Average market effective interest rate on consumer loans declines

The Bank of Russia’s data suggest that credit and microfinance institutions continued to reduce the effective interest rate (EIR) on consumer loans in the second quarter of 2017.

Compared with the same period of 2016, the second quarter of 2017 saw a decline in EIRs in all 20 categories of consumer loans, as well as a 6.2 pp decrease in the highest average market EIRs of credit institutions (to 26.8%). That said, average market EIRs still remain considerably higher than average market interest rates on issued loans.

Most categories of consumer loans in all segments of the microfinance market also registered a decline in average market effective interest rates in the second quarter of 2017. Compared to the first quarter of 2017, a decline in EIR has been registered in 15 out of 21 categories of consumer loans issued by microfinance organisations (MFO) (from 0.7 pp to 4.7 pp). The most pronounced decrease was registered in average market EIR on POS-loans (by 3.2-3.8 pp) and loans of 30 to 60 thousand rubles issued for more than one year (by 4.7 pp). Average market EIR also declined in 12 out of 18 categories of consumer loans issued by consumer credit cooperatives (by 0.2-1.6 pp compared with the first quarter of 2017) and in 11 out of 18 categories of consumer loans issued by agricultural consumer credit cooperatives (by 0.03-2.8 pp).