A noticeable increase in the debt burden of Russians will push the Central Bank of Russia to reduce the risk of the financial sector, said in conversation with FBA “economy today” independent financial and economic expert Alexander Trifonov.
The Central Bank of the Russian Federation has prepared a review of financial stability, which mentions, that the total debt of Russians on loans, which are subject to credit holidays, is about 7 trillion rubles. Expected scale of restructuring in the short term, the document says, may have a negative impact on the liquidity of individual banks. Wherein, not all borrowers will need a credit holiday, but mostly in humans, working in the most affected industries. They can account for up to a third of existing loans.
“Debt burden is an indicator of the ratio of payments, paid by borrowers, that is, in this case, individuals, on loans and their income. As of 1 April 2020 the debt burden of Russians reached the level of 10,9% of income, which is the historical maximum.
However, in reality, the debt burden indicator does not look that big., if we take into account only that part of the population, able to provide credit. To pay such Russians have to spend about 44% their income. At the same time, the indicator of the banking sector does not include microfinance organizations..
The deterioration in the financial condition of the population was due to the coronavirus pandemic, as a result of the spread of which many Russians lost their jobs and, Consequently, income”, – says expert.
Banking sector as a whole, emphasized in the overview of the main regulator, is in a state of structural liquidity surplus, and credit institutions have a significant stock of liquid collateral, which can be pledged on the interbank market or on repo transactions of the Bank of Russia.
The observed contraction in retail lending also offsets shortfalls in payments on restructured loans. Nevertheless, The Bank of Russia is ready, if necessary, to expand liquidity provision to support restructurings.
The banking sector will change the credit policy
Loose monetary policy is designed to support lending and ensure stable dynamics of interest expenses in the banking sector. Regulatory relaxations and reduction of macroprudential premiums will allow banks to gradually absorb losses and ensure the continuity of their activities.
Besides, the main regulator concluded, that the economy of the Russian Federation as a result of the COVID-19 pandemic faced an unprecedented shock, however, the financial sector is in a healthy state.
“In general, the current situation in the credit market does not seem catastrophic to me.. As of 1 May 2020 year total loans, provided to individuals by the financial sector, is slightly more 18 trillion rubles.
Compared to all assets of the banking system, equal 103 trillion rubles, then the said amount 18 trillion will be about 17-15%. This indicates, that the total number of loans granted to the population can be called moderate”, – says expert.
Alexander Trifonov also noted, that the qualitative indicator of overdue debts within the limits of the reflected balance is no more than 5% from the loan portfolio to individuals of the entire banking sector.
"At first 2020 years, this figure has risen by about 10%, which indicates a further increase in the share of so-called bad loans. However, it will not reach colossal proportions..
We can say that, that the lending activity of the Russian banking sector will continue to decline due to the tough approach of bankers to assess the creditworthiness of borrowers and a prudent credit policy as a result of general macroeconomic risk”, – added agency interlocutor.
Economist, making a short-term forecast about the state of the financial market, He noted, that the credit burden of the population will show growth within two to three months, i.e. until September 2020 of the year.
However, Alexander Trifonov emphasized, that the Russian banking sector will not suffer from this, since the real share of untimely returns before 30 days will be no more 20% of the entire banking portfolio of loans to individuals.
Ruble exchange rate and export indicators
It is assumed, that the Bank of Russia will pursue a countercyclical monetary and macroprudential policy further, to ensure financial stability and support aggregate demand. The consistent implementation of inflation targeting in recent years has made it possible to reduce the dependence of inflation on changes in the ruble exchange rate, and the application of the fiscal rule reduced the dependence of the exchange rate on the dynamics of oil prices.
According to the main regulator, weakening ruble and sharp downturn in economic activity will lead to lower imports in the second quarter 2020 of the year, which will provide some support to the current account balance. Exports from Russia are expected to fall 2020 year 40%, ie until $250 bn s $419 billion 2019 year, wherein, imports will fall by 18,5%, ie until $207 bn s $254 billion.
"Ruble's exchange rate, Most likely, will indeed decline in the short term and towards the end 2020 year will fall markedly against the dollar and the euro. This is due to a sharp decline in export goods in the form of oil and gas due to the spread of coronavirus infection in the world and a decrease in the economic activity of the subjects.
Foreign exchange earnings as a result of falling prices for hydrocarbon raw materials and the general global crisis will decrease. In this regard, the Central Bank can influence the ruble exchange rate for the sake of stabilizing the Russian economy”, – He stated the expert.
Alexander Melnik
