​Consumer credit growth slows in December, as household deposit growth strengthens

RUSSIA ECONOMICS - In Brief 28 Jan 2022 by Alexander Kudrin
CBR reported that household deposits increased in December by 5.5% m-o-m (5.8% if escrow accounts added) as the key rate was hiked amid accelerated inflation. In 2021 as a whole, household deposits grew by 13.3% as a result.At the same time, banks’ credit to households (mortgages and consumer credits combined) expanded by 25.1% last year. In 4Q21 average rate of growth of this credit generally slowed, and in December, it increased by 1.6% m-o-m. Such a still relatively strong growth largely stemmed from a rapid expansion of mortgages (by 3.2% m-o-m including securitization and by 2.7% m-o-m without securitization) as people seemingly rushed to borrow to finance their operations with real estate ahead of the key rate hikes. As mortgages are still heavily subsidized, mortgage interest rates remain well below inflation. These numbers suggest that the rate of growth other types of credit to households, such as car loans, slowed considerably last month. Note that credits to the household sector represent 20.8% of banks’ assets.Overall, these developments can be considered positive as increased incentives to save and a slowing rate of growth of consumer credit will help cool down the overheated consumer market.Evgeny GavrilenkovAlexander Kudrin

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