There are no signs of a bubble creating or overheating in Russia’s retail lending although growth in this segment carriers certain risks while being an economic growth driver, the deputy CEO of Russian state-run bank Vnesheconombank told TASS news agency.
“The Central Bank, to its credit, is actually toughening regulation for several years already through risk ratios and establishment of retail lending provisions. It ‘cools down’ the same. Therefore, from my point of view, there is no ‘bubble’ here,” Andrei Klepach said.
The top manager agrees with the position of the Central Bank that the increase in retail loans stimulated economic growth.
“Indeed, according to the estimate of the Bank of Russia, consumer demand supported by retail lending was largely the growth driver. We will not have a half-percent growth of GDP in the first quarter without it, but [the figure will be] even lower,” Klepach said.
Other experts questioned by TASS hold a similar position. The Russian economy’s growth rates will be about zero in the first quarter unless consumer lending growth, Natalia Orlova from Alfa-Bank says.
“We are not at the overheating phase now; we are approaching it. Indeed, I absolutely agree that we would certainly have growth rates about zero if no acceleration of retail lending growth occurred with us in the first quarter,” Orlova says.
Alexei Devyatov from Uralsib also supports this position. Lending creates “at least certain” demand on the domestic market, he noted. Banks need to create a common credit bureau to see borrowers with problems, the expert noted.
Such a bureau will make it possible for any bank to see all credits and refuse to give new ones if concerns are present, Devyatov said.
“It is necessary that any bank sees, for example, that an individual already has five loans and refuses to give the sixth one. I think this should be done but I do not see any major bubble,” the expert added.