Russians' borrowing grows ahead of savings

Russians' borrowing grows ahead of savings
Russians have given up on saving and are borrowing more instead to fund their lifestyle / bne IntelliNews
By Vladimir Kozlov in Moscow January 9, 2018

Russians have given up on saving and are borrowing more instead to fund their lifestyle, data from the Central Bank of Russia (CBR) shows. Borrowing from banks has doubled over the last eight years since the crisis began and two thirds of Russians say they have no savings at all, up from just over half in the last year.

Russians borrowed from banks RUB12 trillion ($210bn) in January-November 2017, up RUB1.2 trillion or 10% year-on-year, while their deposits, although more than twice as much at RUB25 trillion, were up just by RUB800bn, which corresponded to just a 3% increase.

The numbers came from the CBR, and while full-year figures are not yet available, they are unlikely to change the overall dynamic, even though many lenders offered attractive deposit deals for the New Year's season.

Situations when Russians' borrowing grew ahead of saving occurred before, but what is remarkable this time is that the trend was observed against the backdrop of the populations' declining real incomes.

In January-November, Russians' real incomes declined by 1.4% y/y. Apparently, people are tired of trying to save and are compensating for their insufficient incomes by borrowing more.

Incidentally, a 3% rise in retail turnover, registered by Rosstat in January-November, the government statistics agency, could come as a proof of that.

Along the same lines, the proportion of Russians who have savings, declined from 39% to 31% from August to December, according to inFOM polling company, while the share of those who don't have any savings at all was up from 59% to 67%.

In late 2017, the state owned pollster, the Russian Public Opinion Research Centre (VTsIOM) found that Russians' borrowing from banks had doubled since 2009.

More than half (57%) of the respondents said that either they or their family members have at least one outstanding loan, compared with just a quarter (26%) in 2009.

In urgent need for cash, two thirds (64%) borrow from family and close friends, up from 54% in 2014, and 35% take a bank loan, compared with 32% in 2014.

Russia’s banking sector made a colossal aggregate loss of RUB322bn ($5.5bn) in September 2017 but was back in profit in October just with an aggregate profit of only RUB18bn ($300mn) – but was still loss making if Sberbank’s record RUB200bn profits are subtracted.

However, consumer loans were growing fast in 2017, becoming an increasingly important source of profits for banks.

 

Data

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