Banks warned about the growth of refusals to issue loans after the restrictions of the Central Bank – RBC

Macroprudential limit is the maximum share of loans with certain characteristics in the total volume of unsecured loans or borrowings that lenders can disburse in a quarter. The Central Bank will apply increased risk weights to issuances in excess of the MPL, which are designed to put pressure on the capital of a bank or a microfinance organization (MFO). The limits will affect unsecured loans or borrowings, as well as credit cards – they will be the same for these products.

For loans for more than five years (although shortly before the new year, the deputies proposed to ban such long loans altogether), the limit will be 25%, that is, long loans, ideally, should not account for more than a quarter of unsecured loans issued by banks. According to the Central Bank, in the second quarter of 2021, the share of such loans among newly issued loans exceeded 29%. Restrictions on the issuance of loans to borrowers with a personal income tax of more than 80% will apply to banks and MFOs – MPL will be 25 and 35%, respectively.

The main reason for the introduction of bans will be considered a high proportion of loans and borrowings with such characteristics in the issuance. As follows from the Central Bank data, in the third quarter the share of consumer loans with personal income tax exceeded 80% exceeded the planned limit by 6 percentage points (31%), and the share of such loans from MFOs – by 9.2 percentage points. (44.2%). The next most important factor in favor of the new restrictions is a high growth rate of debt on unsecured loans: as of October 1, the indicator in the banking sector was at the level of 19.2%, and in the MFO segment – 39.6%, the Central Bank notes.

The proposed initial parameters of the MPL are quite feasible for banks, but it will be difficult to organically reduce the share of risky borrowers, says Olga Ulyanova, senior loan officer at Moody’s. She attributes this to the depletion of the more prosperous customer base. The analyst does not exclude that, until the introduction of new restrictions in mid-2022, the issuance of loans to the most debt-laden citizens will grow “because of the banks’ desire to take advantage of the deferral,” but this is not a baseline scenario. Most likely, creditors will begin to tighten the risk policy in advance, “after the seasonal lending activity, typical for the end of the year, subsides,” Ulyanova believes.

Leading retail banks will adjust their risk policies in advance in order to fully comply with the limits and not violate them by the time the restriction mechanism is introduced, agrees the managing director of the NKR rating agency Mikhail Doronkin. At the beginning of 2022, he does not expect a sharp increase in loan refusals.

By themselves, the new limits are not critical and will certainly not lead to the disappearance of retail monoline banks, says Roman Rybalkin, Deputy Director of the S&P Financial Institutions Group. The agency does not expect that MPL at the level of 25% will significantly change the business models of banks, but it does allow for the redistribution of the client base between banks and MFOs.

“In general, in 2022, we expect a slowdown in the growth of consumer lending, regardless of whether quantitative restrictions are introduced or not due to the saturation of effective demand and the rise in the cost of credit products against the backdrop of rising rates,” Rybalkin concludes.

It will not be easy to ensure control over how banks comply with the MPL, said Oleg Lagutkin, general director of the Equifax credit bureau. “The term of validity of credit decisions in a number of cases will not allow exactly to comply with the standard. In addition, lenders will obviously use any information available on the market to more accurately determine the borrower’s income in order to reduce the value of the debt burden indicator, ”he said.

• “The thresholds are reasonable. We will comply ”, – comments the first deputy chairman of Sovcombank Sergey Khotimskiy. He expects that the credit availability in the market will decrease, and some players may record an increase in arrears. “It is important that the Bank of Russia in the future reduces these shares carefully, without causing significant blows to credit availability,” concludes Khotimskiy.
• Alexei Kramarsky, head of the credit risk management of the retail segment of Raiffeisenbank, calls MPL an “artificial limitation of lending.” According to him, such measures will negatively affect the availability of loans. “People who are able to service a loan may be denied or an increased rate due to the premium to the risk weight. Before applying these measures, it is necessary to recognize that part of the Russian economy is in a gray zone, and this zone, according to the latest statistics, has begun to grow again in the last year or two. It is very correct to allow banks to use their own models of confirming the income of borrowers for calculating the personal income tax, “Kramarsky is sure.

• “If new restrictions are introduced, VTB will adjust its risk policy,” says a bank representative, stressing that this may make the process less convenient for certain categories of customers. For example, those who apply for loans remotely may face rejections. “The restrictions imposed by the Central Bank are based on the indicator of the debt burden. The current method of calculating income, laid down in the personal income tax, often does not allow us to determine the real amount of clients’ income, and digital channels for obtaining information on income from government agencies are not sufficiently developed, ”explains a VTB representative.
• MTS Bank will make targeted changes to its lending policy, its spokesman said. “We expect some growth in refusals due to the introduction of the MPL,” the bank noted, adding that “most likely all banks will lower their approval at the time of launch” of the restrictions.
• Banks will adjust their risk policies, but focus on programs with “more flexible conditions for a specific borrower,” said Evgeny Ivanov, director of the retail risk department at Promsvyazbank. He did not specify how this flexibility would be provided.
• Home Credit Bank declined to comment. The rest of the top 15 banks in terms of retail loan portfolio did not respond to RBC’s request.