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Business / Finance

Small and harmful: the debt load of Russians is lower than in the West, but more dangerous themes of the day 16.09.2019 at 21:03

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The Russians are borrowing more and in 2021 will bring the economy to recession, the head of the Ministry Maxim Oreshkin. Why a relatively modest debt load suddenly become a problem?

the Situation, a long time concern of economists, finally drew the attention of the authorities. When 15% of the population, directs payment of debts 70% of their income, it causes a social problem, said the Minister of economic development Maxim Oreshkin. Moreover, this social problem runs the risk of becoming economic, tipping Russia into recession in 2021, said the Minister.

"the rising debt load is a normal part of the credit cycles in the economy — says the rector of the Russian economic school Maxim Buoys. — If the economy is growing, expectations of future higher incomes encourage people to borrow. Thus, people live "here and now" tolerate the consumption of a more prosperous future to the present. But the credit cycle will sooner or later turn back the clock".

the Mass crediting of the population leads to the fact that the temporary revival of demand for consumer goods and services comes a decline. "This particularly applies to sales of durable goods such as housing and cars — says the managing Director of IG "Algo Capital" Michael Khans. — The future decline of the markets means that trading infrastructure and production capacity with high probability will be underutilized. This, in turn, is able to strike across the country's economy. In the worst case, such a process takes the form of massive defaults on loans and a series of bankruptcies of commercial, industrial enterprises and credit institutions".

In fact, the Minister of economic development, fears of a future credit crunch with all the consequences for the economy negative consequences. "Such crises are very characteristic for the capitalist economy, continues Khans. — We can assume that they are periodic and inevitable. Let's not forget that the trigger for the global financial crisis of 2008 was the problem with mortgage bonds in the United States."

If we compare the figures of the debt load of the population in Russia and other countries, it appears that the credit load is substantially — sometimes much — below. "The attitude of the credits of Russians to the amount of annual disposable income is 28%, — quoted the General Director of MFO Webbankir Andrey Ponomarev. — For comparison: in Hungary it is 43.3%, and this is the minimum level among member countries of the Organization for economic cooperation and development (OECD). The ratio of household debt to GDP in Russia is low: according to the Central Bank at the beginning of June 2019 by about 16%. According to statistics from the OECD, the Czech Republic, the figure is 32.3% of GDP, and in Poland — 35,2%". In more developed countries, and numbers more in the UK and France this figure exceeds 50%, and in the United States is committed to 100%.

the Delay is gaining momentum

Nice looking Russian indicators, even in comparison with the picture observed in our country in the recent past. "The share of loans with overdue payments over 90 days to total loans fell by more than half from 10.6% in August 2016 up to 5% in August 2019, — quotes the statistics of the Central Bank, the head of the expert division of the consulting company Strategy Partners Nikita Popov. — About halved and the share of overdue debt — provided loans to individuals that are not repaid within the contract term in the loan portfolio". (See. schedule.)

There is also one more nuance. "Growth of loans overdue more than 90 days from the start of 2019 is technical in nature, — says head of the banking and financial markets, management analysis and strategic marketing PSB Ilya Ilyin. — Traditionally, at the end of the year, banks write off or sell bad loans. This leads to a reduction of bad debts, which over the years increases with increasing aging of the loans."

Since the beginning of 2019 to August 1, the volume of overdue loans decreased from 5.4% to 5%. "It's not too high for our country, — said General Director of IFC "Timer" Roman Makarov. A similar level of delay was in the middle of 2013. The pre-crisis and in 2014 it exceeded 7%".

however, if the debt load is reduced, then why worry Maxim Oreshkin? And here's why. Recently, the Central Bank released data for July: the rate of growth of overdue debts exceeded the credit growth by 1.8 times. And if in June the indicator of delay amounted to at least April 2013 — 4,96%, at the end of July the trend reversed — had risen to 5.01%.

the Bank of Russia recognizes the growing debt burden of the citizens, but says the lack of "bubble". The Central Bank is more skeptical mood. "In July, ratings Agency S&P noted with alarm that about 16% of loans issued by Russian banks, are problematic: they either already restructured or serviced with a delay exceeding 90 days, — says Andrey Ponomarev. — In their opinion, this situation could lead to a banking crisis".

Here are the numbers. If three years ago of outstanding debts was less than 10 million, now they number, according to the National Association of collection agencies (NAPCA), close to 14 million

wait a Second, what eventually happens? Arrears is rising or falling? "Most likely, overdue loans are growing in the segment of small lending, are concentrated among the poor strata of the population, — says Maxim Buoys. — From the point of view of creditors, i.e. banks, the situation is not getting worse on average. But from the standpoint of borrowers, this sad news which confirm the upward trends of poverty in Russia, which says, for example, the chamber".

this year, the growth rate of consumer credit are 22-24%, according to the Ministry of economic development. "Increased and average debt of borrowers with one loan at 12% for the year to 137 thousand rubles, with two — by 11% to 284 thousand rubles," — said Vice-President of RFI, the Bank's Elena Chizhevskaya.

People take more money, but it is not the credit growth, which leads to increased consumption and, as a consequence, the growth of the economy as a whole, as it happens in the West. Yes, the level of debt load of Russians in absolute figures and in percentage to GDP is low. "But its growth is in contrast to the economic performance of the Russian economy: the continuing fall of real disposable incomes, the lack of preconditions for economic growth", — says the head of the Luxembourg office of a consulting company KRK Group Nikita Ryabinin.

no Yardstick to measure

If the world's growing debt load leads to the promotion of economic growth, then Russia is in its own special way. Lending is only able to support current consumption. "In Russia the big prospects of growth now in sight, — said Maxim Buoys. — Against this background, the growth of the debt load can be explained by the fact that people perekreditatsii to new loans to service old, or inertia, take out loans, to support the same level of consumption." "But this can lead to catastrophic collapse, warns the General Director of IK Investment Bengala Alexey Buyanov. — So this is a timely discussion it is important to prevent a potential problem."

In Russia, the danger is not the debt level itself, but significant and sustainable excess growth of consumer credit over the growth in real incomes, pays attention to the Roman Makarov. At the end of August Oreshkin announced adjusted economic forecast for the current year. "Taking into account the actual data has been revised forecast for the growth rate of real disposable income of 0.1% compared to 1% projected earlier", — quotes RIA Novosti words of the Minister.

this situation may lead to problems in the economy, referred to by the official.

the Fact a house of cards

In the last two years, the growth of lending to households contributed to the growth of consumption, which influenced the growth of the economy, says Ilya Ilyin. However, long retain the same level of consumption in conditions when the credit should be given an increasing part of income, it is impossible. Consumer demand starts to fall and drags along everything else.

With a mortgage, at first glance, all is well: the share of overdue payments (more than one day) falls. If at the beginning of 2019, the delay was up 1.14% in July to 1.04% and in August — just 0.9%. "The reason for the very rapid growth of mortgage loan portfolio as of 1 January and 1 August it grew by 10%, and over the past year — 24%," said Roman Makarov.

But is this good growth? "In the spring, the Central Bank said that he sees risks of education "credit spiral", in which the growth of mortgage lending is a factor of growth in home prices and growth in property prices — factor in the further growth of lending," — says Maxim Buoys. "In the event of a sharp deterioration of the economic situation here can be realized a large amount of accumulated risks," warned Makarov.

"If "dusting" the food, for this will inevitably be followed by the growth of social tension. Suffice it to recall mass demonstrations "currency" mortgage holders," — said the Chairman of the Commission on financial security at the Council on financial-industrial and investment policy Trading-industrial chamber of the Russian Federation Ivan Rykov. However, an even bigger problem with mortgage credits threatens banks. "Banks' mortgage portfolios exposed to serious risks in connection with the legislative prohibition on free actions in respect only of residential property borrowers, — draws the attention of Nikita Ryabinin. This can be a serious problem for banks 'balance sheets if the economy will not grow or begin to stagnate, you will have to create significant reserves, which will put great pressure on capital of banks".

What's next? "Large banks once again will run to the government, telling a story about the fact that they are important for the economy, and by forcing them to increase their capital, or, simply, to spend budget money to cover the losses that you created," suggests Ryabinin. Part of the country was already facing a similar situation in 1998 and 2008. "Most likely, will repeat the scenario of 2008 in which the state actively helped companies and banks to survive, — says Alexey Buyanov. — However, it will be applied a more selective approach, because all the money is not enough".

the state at this time just is not enough money to bail out credit institutions, agrees Ivan Rykov. "Let me remind you that the Bank bailout in 2014 the state allocated about 6 trillion rubles, however, in the case of a major crisis may require even greater amounts, which in the context of the difficult economic situation in the country may not be, — said the expert. — Well, after that the country will face a General debt crisis".

the Central Bank to the rescue

the seriousness of the problem recognize already at the top. The Bank of Russia noted the increase in the debt burden and try to avoid the appearance of "bubble".

on 31 July Russia began to operate the law on mortgage vacation. "In case of deterioration in the financial condition of the borrower, banks will be obliged to provide the possibility to suspend or reduce the amount of payments on the mortgage for six months, — explains Ilya Ilyin. — Missed payments the borrower needs to be repaid at maturity. This measure will allow to restore solvency of borrowers, the technical delay on such loans will not."

as of 1 October introduced a marginal debt load of citizens (PDN), and set the allowances to the risk factors depending on the level PDN and the total cost of credit. The higher the premium, the higher the risk factor. "Banks will be unprofitable to lend to borrowers whose loan payments exceed 50% of monthly income," continues Ilya Ilyin. Since October, banks are obliged to form their own standards based on these innovations.

In General, the experts unanimously agreed that these measures, the Central Bank will be effective and will really slow down a further increase of the credit load. "Competent actions by government, regulators, and market participants themselves should help to ensure that this bubble will slowly deflate, or, alternatively, to grow in the near future, says President of NAPCA Elman Mehdiyev. — We are now in a situation where "bubble" is not given to inflate and to influence the whole market."

However, these measures do not solve the problem of already existing indebtedness. And what can it solve?

How to treat "bad" debts

Surveyed experts have found many ways:

1. Up roschennomu bankruptcy proceedings. "Most importantly, you need to create a quick and cheap procedure of bankruptcy of physical persons in the simple cases, — says Director of macroeconomics "Expert RA" Anton tabah. — It would not run. Part three of the year promises, and things are there."

2. Debt restructuring. "The banks are not very willing to restructure overdue debts of the citizens, whereas, in my opinion, it's the only civilized way of repayment of bad debts, — says Ivan Rykov. Now in reality, banks seldom go towards the debtors, it is easier to sell packages of debt collectors. And those themselves in the eyes of society has discredited".

3. To revise the laws. "If we, following the example of many countries, will first approve small consumer loans and only after closing to issue car loans, young people gradually learn to use these financial instruments," — said Alexander Kulikov.

4. To collect debts online. "If the work is overdue and will take place remotely — for example, the site "public Services" when the debt was sent through EPTS, the borrower has received the notification of the decision of the court to recover the debt, the amount written off from the card — such a system would make life easier for banks to discipline borrowers, — says Alexander Kulikov. — If the problem of debt will be solved online on the official level, the effect will be more ambitious and global, at all levels".

5. To create an institution of private court bailiffs. "This idea already some time discussed the expert community, — says Ivan Rykov. — Non-state police officers under state control could help the FSSP, having been engaged in the collection of debts of legal entities, leaving to the state service of socially important debts. The mixed system of enforcement is working successfully in many countries, and I think that for our country it would be a good option."

6. To create a single state database on the income of the population. "Some countries at the state level to collect information on incomes, and all banks have access to it — consequently, no one overloads the borrower, — said risk Director cards installment "Conscience" Anastasia Mukhacheva. — At us such practice is only beginning to be introduced: service FIU for contributions provides information about the white salary of the borrower, but because the country has a high gray level of wages, this service, unfortunately, does not cover the needs of the banks at 100%."

7. To provide the dot state aid. "To stabilize the situation point may help the poor, large families, the disabled, and mitigation program of co-financing the acquisition of housing for young families", lists Elena Chizhevskaya.

8. To hold the credit Amnesty. "A very interesting situation for this reason are shaping up right now in Kazakhstan. The new head of the state is actually declared a state of widespread credit Amnesty, says Michael Khan. — It focuses on the poorest citizens who will be able fully or partially to get rid of debt. However, they will not have the ability to borrow in the future, what is a good educational measure." In Russia, however, has not yet decided to forgive the debts. "Example of a partial solution to such problems was the news that Sberbank will hold the restructuring of loans affected by the floods in the Irkutsk region to individuals, small businesses and entrepreneurs — like the Khans. The decision has been made on the recommendation of the President of the Russian Federation Vladimir Putin."