The Ratio Between the Volume of New Consumer Loans and Costs Amounts to 30%

In August 2013, the volume of individuals' loan debt to banks rose by Rb 234bn or 2.4%. On the basis of the outputs of the month, the annual growth rate fell to 31.7%.

In August, the quality of the retail credit portfolio did not change significantly. The share of the overdue debt was preserved at the level of 4.4% of the total volume of the loan debt, though growth rates of the overdue debt were higher than those of loans in general (3.7%). Within a month, the ratio of provisions for possible losses to the volume of loans rose by 0.1 p.p. to 7.0%, while provisions themselves, by 4.1%.

Despite slowdown of growth rates of individuals' loan debt, the role of loans in supporting of households' current consumption keeps growing. So, according to preliminary estimates in August the volume of newly extended loans to households amounted to 30% of the total value of the retail sales and costs related to public catering and paid services, while in the period from the beginning of the year the ratio of new loans and consumption-related costs amounted to 28%. A year before, those ratios amounted to 27% and 25%, respectively.

Fig. 1. Dynamics of loans to households in state-run banks and other banks (trillion Rb) and the share of state-run banks in loans to households (%, right-hand axis).

Interest rates on bank loans to individuals remain high. So, in July 2013 the weighted average rates on ruble loans to individuals vary in the range of from 16% to 27% per annum. In addition to the above, in July-August 2013 banks extended at least Rb 320bn worth of loans at rates higher than 25%, including over Rb 35bn with value of over 60% per annum.

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