Bank of Russia keeps macroprudential limits on consumer loans unchanged
The Bank of Russia retains the parameters of macroprudential limits on unsecured loans for 2023 Q2 the same as those set for 2023 Q1. This measure is to limit the increase in households’ over-indebtedness by discouraging lending to borrowers with high debt service-to-income (DSTI) ratios and through the deliberate extension of loan maturities.
In making this decision, the Bank of Russia Board of Directors was guided by the following.
According to January 2023 data, the monthly growth of outstanding unsecured consumer loans was 0.5%1 (vs 0.1% in December 2022). The standards of unsecured consumer lending were persistently deteriorating over the period before the introduction of macroprudential limits. Unsecured consumer loans issued to borrowers with DSTI2 above 80% accounted for over 36%3 in 2022 Q4 (vs 32% in 2022 Q3). It is the maximum level since the obligatory calculation of DSTI was introduced on 1 October 2019. The proportion of consumer loans for more than five years stays high (15%4 in October 2022).
In January 2023, banks and microfinance organisations (MFOs) began to adapt to macroprudential limits. Many market participants have adjusted their internal lending systems to monitor the compliance with the limits on a daily basis. Preliminary data for January suggest that some banks and MFOs will have to tighten their lending standards in February—March to comply with the limits at the end of 2023 Q1. Considering the above, it is expected that the amount of unsecured consumer loans issued in February—March could be
That is why the Bank of Russia sets the same macroprudential limits for 2023 Q2 as it set for 2023 Q1:
| DSTI exceeds 80% | Loan maturity exceeds 5 years | |
| Banks (except banks with a basic licence) | 25% of the amount of issued consumer loans without a credit limit during 2023 Q2 | 10% of the amount of issued consumer loans without a credit limit during 2023 Q2 |
| 25% of the amount of established (increased) credit limits during 2023 Q2 | 10% of the amount of established (increased) credit limits during 2023 Q2 | |
| Microfinance organisations | 35% of the amount of issued consumer loans without a credit limit during 2023 Q2 | Not applicable |
| 35% of the amount of established (increased) credit limits during 2023 Q2 | Not applicable |
The Bank of Russia will make a decision on the parameters of macroprudential limits for 2023 Q3 in May 2023 considering changes in households’ debt burden and lending standards.
1 According to Reporting Form 0409115.
2 DSTI is the debt service-to-income ratio of a borrower. It is calculated as a ratio of a borrower’s average monthly payments under all loans raised to the borrower’s average monthly income.
3 According to Reporting Form 0409704.
4 According to credit history bureaus’ data.
The reference to the Press Service is mandatory if you intend to use this material.