Russian banks raising their interest rates

RUSSIA / FSU POLITICS - In Brief 30 Jul 2021 by Alex Teddy
After the Central Bank of Russia (CBR) raised its key interest rate in July 2021 commercial banks have followed suit. Some raised their rates even before CBR - these included Gazprombank, Rosbank and Promsvyazbank. Some banks raised the interest rate for depositors.Raiffeisen and VTB said they do not plan to raise their interest rates much for mortgages and small private loans.In September 2021 CRB will have another Board of Directors' meeting. That could well lead to another rate rise. Inflation is predicted to be 5.7% at least in 2021. CBR's target for this is 4% so it will take a lot to get inflation even close to the target. CBR is openly anxious about how much consumer debt there is. It has been expressing this worry for several years. Lending to SMEs was up almost 16% in the first two quarters of 2021. Mortgage lending might have risen as much as 24% in 2021. It has become stupidly easy to get a consumer loan. Income compression pushed people to do this. The banking sector has never been healthier. It made a bumper profit of USD 16.5 billion in Q1 and Q2 2021. That is YoY more than a 100% increase. The banks are raking in profits from interest and commissions.

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