Retail lending growth rates slow down for the third consecutive month

In the period January—July 2019, bank lending in general continued to grow, according to the information and analytical material ‘On the Development of the Russian Banking Sector in January—July 2019’.

However, the slowdown trend in retail lending became more pronounced (its growth rate had been decreasing in the period May—July). Among other factors, this was the result of the regulatory measures implemented by the Bank of Russia to limit growth in the highest-risk lending segments (unsecured consumer loans and housing mortgage loans with a low down payment).

Since the beginning of the year, the average ratio of general and administrative expenses to operating income across the sector reduced by 1.6 pp to 41% as of 1 July 2019. This may suggest that credit institutions have improved their operating performance. In the period January—July 2019, profit in the banking sector totalled 1,178 billion rubles. Yet, when comparing this figure with the 2018 result, it is necessary to remember the adjustments in line with IFRS 9 — they have had a considerable impact on the current financial performance.