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Press conference post release “When affordable credits come back: 2012 Forecast”

December 20, 2011, 11:00 am. Press conference on a topic “When affordable credits come back: 2012 Forecast” was held at the conference hall at Interfax-Ukraine News Agency (8/5a Reitarska street, Kyiv).

 

Renewal of crediting commenced in 2011 raised hopes for banks and borrowers. But the liquidity crisis combusted in August and dragged on through December strongly hit the hopes for affordable and inexpensive loans.

Consumer loan granting history in 2011

(including auto credits and excluding mortgage; a monthly volume of new credits granted, in billion UAH/month)*

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

4

4.5

7.6

7.3

7.9

8.4

8.4

7.5

7.2

7.4

* - acc. to NBU

2011: Cash credits. CreditMarket Cash Loan Index went up to 112.83% in December, from 89.85% in July. The first increase in rates was registered in mid-July – to 102%; and the second rise started at the beginning of November and keeps on today.

2011: Credits for home appliances. CreditMarket Consumer Loan Index was 127.04% in July. Then, it decreased to 125.41% in August. Since the beginning of September it remains stable at 127.04%.

2011: Credit cards. CreditMarket Card Index grew from 58.46% in July to 69.04% in December. The first insignificant rise was recorded in mid-August – to 60.77%. A sustained growth till the current indicators has been under way from the beginning of November.

2011: Auto credits. CreditMarket Car Loan Index went up to 40.13% in December from 34.44% in July. The index increased to 34.96% in end-August, and its brisk growth started in end-October. Automobiles mounted the peak of sales in August due to the expansion of auto loans in summer 2011.

2011: Mortgage loans

CreditMarket Mortgage Index went up to 24.35% (December) from 19.22% (July).

Mortgage loans granting history in 2011; a monthly volume, in billion UAH/month.

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

0.227

0.207

0.212

0.261

0.244

0.301

0.301

0.347

0.449

0.557

* - acc. to NBU

Banks’ actions in 2012

- improvement of risk management quality;

- increase in a risk constituent in loan interest rates as people’s paying capacity is still low. There’s a threat of the second wave of the crisis and a risk of losing regular income by people.

- change in approach to selling of bank services (to distribution channels) by expanding partnership with finance and other institutions;

- cost cutting, in particular, unit costs cutting for doing business and putting in place of remote banking.

Banks’ actions in the crediting segment:

- to severely evaluate borrowers quality – to select the most financially reliable;

- to focus on granting auto loans and short-term unsecured cash and consumer credits;

- to keep rates at a rather high level, at least in the first half-year.

2012: Cash credits

No significant changes in loan rates are expected till spring 2012. Effective rates would decrease by app. 10% after summer. The market size in this segment would grow by 20-25%. New market operators are likely to appear, and withdrawal from the market of failed companies is probable.

2012: Credits for home appliances

This will be segment #2 by size (after auto loans). Promotion programs are likely to mainstream since 2012. The segment will be strictly controlled by the largest strong market operators. A share of home appliance sales on credit can increase to 45-50% of the total volume of retail sales.

2012: Credit cards

This loan type is considered to be the most hazardous at a time of economic instability. Credit cards is a product for a more civilized market. The segment behavior will depend on the state of Ukrainian economy and international markets. If some negative trends appear, crediting volumes will go down, and this segment can be one of the first to collapse.

2012: Auto loans

At present, a share of auto sales on credit is less than 15%, but it can increase to 20% of the total sales of new automobiles under favorable conditions on the resource market. We expect market growth by 10%. In case of negative trends or crisis situations the slowdown is also possible. Interest rates will not go down before summer 2012. A significant repartition of the market and coming of new market operators is possible.

2012: Mortgage credits

A mean effective rate comprising all fees and other borrower payments will be 24-27% per annum in UAH. Nominal rates can be 17-20% per annum. Mortgage loans will be taken mainly by people who lack 25-35% of the apartment price and who expect to repay it for a few years.

Recall that index.kreditmarket.ua is a quality source of current information on credit rates for individuals and credit market analytics on cash credits, credit cards, credits for home appliances, auto loans and mortgage loans.

Participants: Ihor Durytsky, General Director at KreditMarket (LLC FC Financial Solutions Center); Volodymyr Kompaniets, Operations Director at KreditMarket (LLC FC Financial Solutions Center)

 
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