The Central Bank fears a new credit bubble

The Central Bank fears a new credit bubble


The debt burden in some areas has reached the limit

Photo: NEWS/Paul Poor

The debt burden in some areas has reached the limit of 27-30%. About it, answering a question “News”, why the Central Bank fears the formation of a new credit bubble, said the first Deputy Chairman of the Central Bank Dmitry Tulin during the presentation “Main directions of monetary-credit policy” for the next three years. According to him, this fact threatens the financial stability and could prevent credit growth at the macro level. About the risk of new credit bubbles had previously said, and the head of the Central Bank Elvira Nabiullina. This at first glance seems a paradox, because corporate borrowing is not yet even planned recovery.

That there is a risk of overheating in lending, the Central Bank Governor said after the last decision of the regulator about the change in the key rate. However, Nabiullina has not explained the reason of such danger. Earlier on the International financial Congress as a risk she had identified including a high debt load in the traditional Bank lending sectors. It would seem dissonant with the fact that corporate borrowing is still, to put it mildly, not in the best shape.

— The total loan portfolio of Russian banks for the first half of 2016 decreased by 0.5%, while new loans to non-financial sector fell by 4.7%, — has reminded the head of the industrial policy of the rating Agency RAEX (Expert RA) Fedor Zherdev.

In this context, it is difficult to imagine how can form a new credit bubbles. As explained by Dmitry Tulin, the risk is high credit load, which is observed in some industries. According to him, in some sectors it reaches 27-30%, which is at the limit. What are the industries in question, he did not specify. The press service of the Central Bank also failed to provide “news” comment on this issue.

Last year, the report of the Central Bank already noted that “the relatively rapid loan growth in 2013-2014 that took place in the backdrop of slowdown in real economic activity rates have led to a significant increase in debt burden in Russia”. Speech including goes about the foreign exchange liabilities of domestic companies, the difficulty of which is intensified on the background of the devaluation of the ruble.

According to experts of the Central Bank, relatively high accumulated debt level will be an objective deterrent as the demand for borrowed funds, and from their suggestions. The first Deputy Chairman of the Central Bank also pointed to the danger of curbing credit growth. Simply put, if the debt of a particular industry are high, it restrains the possibility to obtain new loans. In this case, said experts of the Central Bank, the issue in such conditions will not solve even the easing of monetary policy, i.e. the reduction of the key rate. Presumably, it was stated in the report, such processes in the first place can be typical of machinery, metallurgy, retail trade, agriculture and chemical industries.

Vice-President of “Business Russia” Nikolay Ostarkov agrees that there is now a large debt load, for example, in the construction industry, agriculture, retail trade, and certain sectors of industrial production. According to him, if to consider loans that are available not only to developers but also to individuals for house purchase, the credit load of the construction can now be 70-80%. However, according to experts, it’s not critical, since for this process is a real asset in the form of construction. Many industrial and agricultural enterprises to invest in development and modernization, which is also a positive process. According to Ostarkova where the big problem there is the business with working capital.

— The macroeconomic situation ate working capital. Businesses, of course, optimised costs, but it’s still a much bigger problem than the debt load, — said Vice-President of “Business Russia”.

The actual statistics on the ratio of credit debt and revolving funds no. But, for example, in 2013, according to Rosstat, the volume of debt companies on Bank loans to the amount of working capital ranged from 45 to 107%, said the analyst of JSC “Finam” Alexey Kalachev.

That is why last year the government adopted a decree 214, which was established the procedure for obtaining industrial organizations subsidies from the Federal budget for compensation of part of expenses for payment of percent on loans. The donations were made specifically on the working capital and (or) to Finance current operations.

Fedor Zherdev from RAEX believes that the island’s debt burden now stands the problem of the lack of investments for which credits are one of the main sources.

— In the preparation of the annual ranking of the largest 600 companies in Russia, the Agency conducts a survey of local business leaders. So, at the end of last year, the growth of investment from private owners is 10%, state-owned companies — still less, of 9.8%. In both cases the increase is below the annual inflation rate, which in 2015 closer to 13%. In the long term under-investment, of course, can lead to increased over-indebtedness: there is no investment, so income falls, therefore, not to repay loans, — expressed concern the expert.