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Saturday, December 3, 2016

Sberbank gives the signal to lower interest rates on loans


The largest Russian Bank following the decline in Deposit rates has also been reduced-interest loans. The savings Bank is ahead of the curve of the Central Bank, thus pushing him to the easing. Will other banks follow the leader of the industry will be consumer lending to pre-crisis levels?

Sberbank may 16 reduces rates on consumer credits to pre-crisis levels, said the Director of Department of retail non-transactional products Sberbank Natalia alymova.

“Private banks can really follow the example of Sberbank, but a massive trend will be just after lowering the key rate by the Central Bank of the Russian Federation

“We long time didn’t touch our rates on consumer loans. Now is a good moment to reduce them. The reduction is quite substantial, it leads to the rate to the level that was before the crisis, i.e. until the end of 2014 – beginning of 2015,” alymova said.

The decline was across the line from 1 to 4 percentage points. According to her, the loans guaranteed by a new range of rates is now from 14,9% to 22.9% per annum compared to 16.5–25.5 per cent previously. On loans without collateral new rates are at a level of from 15.9% to 23.9%, earlier – 17,5–26,5%.

The Bank observes a revival of demand and growth of applications for consumer credits this year compared to last. So, for the first quarter of 2016, the savings Bank has given out consumer credits at 156 billion rubles. Loan rates in General on the financial Russian market also corrected, said the speaker.

“According to our data, in December 2014 rates from the Bank were higher by 7-10 percentage points, increased to 27.5–35.5 percent per annum. Until the increase in the key rate of the Bank of Russia to 17%, the loan without collateral and guarantees could be issued under 20,5–25,5% % per annum. Today’s Bank rates – even lower than before the crisis”, – said the expert on credit products of Banks.<url>” Elena Sudarikova.

Sberbank has made a good move that will allow him to stay ahead of other market players. “The Bank demonstrates that it is ready to be a leader and not to lag behind the process”, – said the head of operations on the Russian stock market IR “freedom Finance” George Vashchenko.

Experts indicate that the banks have a real opportunity to reduce interest rates on loans, despite the fact that the Central Bank has not yet returned its key rate to pre-crisis levels.

First, significantly improved the liquidity situation – the decline in demand for loan products led to increase the amount of available funds from banks, indicates the managing partner of the audit company “2K” Tamara Kasyanova.

Secondly, the market still expects a reduction in the key rates by the Central Bank. “Despite tight monetary policy, the preconditions for a rate cut the market is, and sooner or later the Central Bank will take this step,” – said Kasyanov. “Sberbank is acting in advance and this gives the Central Bank a reason to think again about further monetary easing,” says Vashchenko.

The key rate was significantly increased at the end of 2014, which immediately led to a rise in interest rates on Bank deposits and the decreasing availability of credit both for population and for business. Since then, the Central Bank gradually reduces the rate.

In addition, money market rates have recently been below the key rate, which enables banks to reduce interest rates. Plus, the savings Bank has gone on it after I reduced the rates on deposits, and it has not caused outflow of investors, adds Vashchenko. Rates on deposits were reduced from 25 April – by 0.9% on ruble rulers and 0.5% on foreign currency base deposits.

Sberbank online allows you to first reduce rates to attract and the first to reduce lending rates liquidity. In the end, the cheaper all Sberbank attracts deposits and, accordingly, has the ability to dynamically manage their margins, either to increase the margin financing under the average market rates, or lower lending rates, increasing volumes and margins while maintaining market average”, – explains the mechanism of the head of Department of the analysis of financial markets kit Finance Broker” Vasily Koposov.

Therefore, another incentive for lower lending rates could be the decision on stimulation of demand for banking products among the population.

Sberbank as a leader of the industry is traditionally an important indicator for other participants in the financial market. However, follow now other banks for an industry leader? Experts are not entirely sure.

“It is unlikely that the decisions of the savings Bank will become a trend in the banking market – not all players are willing to reduce rates. Individual banks can do to follow the example of Sberbank, but a massive trend will be just after lowering the key rate by the Central Bank,” – says Kasyanov.

In contrast, Vashchenko considers that on the horizon three months it will happen. “Another issue is that the advertisement did not disclose all the terms of the contract, and the rate at 17.9% is the best possible, and taking into account a number of factors, it rises to 23.9%. And such proposals from other banks is now,” he says.

In any case, the decline in interest rates would have a positive impact on the demand for loans.

“The decision of the savings Bank can attract new customers if the new rate is lower than the competition. There are certain structural changes in the market is quite possible,” – says Tamara Kasyanov.

However, significant growth in total lending, most likely, will not. “The consumer market in Russia continues to decline due to the fall in real incomes. To expand this trend by increasing the availability of loans only in the same Sberbank of 1.1–4.4 percent is unlikely. But in the long run, if a reduction in interest rates will be widespread and deeper interest in banking products will increase”, – the expert adds.

Vashchenko considers that the reduction in retail rates will gradually reduce sales dip to 15% and reduce the level of overdue debt, which exceeds 11% in the consumer sector.

On the other hand, fully to pre-crisis levels potrebkreditovaniya will come back very soon. “The population’s real income has declined to its lowest level in more than 10 years, and on improvement of the situation will take years. The pace of market recovery will be slow, apparently, will not exceed 5% per year” – waiting George Vashchenko.

Still, the cost of credit is not always a decisive factor for the population. The consumer must at least have permanent and sufficient income and to be confident in the future.

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