cost of a loan rose by the mere 0.4 p.p.

 

М.Yu. Khromov, Leading Expert of the Structural Research Center