have you taken the increase in delinquencies on the loans during the isolation?
Alexander Vikulin: Radical negative changes in the situation of “bad” debts are not observed. In March rose slightly, from 19.5 to 21.6%, for the share of unsecured loans overdue from 90 days, but this is more a mathematical effect associated with the fact that in the first quarter banks continued to minimize the risks, that is, to approve and to issue such credits became less. Good loans are subject to amortisation, and bad remained in the portfolio – the share of the latter thus increased. But microfinance organizations have been able to improve portfolios (they have in March the share of overdue loans over 90 days decreased from 32.9% to 30.4%) at the expense of borrowers, which banks have not approved the application because of low credit rating or excessive burden of loans on income – this is called PD, the maximum allowable load.
we All – both banks and borrowers were in a precarious situation. The President declared non-business days until 30 April. And the people, and the banks didn’t understand working now days or not, you have to pay now or in may. Then came the clarification of the Bank of Russia, and then and the Supreme court regarding the fact that in April working days for fulfillment of obligations should be considered as in everyday life. That is, it is necessary to pay.
the Introduction of vacation credit can also be attributed to non-standard measures. So, some citizens learned about the law, decided that the debts they are now almost forgiven. But it is clear that the holiday is not available to everyone. In this case the interest during the grace period will accrue, though at a reduced size: 2/3 of average weighted interest rates on the market for all loans except mortgages and mortgage – in accordance with the contract. A significant portion of borrowers think that it is cheaper to continue to pay on schedule. In other words, only to the end of the third week of isolation more or less understood.
the Delay will continue to grow?
Alexander Vikulin: unfortunately, the higher delinquencies are inevitable in this situation. This is due to the fact that self-isolation, and coronavirus, and the new prices of oil are costly to our economy, and hence borrowers. So you will have to pay, the question – to whom and how much. Of course, the government did much to ensure that loss of ordinary citizens was minimal. But the burden on businesses and employers greatly increased, and therefore, affected employees, ordinary borrowers. Consequently, their solvency will depend on how effective in countering the crisis will be government and business.
will Increase after the quarantine, the demand for loans? Will the banks to change the model of the behavior of borrowers?
Alexander Vikulin: In the first days of April was noticeably sharp decline of applications for credit��s on the part of citizens. In some types of lending, the decline is 90% of last year’s volumes, but only at the end of April, according to the forecast of NCB, it will be 59%. However, a detailed analysis of the process suggests that if the classic banking offices accepting applications actually fell, in online channels, it has been preserved in the same volumes and even growing. This, in my opinion, suggests that the interest of the citizens of the borrowing has been preserved and as you exit the isolation will be restored at least in the previous volumes.
Another thing – are the banks to lend to borrowers who have returned to them for loans? All 2019 and the first quarter of 2020, we observed a reduction in risk appetite from the banks – the acceptance level of all time reduced. This is due to the limitations of PD, introduced in October by the Bank of Russia and the internal policy directed on improvement of credit portfolios. The latter, incidentally, by April 1, have led to a decrease in PD for borrowers in all income segments – up to 23.3 percent from 24.6% on 1 October. I think this policy of banks will continue, and loans are able to help only those borrowers who have a high enough personal credit rating (PCR) and acceptable to the Bank, the value of PD.
We understand the massive concerns of borrowers concerned about their credit history in connection with the credit vacation. In mid-March, the NCB and the Association of Russian banks has written to the Central Bank a joint proposal for the implementation of such a mechanism of vacation credit which would have led to the deterioration of credit histories of borrowers. Our appeal is reflected in the text of the law, which envisages amendments to the Federal law “On credit histories”. Therefore, information on the provision of credit vacation, which is now supplied to NCB, is reflected in credit history with a neutral status and does not reduce the RCC of the borrower.
Should I now take out loans or it is better to suffer without borrowing?
Alexander Vikulin: We keep the recommendation for borrowers unchanged. You need to evaluate the need for credit. If without it do not, then you need to get your RCC and to evaluate the chances of obtaining of a loan. If the CRP is relatively small, from a large loan should refrain, as a little chance, and the conditions are not the best. Instead, it is better to try to increase your PCR, make it as high as possible. It is possible for any human being, we need only to earnestly fulfill credit obligations. If the CRP is high enough, you need to find a Bank which setting offers the best conditions.
As you can see, the recommendation is simple, but follow it not all borrowers. These are scammers – especially now, in conditions of isolation. EveryNEWNO we receive tens of messages from citizens who called from an unknown number with the message on allegedly tainted credit history, for correction where you need to go to some website. And is happening there, sorry, banal taking money from unsuspecting citizens. The sites we find in March the traffic has increased significantly and each of them thousands of dupes. In my opinion, in a crisis of this kind fraud are comparable to robbery with an appropriate response of the state.