Russian consumer loans ballooning despite CBR measures to cool the market

Russian consumer loans ballooning despite CBR measures to cool the market
Russia's unsecured consumer loans increased by 25% year-on-year in January-March 2018, account for half of total RUB1.9tn or retail credits
By bne IntelliNews May 17, 2019

Unsecured consumer loans in Russia keep on growing, increasing by 25% year-on-year in January-March 2018, Vedomosti daily said on May 17 citing the data by Frank RG. Unsecured loans accounted for RUB1.05tn of the total retail loans volume of RUB1.9tn issued, and as a class are growing faster than overall retail loans (16%) and mortgages (3.5%).

In 2018 the Central Bank of Russia (CBR) was concerned about the appearance of a consumer credit bubble and has tried to cool the overheated market.  

"The people are tired of their ascetic lifestyle. Part of the population is drawing on consumer loans just to maintain a level of consumption," the deputy head of the CBR Dmitry Tulin told State Duma, as cited by Interfax on May 16.

The consumer loan growth is an "objective process that should not be outlawed," Tulin said, while admitting that the CBR have not yet succeeded in substantially cooling the segment. According to the CBR data, also the average loan amount increased in the first quarter. However, the increase could have been front-loaded as the risk coefficients on consumer loans have been increased since April 1.

Market participants surveyed by Vedomosti daily warned what both the maturities and amounts of the loans issued increased as the CBR tried to cap the interest rates through tougher regulation. As the loans are unsecured, the danger of defaults in this case increases.

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