Bank lending to households shrinks in April

RUSSIA ECONOMICS - In Brief 01 Jun 2022 by Alexander Kudrin
The CBR reported that total outstanding household debt to banks decreased in April to R26.8 trln (including an insignificant part of credits in FX) from over R27.0 trln as of April 1, 2022 (i.e., by 0.9% m-o-m). It implied that banks granted fewer new credits than households repaid in April. In March, outstanding consumer debt was almost flat. It looks as though amid increased interest rates and a generally uncertain situation in the economy banks’ lending activity decelerate all across the board, including mortgages. In April, the number of new mortgages fell to 49.6K compared to around 140-160K each month in February and March. Note, that mortgages are still subsidized and as opposed to other loans, interest rates on mortgages didn’t jump in recent months. Overall, the situation in the consumer lending market didn’t look unexpected. Equally unsurprising could be a rather significant fall in non-food retail sales. Therefore, to avoid a too hard landing on this segment of the economy, the CBR started cutting its key rate more aggressively. More action from the CBR can be expected this month. Evgeny Gavrilenkov Alexander Kudrin

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