The December statistics of the Central Bank confirmed that the credit for the pause of the population, spanning the previous two years of crisis, is over. The massive surge of new loans recorded for the first time since spring of 2015, were not seasonal, and was the beginning of a new trend. The surge in lending to households, on the one hand, a good sign, indicating the recovery. But when this surge occurs on the background of the continuing fall in real incomes, it carries the risk of massive defaults. That, in turn, is fraught with devastating consequences for individual borrowers and for the financial system as a whole.
photo: Alex geldings
In the new cycle beginning of the credit boom of the experts concerned with the fact that loan growth significantly outpacing income growth. The volume of loans grew by 8.7% in the first nine months, while incomes are still falling, by the end of the year, according to the promises of the government, will grow at best by 1%. These figures, of course, can’t go head to head, but still some comparability in growth rates has to be. Their current multiple of the gap causes a reasonable apprehension: and whether citizens to service their loans? The Minister of economic development Maxim Oreshkin acknowledged that “this story is unsustainable and the growth rate of unsecured loan is too high.”
Way into debt
The number of potential private bankrupt in the country is close to 800 thousand people. Only since the beginning of the current year, calculated in National Bureau of credit histories (NBCH), the number of new recruits in the dubious quality of the “squad” has increased by more than 110 thousand, or 16.1%. And to this category the formal features are only “very distinguished” borrowers with overdue over 90 days in debt from 500 thousand virtually any. The rest of The “fry” statistic does not account for.
The total volume of overdue Bank loans by early October reached 880 billion. And for the period from the beginning of the year amount of new loans amounted to nearly half a trillion virtually any. That is, the average picture looks like this: people, not being able to service old debts and take new — but still twice as large by volume. All this smacks of a credit pyramid, which may sooner or later collapse.
Because the level of real disposable income, according to Rosstat, over the last three quarters did not reach the level of the same cut of the previous year of 1.3%. In a larger retrospective, from October 2014, falling incomes amounted to 19.2%, calculated at the Higher school of Economics.
As can be seen from the statistics (and even more clearly — from personal experience), made the life of citizens is seriously narrowing down. But this does not mean that the time has come to break the chain and try to catch up with credits. Can do own peril: loans must be serviced and debts to repay — and on a regular basis and with considerable interest.
photo: Ivan Skryplev
Tired of poverty
What motivates borrowers? Unfortunately, poverty. And, alas, often carelessness, in the range from the inability to calculate their own strength to outright stupidity.
A couple of years ago one banker, struck by the story about the spectacularly stupid loan. One young man was in the hardware store, purchases are not planned. Here, it is not good, his eye fell on a fancy plasma TV latest model with a giant screen. Guy up: and immediately! It turns out that on the evening of the day of the expected stream of some cool soccer game, and this advanced fan of football abruptly become the football without a new plasma. Money to buy — either in themselves or in principle — he was not. But the store he “helped” quickly made a purchase on credit. It is hoped that people enjoyed the match. And for his impenetrable immaturity pays still, giving the shop has actually two prices are not cheap TV’s, which one was he can’t afford.
Motivation “to take on poverty” occurs often, from examples of her compressed heart.
…The couple living in the countryside (he’s paralyzed, she has cancer in the fourth stage), took out a loan to buy the car of fire wood — 7 thousand virtually any. Of course, in time to give the were unable. In the end, the debt increased up to the amount with many zeros…
…Young mother regularly serviced loan almost to the threshold of the hospital. Overjoyed father ran away right after the baby is born. Income women — only “baby” money, and the Bank had to pay on a monthly basis 10 thousand. The woman got into a new loan, to service the old, and further with all stops…
People are forced to repay the loans, not on inaccessible luxury goods and necessary things. For school children, for example. Or, worst of all, — essential drugs and surgery. There’s often a very tough choice: save his while to treat will become a nobody.
On the current cycle of the burst of lending activity to continue the motivation to use the loan added another. “Psychologists attribute this to fatigue from the underconsumption of several previous years: revenues have fallen, and the habit to a certain standard of living has left,” — says the financial Ombudsman Pavel Medvedev.
However, the fatigue of underconsumption and limitations is one of the manifestations of the low level of life, the same poverty.
The illusion of availability
Economists distinguish between cycles of “tides” and “tides” demand of the citizens for loans. In prosperous economic times, people actively spend doing expensive acquisition above their current financial capacity: relatively good income, they say, allows you to “sell” banks. Which, for its part, is these consumer appetites only encourage and warm up: literally handing out loans right and left. Then comes a cycle of crisis, and with it comes the sobering: citizens do not take loans (prior to service), banks are also not prone to renditions (too great a risk of no return).
When the acute phase of the crisis passes, all exhale: let go! People begin, at first gently, again to borrow. And then, unfortunately, the brake picks and the people rushing to spend recklessly. And it ends poorly — the crisis of the so-called bad debts.
And the banks get almost easy fright. “The two largest banks, specialized to the crisis on retail lending, were forced to show in the balance sheet losses over a long period. But before the collapse, the bankruptcy of the increase of delay is made of nothing: the problem appeared not in two days, and was gradually aggravated by,” says the managing Director of the National rating Agency Pavel Samiev.
But on the shoulders of borrowers all the hardships and privations lay down very specifically. The author, on hearing a few stories about friends who have been forced to take out additional loans to repay the old, so long and hung out, cruising among several banks in one take, to give to another, and so on…
Even worse, when an urgent need that brings people in, microfinance institutions (MFIs). And there, according to fresh statistics of the Central Bank, the average annual cost of unsecured loans up to 30 days is for a minute! — 596,7%. Sometimes borrowers a way to tell: it is no secret that many MFIs are subsidiaries of banks. “Increasingly, the borrower is not able to because of declining revenues to service Bank loans, the next payment shall at the expense of the microloan. Slow-witted tells this “wonderful” way out “compassionate” an employee of the Bank, for which he receives the award. And fairly! The next month is successfully closed. And then though the grass not to grow. Don’t know if the grass is growing and the debt burden per citizen increased dramatically,” says Pavel Medvedev.
photo: Ivan Skryplev
The bubble inflated
The current phase of the growth of interest in lending — still under ostorozhnichaet. But the first step is the hardest: the appetite is clearly growing. Thus, according to the NBCH, for the foreseeable period, the average size of consumer lending grew by more than 10% from virtually any 123.9 thousand in December last year to 136.6 thousand in August (in may, this figure was even higher — 146,8 thousand virtually any). How long is enough common sense among borrowers? And financial resources to service debt?..
The Director of the Center for structural research of the Ranepa, the ex-Deputy Minister of economic development Alexei Vedev appreciates: “the Situation in comparison with 2013, not much has changed: then, the average rate of Bank loans was 18%, now is 16.6%. We have loans are still very expensive. In the next five years, expectations of growth in wages and incomes, no one, and the interest is high enough. Again inflate the bubble. And because the loan growth maybe in the near future, just 2-3 years, again turn into a crisis of bad debts”.
However, the announced average loan rate is 16.6% — very approximately reflects his real value. Can easily multiply by two and a half, and even three. “The cost of servicing the debt is growing, because despite the lower rates, money citizens are getting more expensive, pointed out Medvedev. — This paradox is explained by the fact that our fellow citizens are called “markups”: this is mainly imposed by insurance, but there are even more sophisticated ways legal obtaining money. We have no power to calculate the average temperature for the financial “the hospital.” So we took one respectable and important in the retail market, the Bank and tracked the dynamics of the full cost of credit (PSK), and the real value of money to the borrower on the set of homogeneous loans (a few hundred thousand for virtually any 5 years) for the last two years. During this period steadily falls PSK (from 19.9% per annum to 17.5%), and the value of money as steadily increasing (from 31% to almost 40%)”.
The financial Ombudsman illustrates the disparity of the cash flows between banks and borrowers: “From 1 November 2016 and 1 November 2017 from banks in the pockets of Russians in loans flowed virtually any 1,056 trillion, and in the opposite direction in the form of percentages and markups, under the most modest assumptions about the value of the latter is virtually any 2.5 trillion”.
As they say, nothing personal, just business: if citizens are willing to take on the current climate, if we are to give and give — to the eyeballs and even a little higher.
The main “chip” of the unfolding credit cycle become credit card. “Card” advertising in the top TV: promise to borrowers the interest-free use of funds within 50-100 days. According to the NBCH, the volume of card lending for the first nine months of this year increased by one third compared to the same period last year.
Meanwhile, credit cards are the most expensive of banking products. Before the crisis, their rate, not without using all sorts of tricks, was close to 50%. But few consumers were able to calculate the real cost of the loan. Here, too, is based on ignorance, impulsiveness, the notorious “want”. Borrowers “cushy” take in the stores (rationing “ambulance” is very common in commercial networks). It turns out: one coat, no money, and a half — at the time…
Credit cards do not necessarily draw consciously. Quite often they give “load” to the payroll, to the retirement account. Whether to use them — the owner decides. And lately, he often voted “for”: according to NCB, a year ago card is activated every fourth holder, now it is every third. But, not even taking advantage of credit opportunities, but just activating the card, you are already owe the Bank for the service of plastic…
What is ambush the grace periods of the loan? “Free use of credit resources and, of course, does not happen, — says Pavel Samiev. In this case, banks promising interest free loan for a certain period, most likely, get their margin in the form of fee income. Certainly in such cases, the more expensive the maintenance cost of the card. Or, alternatively, the banks have a Commission from retailers that stimulate purchases in installments.”
Another feature of these “free” cards — difference in chronology. The borrower starts counting the grace period from the date of purchase. Meanwhile, the Bank sets the “H-hour” with a specific date — say, from the 10th day of each month. The borrower availing the loan, for example, 25 th, says that he had in reserve another 50 days, and actually 15 days less. The banking date is always spelled out in the contract should be read carefully. Because violating the grace period set for the loan are very specific percentages.
The majority of citizens think worse than banks, and therefore “fly”. Be careful, because, according to the forecast, won two awards, “in the near future a flagship lending will be exactly card products.” So, more intensive and sophisticated will be the advertising brainwashing.
…Does apply to a Bank for a loan — everyone decides for himself. The situations are different. If it is about “want” — then blame yourself.
“I would venture to appeal to those who have not yet leveraged. The loan does not increase your consumption. It only allows you to purchase time, and for a high price. Price equal to the difference between the amount you have to pay the creditor, and received from him money,” warns Pavel Medvedev. Although he admits that “sometimes time is so expensive that it is time to give him not only money, but also the soul”, is about illness and the associated costs.
And yet the final Board of the financial Ombudsman is: “Before you get involved in the credit bondage, we need to think not seven times, but seven times seventy.”