Belarus' consumer lending market predicted to pick up in February

The consumer lending market in Belarus will start reviving in February, but banks will be more cautious with new loans, the banking sector experts toldBelTA.

On 1 February, the National Bank intends to remove the formal limitation on the growth of banks' ruble loan portfolio. "But this does not mean that all banks will instantly start issuing out loans, said Chairman of the Board of MTBank Andrei Zhishkevich. The position of the National Bank on the limitation of ruble liquidity in the banking sector is still very tough. It is a totally justifiable and predictable response of the regulator to the continuing tensions on the foreign exchange market, he said.

Andrei Zhishkevich believes that this restrictive policy will be maintained. "Accordingly, not all banks, including retail banks, will be able to find the funding to resume active lending. The banks, for which the retail business is not the core one, will be probably more focused on the support of their corporate portfolios, he added.

Another fact that needs to be taken into account is possible reassessment of credit risks. "It is clear that the policy of pegging the wage growth to the labor productivity growth is important at this stage but will affect the borrowing capacity of people. It can therefore be expected that banks will be more cautious with new loans, and will reduce credit limits, Andrei Zhishkevich said.

With regard to the interest rates, Andrei Zhishkevich believes that given the increase in the deposit rates up to 45-50%, we can naturally expect the interest rates on consumer lending market at about 60-65%. "It is expensive with regard to a mortgage, a car loan. Credit cards and small express loans will most likely remain in demand. Given the high interest rates, installment cards will become more popular as they offer zero interest rates for consumers while banks are offset by commission fees from retail networks, he explained.

Valery Polkhovsky, an analyst with the Forex Club Group of Companies, said that after the National Bank lifts its recommendation the consumer lending market will pick up. The demand for loans will be restrained as the interest rates will be pretty high and they will continue to depend on inflation. "In any case, banks will be able to offer loans at the rates exceeding the inflation rate, which considering the depreciation of the Belarusian ruble, will be rather high," he said. However, the excessive lending would not benefit the financial situation in the country anyway. The National Bank said that the banks are increasing the supply of foreign currency in the cash segment of the market. In such circumstances, the loans denominated in rubles might be used to purchase foreign currency and which could destabilize the financial and monetary markets again, the expert said.