Bank of Russia keeps macroprudential limits on consumer loans unchanged
The Bank of Russia retains the parameters of macroprudential limits (MPLs) on unsecured consumer loans for 2024 Q2 the same as those set for 2024 Q1. The MPLs aim to curb the increase in households’ over-indebtedness by discouraging lending to borrowers with high debt service-to-income (DSTI) ratios and by deliberately extending loan maturities.
In making this decision, the Bank of Russia Board of Directors was guided by the following.
In late 2023, consumer lending slowed down amid the tightening of monetary and macroprudential policy (the increase in macroprudential buffers from 1 September 2023 and the reduction in MPLs in 2023 Q4). In 2023 Q4, the portfolio of unsecured consumer loans grew by 2.0%1 (vs 5.9% in 2023 Q3), with the amount of outstanding consumer loans declining by 0.1%2 in December. The trend toward cooling in the consumer lending market is likely to persist in 2024. The Bank of Russia expects that the portfolio of consumer loans will grow from 3% to 8% in 2024.
MPLs helped markedly decrease the proportion of loans issued to highly-indebted borrowers. The proportion of loans issued to borrowers with DSTI3 above 80% dropped from 36% in 2022 Q4 to 17% in 2023 Q4, whereas the outstanding loan balance of such borrowers decreased from 34% to 28% of the portfolio.4 The proportion of actually provided loans with DSTI above 80% exceeds the established MPL value (5%), as some of these loans are provided via earlier issued credit cards.5 Their proportion will reduce as the portfolio of credit cards will renew.
Between January and September 2023, the decline in the proportion of loans with DSTI above 80% was accompanied by an increase in the number of new loans in the next segment with DSTI from 50% to 80% (from 27% in 2022 Q4 to 33% in 2023 Q36). This is why a separate MPL7 was set for this range of DSTI ratios. This measure helped reduce the proportion of such loans from 33% in 2023 Q3 to 28% in 2023 Q4. Overall, during the year of application of MPLs in the unsecured consumer lending, the proportion of new consumer loans issued to individuals with high DSTI (over 50%) declined from 63% to 45%.
MPL values for banks (except banks with a basic licence)
| DSTI exceeds 50%, but is below 80% | DSTI exceeds 80% | Loan maturity exceeds five years | ||||
|---|---|---|---|---|---|---|
| 2024 Q1 | 2024 Q2 | 2024 Q1 | 2024 Q2 | 2024 Q1 | 2024 Q2 | |
| Percentage of the amount of issued consumer loans without credit limits | 25% | 25% | 5% | 5% | 5% | 5% |
| Percentage of the established (increased) credit limits | 10% | 10% | 5% | 5% | 5% | 5% |
MPL values for microfinance organisations
| DSTI exceeds 50%, but is below 80% | DSTI exceeds 80% | Loan maturity exceeds five years | ||||
|---|---|---|---|---|---|---|
| 2024 Q1 | 2024 Q2 | 2024 Q1 | 2024 Q2 | 2024 Q1 | 2024 Q2 | |
| Percentage of the amount of issued consumer loans without credit limits | 25% | 25% | 15% | 15% | No limit | |
| Percentage of the established (increased) credit limits | 15% | 15% | 15% | 15% | No limit | |
The retention of current MPL values will help reduce the proportion of risky loans in the portfolio of consumer loans further.
The Bank of Russia will make a decision on setting MPLs for 2024 Q3 in May 2024 with due regard to changes in households’ debt burden and lending standards.
1 According to Reporting Form 0409115. Adjusted for the securitisation of loans in December 2023.
2 The portfolio decreased by 1.9% net of the adjustment for the securitisation of loans in December 2023.
3 Debt service-to-income ratio of a borrower.
4 According to Reporting Form 0409704.
5 The MPLs set on credit cards reduce the proportion of new limits and limits increased by creditors rather than the proportion of actually issued loans with high DSTI, as decisions to use the limit are made by borrowers. Outstanding amounts are in part related to credit cards issued during the period of easier MPLs or even before their introduction.
6 During this period, the proportion of loans with DSTI over 80% declined more significantly i.e. from 36% to 25%.
7 In 2023 Q4, these MPLs were tightened to 30% for cash loans and 20% for credit cards. In 2024 Q1, they were tightened further to 25% and 10%, respectively.
