Big banks begin to increase credit card limits

Credits are improving

In the spring of 2022, unsecured consumer loans dwindled, though not by much. Russians took less consumer loans due to higher rates, risks and general uncertainty in the financial market. The Central Bank noted that due to rather strict issuance standards and a high key rate, there is no demand for expensive loans among financially wealthy borrowers, and less affluent citizens may not be able to meet the criteria for obtaining loans.

However, in the summer months, the consumer loan market in Russia started to recover slowly. The Central Bank’s June report on the development of the banking sector noted that the increase in loan volume in the first summer reached 0.2% after a three-month decline (-0.4% in May, -1.9% in April and March). Demand intensified due to the fall in interest rates in June, while banks softened their potential loan needs.

What are the big banks saying?

Customers of various Russian banks report that since the end of July they have received more frequent messages about increasing credit limits on cards. socialbites.ca correspondents received similar offers. Large banks in the top 30 in terms of capitalization confirmed this trend.

Otkritie Bank’s press service said that unsecured consumer loans are really growing in the market.

“Since the start of the second quarter, Otkritie Bank has been increasing its credit card sales every month, and June set a historic record for issuance for the bank. In the second quarter, demand for cash loans increased by a third in the first quarter. While the bank is not planning an overall increase in limits for loan products, changes are possible for certain categories of borrowers that may affect the limit,” he said.

MTS Bank noted that while making the decision to issue a credit card, they also adjusted the existing credit limits for existing customers. “Now the bank’s forecast is improving compared to the spring period, so the adjustments to the limits will also be positive,” the press service of the financial institution said.

RNKB bank said they are expanding their credit card limits regularly. The more the customer uses the card, the higher the chance of increasing the available amount.

“Limits, solvency, activity of using the card, prevention of overdue debts etc. calculated separately for each customer. The increase can range from 10% to 100% of the current limit,” he said.

For customers with regular income from a debit card, the limits increase the most. RNKB, these include bank payroll holders, retirees and the self-employed.

The ability to increase credit card limits was also allowed in Sovcombank. Halva card is now available to customers. The limit is reviewed regularly and can be increased with active use. Also, the bank can increase the amount of funds available at the request of the client.

Post Bank recorded a sharp increase in Russian credit card demand at the beginning of summer. At the same time, the average payment amount has also increased.

“In June, our bank’s credit card portfolio grew by 46% compared to the same period of the previous year. Compared to May, loan demand increased by 56%. With the growth in loan volumes, the average amount of payments is also increasing – about 10% per month, ”the press service of the bank summarized.

Will loans become more affordable?

Alexei Volkov, Marketing Director of the National Bureau of Credit History (NBKI), confirmed in a conversation with socialbites.ca that the average limits of issued credit cards have increased slightly. In June 2022, this figure amounted to 70 thousand rubles, in May – 69 thousand.

“Compared to May, the average limit size increased by 1.4%. At the same time, compared to the same period in 2021, the average amount of limits on credit cards increased by 2.8% (in May 2021 – 68.1 thousand rubles). All of 2021 and the beginning of 2022, the limits were at a constant level – 70-75 thousand rubles. Now these indicators are gradually returning to the pre-sanction level,” he said.

However, Igor Nikolaev, principal researcher at the Institute of Economics of the Russian Academy of Sciences, believes that the downward trend in bank rates will slow down in the autumn of 2022, which will negatively affect the availability of credit.

“Reducing the base rate by 1-3 percentage points in recent months certainly makes loans more attractive, but the relative positive effect will eliminate the decline in real incomes of the population and high inflation. The risks of non-payment of loans by the end of the year may increase significantly.

The exchange rate of the national currency weakened by 10 rubles per month against the dollar, an increase in parallel imports will lead to an increase in inflation. The current level of the key ratio will most likely be the lower limit, ”the Nikolaev concluded.