Financial collapse is affecting paying capacity of borrowers. The arrears of individual credits are growing 6 percent a month, i.e. twice as fast as before the crisis.
Photo: Svetlana Nefedova
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Borrowers Tend to Drag Out
Financial collapse is affecting paying capacity of borrowers. The arrears of individual credits are growing 6 percent a month, i.e. twice as fast as before the crisis. So far, the banks have managed to set it off by the increase in credit portfolio. But individual crediting will become unprofitable for the banks if this trend survives.
According to reports provided by 32 banks, the arrears of individual credits grew 5.9 percent on average in October in Russia. Some banks had above 10 percent, and the indicator materially increased in absolute figures.
VTB 24, for instance, suffered the arrears increase of above 228 million ruble (10.3 percent), while the overall amount reached 2.4 billion ruble. The arrears of individual credits stepped up 3.5 percent in the bank system in general, the Central Bank of Russia (CBR) reported.
So far, the growth in arrears has remained in line with the asset growth and the increase in portfolio of individual credits, which stepped up 8 percent in October, said representatives of VTB 24 press service.
According to analysts the growth in arrears is the first sign of declining paying capacity of the nation. “Nowadays, the paying capacity is shedding mostly on reduction in salaries and on their irregular payment,” explained Natalia Orlova from Alfa Bank. “Retail market always responds to economic difficulties with certain delay. The situation will aggravate by the year-end, as the companies will be dismissing more people.”
According to Russia’s employment agency Rostrud, 1,073 local companies officially announced the plans to reduce their personnel by 46,000.
www.kommersant.com
All the Article in Russian as of Nov. 14, 2008
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