It’s time to hold the horses on the lending market
The Ministry of Finance and the Central Bank of the Russian Federation consider it necessary to contain the rapid growth of consumer lending. The financial department, according to Deputy Minister Alexei Moiseev, supports the regulator’s proposals to tighten requirements for banks. Earlier in September, the Central Bank raised the interest rate from 8 to 8.25%, and a new increase may occur in November.
In turn, the Ministry of Economic Development believes that the increase in interest rates and the tightening the provision of funds to the economy by the monetary policy of the Central Bank significantly inhibits growth.
Since the beginning of the year, the portfolio of retail loans in the whole banking system in Russia has grown by 29.3%. At the same time, the annual growth rate was already 40%. And the volume of corporate loans increased by only 10.1%.
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Investments are not yet encouraging with their dynamics. According to strategic plans, the indicator should grow from the current 20% to 25% in 2015 and to 27% in 2018. The Central Bank and the Ministry of Finance traditionally explain their actions by anti-inflationary considerations, which have long ceased to be convincing.
In early October, First Deputy Chairman of the Central Bank of the Russian Federation Alexei Ulyukaev said that the Bank of Russia is now more worried about the prospect of rising inflation than slowing economic development. Meanwhile, inflation and the interest rate of the Russian Central Bank are parallel to each other, as evidenced by the price dynamics over a long period of stability of the regulator’s rate.
The Central Bank also indicates an increase in unsecured retail loans – cash loans, credit cards, POS loans. On this basis, the bank regulator plans next year to double the rate of reservation for new unsecured vessels without delay, and also with an delay of up to 30 days.
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At the same time, the portfolio of unsecured loans to the population by the end of this year will grow to 5.2 trillion rubles, believes Yury Kormash, vice president of the Association of Russian Banks. The most popular loans in the Russian Federation are POS loans, as well as credit cards.
The expert noted that the growth dynamics of the portfolio of unsecured loans to individuals has already exceeded 43%. According to the rating agency Expert RA, from July 1, 2011 to July 1, 2012, the portfolio of unsecured loans increased by 65%.
Banks make good cash loans on consumer loans, despite the fact that in reality the level of defaults does not have a noticeable effect on the system and, in general, these loans are not classified as risky.
At the same time, the representative of the ARB recalled that consumer loans are most sensitive to social shocks. This creates risks for a long period. “The population’s cash expenditures exceeded revenues by 256 billion rubles. This means that Russians are spending too much, which raises concerns about defaults,” Kormash notes.
The Deputy Minister of Finance of the Russian Federation calls the Bank of Russia measures to contain the growth of consumer lending in Russia completely adequate. Now there is a real risk of overheating of the consumer lending market, therefore it is only a matter of restraining its growth rate.
At the same time, Moiseev emphasized that the Bank of Russia should pursue a “more targeted policy” within the framework of regulating the consumer lending market. “It should be aimed at individual elements of the banking system, and not at the economy as a whole,” the financier explained.
“We completely allow the exclusion of new reserve standards for the least risky types of consumer lending,” the Central Bank’s head of the banking regulation department, Vasily Pozdyshev, clarifies the position.
German Gref, the head of Sberbank’s largest retail bank, does not share the Bank of Russia’s concerns about overheating in the consumer lending market. According to him, theoretically, such a danger exists, but the statistics of the last two months indicate an early decline in consumer lending growth by one and a half times. And therefore, discouraging measures are premature. Monetary policy in Russia leads to a slowdown in economic growth, said the head of Sberbank German Gref.
According to the Ministry of Economic Development, the total volume of loans granted to non-financial organizations and the population in September increased by 1.1% in the month to 26675 billion rubles, in general, in January-September, the increase amounted to 14.7%, against 19.8% for the first nine months of 2011.