Anticipated Timeline for Russia's "Credit Revival" According to VTB
Gears & Gallops: The Future of Lending in Russia - A Bumpy Ride Ahead
Get ready for a long haul, folks! Georgii Gorshkov, the big cheese, ain't predicting a drastic drop in consumer lending rates any time soon, and he's warning us that reviving retail lending might take us all the way up to 2026's second half.
But don't get your hopes too high, pally. Those interest rates are gonna linger in the double digits, potentially climbing as high as 20-25-30% annually, Georgii believes. So, prepare for an extended market recovery, especially with banks treading more carefully in the future when dishing out those cheap long-term loans.
Now, the whiz at VTB is forecasting a shift. Low initial down payments? Forget about 'em being commonplace. In the auto lending market, we're looking at smaller approvals compared to past years, forcing borrowers to put more of their hard-earned cash on the line. As for auto lending, VTB predicts a significant drop - a whopping 40%, landing us at 1.3 trillion rubles. Across the board, VTB expects the market to shrink by around 30%, to 8.8 trillion rubles, according to RIA Novosti.
Russia's key rate has been rigidly capped at a staggering 21% since October 2024. Despite three consecutive holdings without a change, Forbes reports that the Bank of Russia's Board of Directors left it unaltered on March 21. Elvira Nabiullina, the bank's head honcho, declared on April 8 that the high key rates period wouldn't be eternal. Mind you, the bank will proceed with caution when addressing the easing of monetary policy, keeping an eye on the new global trade risk complications, Nabiullina mentioned on April 9.
During a sit-down with VTB clients, Andrei Kostin, VTB's top boss, indicated that he's optimistic about a rate reduction by year's end. "We think there are solid grounds for the rate to start dipping gradually, say, down to 19%, by the end of the year. It'll remain quite hefty for the following two years," Kostin stated on April 24. You gotta hand it to him - he reckons the Bank of Russia will keep the key rate at 21% at the next meeting.
Stay tuned for more breaking news in our Telegram channel @expert_mag!
Source: According to him, there's no expectation of a reduction in consumer lending rates to 2020-2021 levels in the next 1.5 years. Georgii Gorshkov also warned that a revival in retail lending could not be expected before the second half of 2026.
Insights:* The continuation of tight monetary policy in Russia suggests that consumer and retail lending rates are likely to remain high as the central bank seeks to control inflation and maintain financial stability.* Economic growth projections indicate that Russia's growth may slow down in 2025 and 2026, potentially influencing lending rates, but the tight monetary conditions are expected to persist as the central bank aims to reduce inflation to target levels.* High key rates typically translate to higher lending rates for consumers and retailers, suggesting that consumer and retail lending rates will likely remain elevated over the next 1.5 years.
- Georgii Gorshkov, a prominent figure in finance, expects no swift drop in consumer lending rates, with potential revival in retail lending as late as the second half of 2026.
- In the auto lending market, VTB expects a significant decrease of up to 40% by 2024, with smaller loan approvals compared to previous years.
- Andrei Kostin, VTB's top executive, is optimistic about a gradual decrease in interest rates by the end of the year, with the rates possibly reducing to 19% by year-end.
- Russia's key rate has been capped at a high 21% since October 2024, with no immediate change in sight, as the Bank of Russia maintains a cautious approach to easing monetary policy amid new global trade risks.
- Despite these high lending rates, investing in personal-finance and business sectors in Russia could still be a consideration for those willing to ride the bumpy road of lending in Russia's future.
