The impact of the COVID-19 pandemic and consequent economic downturn has heightened demand for consumer credit in Russia. Driven by the economic context, consumer confidence and willingness to purchase expensive items with credit, such as cars, has dropped.
Auto lending in Russia was hit particularly hard by the COVID-19 outbreak, with sales of new cars crashing throughout the country and demand for loans plummeting. Car sales were already declining in the country before the pandemic, with the government supporting the industry with subsidised programmes.
One of the effects of the pandemic is that banks have been tightening their policies regarding newly issued consumer loans. The declining number of approvals indicates that they have been adhering to an increasingly conservative policy when approving applications, especially for a higher sum of consumer credit such as those typical in auto lending.
In Russia, the development of consumer credit in 2022 and beyond will depend heavily on the rate of economic recovery post-COVID-19. Despite the severity of the recession, strong government support in response to the economic fallout of the pandemic will help to safeguard jobs and boost demand.
Russian banks, especially leading players, will continue to lower interest rates on loans in a bid to attract price-sensitive consumers. Banks are also developing better quality, more sophisticated, and more convenient credit products that cater to the needs of different consumer groups.
The COVID-19 pandemic has further fuelled consumer awareness and interest in digital solutions in daily life. It has also accelerated the already existing movement towards digital financing, which is reflected in the surging number of loan agreements completed, at least partly, online.
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Non-mortgage consumer debt extended to individuals for personal or household use including installment loans and credit cards. Examples of consumer credit include auto lending, card lending, durables lending, education lending, home lending and other personal loans. Consumer credit includes both revolving and non-revolving credit.See All of Our Definitions
This report originates from Passport, our Consumer Credit research and analysis database.
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