Microlending market features sustainable growth

According to the results of the microfinance market survey, the aggregate microloan portfolio reached 85.5 billion rubles at the end of the third quarter of 2016, posting an increase by 8% quarter on quarter and an increase by 36.9% year on year.

The structure of the portfolio remained unchanged over the quarter: loans to small and medium-sized businesses accounted for almost one quarter of the portfolio, i.e. 24.1% (24.6% in Q2), and consumer microloans to households represented 75.9% (75.4% in Q2). Less than one third of them were short-term microloans, including payday loans.

The demand for microfinance services continued to grow, being one of the factors pushing up the total number of microloan agreements from 2.9 million in 2015 Q3 to 5.0 million in 2016 Q3 (an increase by 74.2%).

A sustainable downward trend has evolved regarding the effective interest rate of microloans. Average market readings for loans with typically maximum EIR (payday loans) declined by 63.8 pp to 596.4% compared with the same period previous year.

Over the period under consideration, the amount of funds raised by microfinance organisations (MFO) grew by 3.0 billion rubles year on year and totalled 13.9 billion rubles. This was achieved mainly on account of funds (loans/borrowings) received by MFOs from legal entities.

Simultaneously, the number of MFOs listed in the government register dropped. That was primarily down to Bank of Russia efforts aimed at excluding unscrupulous and unviable entities from the register.