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Russia: Micro-Financing Organizations’ Loan Book Up 35%, Exceeds RUB 150bn

UrBC, Moscow, April 16, 2019. Russia’s micro-financing organizations’ accumulated loan book increased from RUB 113 billion to more than RUB 152 billion (+35%) in the course of 2018, RAEX’s press service reports.

According to the rating agency’s research findings, the share of micro-loans concentrated within the country’s largest micro-financing organization went from 27% up to 32% (+RUB 20 billion); in fact, this constituted over 50% of the overall increase in the entire market’s loan book.

The market shares of other large players rose as well, and smaller businesses leaving the market facilitated the process even further. As a result, the country’s twenty largest and top hundred micro-financing organizations controlled 56% and 84% of the market, respectively, by the end of 2018.

‘The year 2018 saw yet another record amount of micro-loans issued to customers: around RUB 320 billion all in all. Fifteen companies out of the country’s top twenty issued 20% more in loan amounts last year compared with one year previously. We believe this had to do with their strategy of trying to seize a larger share of the market before the interest rates would have to go down through legislative enforcement. The top twenty micro-financing organizations we did a research on started issuing 46% more in loan amounts (RUB 78 billion altogether), both through raising the average loan amount and through approving loan applications more often,’ says RAEX’s Managing Director for Banks’ Ratings Alexander Sarayev.

The agency believes the micro-financing organizations’ loan book might come to RUB 190 billion by the end of 2019. Micro-loans to private customers will remain the primary driving force behind the process (this applies to ‘bank’ loans as well). For the first time in the last few years, a downward trend might be expected (a 10% to 15% decline against the year 2018).
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