A survey by the International Confederation of Consumer Societies (Konfop) has found that 22% of Russians are struggling to repay their loans. The situation is particularly acute, with 18.5% of borrowers spending more than half of their income on debt servicing.
This high debt burden introduces risks even as the Central Bank cuts its key rate, a move that typically makes loans cheaper and stimulates borrowing. Igor Rastorguyev, a lead analyst at AMarkets, warns that while lower rates will revive demand for credit, the current state of household finances is a major concern. Even today, approximately 22% of Russians are facing difficulties servicing their debt while almost one-fifth of borrowers spend over half of their budgets on debt payment. The expert emphasizes that international standards for “healthy” lending consider a safe threshold to be no more than 30% of income, a level that is being widely exceeded in Russia.
Thus, we see that the system is approaching a stress point: on the one hand, banks are being incentivized to issue new loans due to lower cost of funds; on the other, household solvency is constrained. This does not automatically indicate a lending crisis but the risk of a wave of delinquencies and restructurings exists, the analyst believes.
“In the short term, the interest rate cut will most likely lead to an increase in refinancing and borrowers’ attempts to alleviate their debt burden. However, in the long term, if the high share of expenditure on loan servicing persists, the pressure on the banking sector and the growth of non-performing loans (NPLs) could intensify. Therefore, the future trajectory will depend not so much on the level of interest rates but rather on the growth of real household incomes and the ability of banks to accurately assess credit risks,” Igor Rastorguyev summarizes.