Banks expect lending to improve across most regions

Credit institutions expect easing of credit to come in the next six months in most Russian regions; they also predict a rebound in demand, so it will lead to loan growth. These are the findings of the poll commissioned by the Bank of Russia. The results are summarised in Q3 Review of Regional Loan Markets, available on the Bank of Russia site. According to the report, loan rates in most regions between July and September 2016 were down, following the recent downward move in the key rate.

Several Russian regions (namely, the Amur Region, the Smolensk Region, the Tomsk Region and the Omsk Region) saw a marked easing of lending requirements to small and medium enterprises.

In an increasingly more competitive environment, banks were focused on winning borrowers over by coming up with softer non-price lending terms.

Mortgage lending retains its position as a growth driver for the Russian market. Mortgage loan portfolio was rising across all Russian regions, mainly as a result of the government’s mortgage rate subsidy programme. This segment grows most in the regions where its share in the total loan portfolio was relatively small (the Republic of Ingushetia, the Republic of Sakha and the Chechen Republic).

The observed changes in bank lending conditions, as well as the overall credit trend, are aligned with the Bank of Russia’s macroeconomic forecast and the target of lowering inflation to 4% by the end of 2017.