Growth in Households’ Loan Debt to Banks Slowed Down

On the basis of the results of April 2013, annual growth rates of households' loan debt to banks fell to 36%. Growth in unsecured loans slowed down a great deal from the peak value of over 60% in summer 2012 to 47% in the 1st quarter of 2013.
A combination of high interest rates and considerable nominal volume of the debt results in growth in the debt load on households' income. In the 1st quarter of 2013, households' planned expenditures (according to the schedule of payments) on servicing of bank loans amounted to 12% of the disposable income (Rb 976bn). At the peak of the crisis (in the 1st quarter of 2009) those expenditures amounted to 9% of households' disposable income (Rb 473bn).

Deterioration of the quality of the retail credit portfolio is the result of a higher debt load on households' income. From the beginning of the year, the share of the overdue debt on loans to individuals and the volume of the provisions for possible bad retail loans have been growing. It is to be noted that growth in those indices was not caused much by slowdown of growth in the aggregate credit portfolio, but due to a speed-up of indices of overdue debt and reserves. So, the value of overdue loans from the beginning of this year till May 1 rose by 15%, while in the entire 2012, by the mere 6%.


Until the end of the year, further slowdown of growth rates of the retail credit portfolio with gradual worsening of its quality can be expected. The risk of development of a full-scale crisis of bad loans in that market segment will depend on the dynamics of households' income and financial possibilities to meet timely their obligations to banks.


Lending to corporate customers keeps slowing down. In April, growth in the debt amounted to 1.7% (Rb 311bn), while annual growth rates fell to 13.4% which is equal to the level of the beginning of 2011.


However, the quality of the credit portfolio in the corporate market segment remains stable. The share of the overdue debt remains at the level of 4.4%, while the value of loan loss provisions amounts to 7.2% of the total volume of the credit portfolio.


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