2023
Reduction of the number of MFIs to 1009 organizations
By the end of 2023, 1,009 microfinance organizations (MFIs) were registered in Russia, which is half as much as five years earlier. Such data in mid-May 2024 were cited by analysts at the Expert RA rating agency.
According to the study, the number of participants in the Russian microfinance market is decreasing from year to year, and this trend will continue: according to experts, by the end of 2024 the number of existing MFIs in the country will decrease by another 50 companies, to 932.
According to experts, in 2023 it was difficult for small MFIs to adjust to the new restrictions of the Central Bank of the Russian Federation - tightening macroprudential limits (i.e., limiting the share of unsecured loans in the total volume of loans issued by the bank or MFIs) and regulatory reserves. The changes required microfinance companies to take a flexible approach to the product line. This did not work out for everyone, and as a result, 153 MFIs closed in Russia in 2023, which has not happened since 2020. At the same time, the portfolio of the 100 largest microfinance companies grew from 84.8% in 2022 to 86.3% a year later.
The volume of microloans issued in Russia in 2023 increased by 30%. However, large players working in high-margin segments (with unsecured consumer microloans with an interest rate of 183% per annum) began to increase the terms of microloans "to salary," and its extended analogues to the maximum possible six months. As noted in the rating agency, this happened in response to the introduction of limits. On the one hand, this is how regulatory requirements were fulfilled without reducing the issuance to high-risk borrowers. On the other hand, high interest rates have persisted.
 | Monoproduct business models that do not have economies of scale become the most vulnerable. First of all, those companies that have not invested in technological solutions and have not reached the payback level, taking into account several rounds of tightening regulatory and legislative requirements for MFIs, will leave the market, the Expert RA agency notes[1] |  |
The share of IT specialists among recipients of microloans in Russia doubled to 4.4%
During 2023, the share of employees of IT companies among clients of microfinance organizations (MFIs) in Russia increased from 2.5% to 4.4%. This is stated in a study of the online financial platform Webbankir, the results of which were released in mid-March 2024.
Among the recipients of microloans in the Russian Federation, the share of specialists employed in the extractive industry is also growing. If at the beginning of 2023 they accounted for 5.5%, then a year later - 7.8%. The share of those working in the field of engineering and metalworking increased from 4.6% to 6.2% over the specified period.
The most numerous category of MFI borrowers are trade employees: their share decreased from 18.3% at the beginning of 2023 to 16.2% at the beginning of 2024. In addition, according to TASS, the number of borrowers employed in healthcare (from 7.5% to 5.7%), the light and food industries (from 7.2% to 5.6%), education (from 6.8% to 5.4%), security and security agencies (from 8% to 6.7%), legal and notarial services (from 3% to 2.1%).
In a number of industries, the share of clients of microfinance organizations practically did not change over the year. Approximately at the same level, indicators were recorded among workers transport (6%), catering (4.6%), (financial sector 3.7%), agriculture (3.5%), advertising MEDIA, and tourism (both groups have about 1% each).
The study also says that in terms of the average loan amount, employees of the financial industry (8.6 thousand rubles), IT companies (7.6 thousand rubles), health care and law enforcement agencies (7.5 thousand rubles each) are in the lead. The smallest amounts of loans are received by employees of catering (5.6 thousand rubles), agriculture, light and food industries (5.9 thousand rubles each). According to Webbankir estimates, the average income of the MFI client by the beginning of 2024 reached 52 thousand rubles per month.[2]
Growth of loans issued by microfinance organizations by 28% to 900 billion rubles
Microfinance organizations (MFIs) in Russia in 2023 increased the issuance of loans to the population by 28% compared to 2022 - up to 900 billion rubles. In the segment of small and medium-sized businesses, the lending indicator grew even more - by 50%, to 105 billion rubles. This was reported in the statistics of the Central Bank of the Russian Federation, published in early March 2024.
From the materials of the regulator it follows that by the end of 2023, the total portfolio of microcredit loans reached 442 billion rubles. During the year, this figure increased by an average of 4-6% per quarter.
According to a study by the Central Bank, the main channel for issuing consumer loans by microfinance companies remains: the Internet share of online loans in the total volume in 2023 increased to 75% against 66% a year earlier. At the same time, 40% of funds were issued remotely to entrepreneurs in 2023 against 13% in 2022.
The Bank of Russia calculated that the share of loans with a debt burden indicator (PDN) by the end of 2023 exceeded 80% amounted to 14%, when in the first quarter of the same year the value of this indicator was 30%.
According to the regulator, the share of individuals who re-apply to MFIs by the end of 2023 increased to 83.4% of the total number of borrowers (a record figure since the third quarter of 2020). According to market participants, in 2024 the growth of the share of such customers will continue, since against the background of new requirements for MFIs, it will be difficult for them to find new customers without an increased debt burden.
The Central Bank also cites data according to which 230 MFIs sold debt in 2023 - 23% of the total number of companies in the microfinance market. The main volume of market cession fell on a small number of large players: more than 50% of the debt sold in 2023 was sold by 10 companies, more than 70% - 20 companies.[3]
The Central Bank of the Russian Federation has tightened the requirements for cybersecurity of microfinance companies. Their IT costs will rise
In early September 2023, it became known that the Central Bank of the Russian Federation tightened the requirements for cybersecurity of microfinance companies. Their IT costs will increase as a result of innovations.
As Kommersant writes with reference to the decree of the regulator, it establishes stricter requirements for storing information about incidents, improving the security of applications and infrastructure and the use of cryptography for online loans.
The level of protection of MFI information infrastructure facilities shall comply with GOST "Security of Financial (Banking) Transactions." Information protection of financial institutions. The basic composition of organizational and technical measures, "is noted in the explanatory note to the project.
The software of MFIs working with online loans must be certified or have an estimated level of trust (DMA) not lower than the norm established by the regulator (DMA 4). In addition, such MFIs will have to conduct annual testing of information infrastructure facilities for penetration and vulnerability analysis.
The costs of MFIs will increase significantly, believes Fedor Muzalevsky, director of the technical department of RTM Group.
| | Firstly, the annual pentest, which in the simplest version costs from 150 thousand rubles, - he explains in a conversation with Kommersant. - Secondly, the assessment of compliance with the ODU4 (not to mention certification), which costs from 1.5 million rubles. Thirdly, the transition from a simple electronic signature without the special functions prescribed by these changes to cryptography (in fact - to domestic solutions) can cost an order of magnitude more. | |
According to Natalia Bunina, special adviser on corporate issues at Pen & Paper, the innovations will require MFIs to shift their focus to the work of IT departments and, possibly, attract additional specialists.[4]
2022
In which regions of the Russian Federation most of all take microloans
The issuance of microloans to the population in 2022 increased compared to 2021 in almost all Russian regions. In addition, in most regions, the level of delay in microloans has increased. This is evidenced by the data of the Central Bank of the Russian Federation, which were published at the end of June 2023.
According to the regulator's materials, in 2022 the largest volume of issuance per 1,000 population is observed in the Republic of Tuva, characterized by low availability of banking services, as well as in Moscow and St. Petersburg, where a significant part of the population is concentrated, including labor migrants from other regions of the Russian Federation.
At the same time, the list of the top 10 regions in terms of microloans has changed: in particular, last year's leader, the Chukotka Autonomous Okrug, dropped out of it, where the issuance of microloans in terms of 1 thousand people decreased by about 85%. In 2022, there was a higher concentration of MFIs and a lower level of delinquency in the top 10 regions than in the country as a whole.
According to the Central Bank, the bulk of the profits in the MFI market are formed by companies with a portfolio of over 1 billion rubles: the MFI market is gradually concentrating, it is easier for large companies to meet the changing economic situation and adapt their business models. The formed customer base and the level of technological development allow such companies to timely rebuild scorring models and the product line for the needs of borrowers. Market profit for 2022 increased by 40% compared to 2021.
At the end of 2022, the loan portfolio grew by 11% after 32% growth in 2021. At the same time, the quality of debt service has worsened, as evidenced by both the high value of the NPL 90 + indicator (34.5-34.6% over the last three quarters) and the significant amount of debt sold (in 2022, the concession amounted to 57.6 billion rubles - almost twice as much as in 2021.
REVIEW OF KEY INDICATORS OF MICROFINANCE INSTITUTIONS
Decrease in market volume by 5.7% to 29.9 billion rubles
The volume of the Russian market for services to microfinance organizations (MFIs) in 2022 amounted to 29.9 billion rubles, which is 5.7% less than a year earlier, when the indicator was measured at 31.7 billion rubles. Such data in May 2023 was presented by BusinesStat analysts.
According to them, in 2022 the largest decline occurred in the segment of individuals, in connection with it is associated with an increase in overdue debt. At the same time, the B2B segment (individual entrepreneurs, small and medium-sized businesses) showed significant growth. The request for credit funds from companies is caused by the need to maintain operating activities in an economic crisis, the researchers explain.
They say that the main driver of the development of the microfinance market remains active digitalization, whose pace was forced to accelerate due to the COVID-19 coronavirus pandemic and the impossibility of working MFO departments in quarantine. The digitalization of the industry led to the rapid growth of the market, the emergence of new products and the general growth of the margin of microfinance services. In 2021, the volume of issued online microloans increased by more than 100%.
Digitalization is expected to remain a key market driver in 2022-2026. New regulatory norms of the Central Bank of the Russian Federation related to the reduction of maximum rates and tightening of credit scoring will force companies to look for opportunities to reduce costs, which will further transfer the market to online format. The way out of this situation may be the emergence of large fintech companies capable of offering a technological solution to problems, for example, conducting credit scoring using machine learning and predictive analytics instead of raising the interest rate on the most risky categories of customers. The development of scoring models based on machine learning, process automation, predictive analytics and increased security can lead to the creation of new microfinance products and a strong change in current ones, analysts say.[5]
The number of clients of microfinance organizations increased by 21.9% to 17.3 million people
The number of clients of microfinance organizations (MFIs) in Russia in 2022 increased by 21.9% compared to 2021 and reached 17.3 million people. This is evidenced by the data of the SRO MiR (the largest association on the MFO market), which were published by RBC on February 20, 2023.
According to the study, in 2022, the growth rate of microfinance clients increased compared to the pandemic (coronavirus pandemic COVID-19) 2020 (then the indicator was at around 9.5%). In absolute terms, in 2022, the number of Russians with microloans increased by 3.1 million people.
However, the increase in the number of customers over the past 12 months turned out to be lower than in 2021, when the MFI customer base increased by 47.3%, or 4.6 million people, the article says.
The general director of the group Eqvanta (brands "" and Fast-moneyTurboseim"") Andrei Kleimenov explained that in 2022, the slowdown in market growth was influenced by the military special operation of the Russian Federation, To Ukraine credit holidays for those mobilized, a new format for interaction with credit bureaus, as well as the preparation of the market for legislative restrictions 2023. According to him, these factors will be relevant in 2023.
By the end of 2022, the total portfolio of microfinance organizations amounted to 294.5 billion rubles, which is 12.3% more than a year earlier (growth in 2021 amounted to 41.8%). According to the assessment of the SRO "MiR," in 2022, MFIs approved loans to citizens for 608 billion rubles. Year-on-year issuance grew by 28.7%. Nevertheless, in 2021, the relative increase in issuance was much more significant - 76.6%.
Experts interviewed by the publication note a change in the strategy of microfinance organizations. They began to work more intensively with repeat customers and less often approve loan applications.
| | Companies reduce the limit of approved amounts and the timing of loans, the growth is mainly due to an increase in approved limits mainly to high-quality repeat customers, - said Creditter CEO Igor Smirnov[6] | |
2021
The loan portfolio of microfinance organizations in Russia grew by a third over the year
The loan portfolio of microfinance organizations (MFIs) in Russia at the end of 2021 reached 329 billion rubles, an increase of 32% compared to 2020. Such data are given in the report of the Central Bank of the Russian Federation, published in April 2022.
According to the regulator's statistics, the share of payday loans in the total portfolio of microfinance organizations in 2021 increased by 1.7% - from 54 billion rubles to 77 billion rubles. The share of medium-term loans increased by 3.6% - from 134 billion rubles to 189 billion rubles.
The Central Bank report says that the growth of consumer demand against the background of confident income dynamics and increased inflation expectations in 2021 contributed to the growth of the microloan portfolio by a third. The growth of the portfolio was accompanied by an increase in the share of medium and long-term loans in the structure of disbursements.
The average loan size in the payday segment for 2021 increased by 7% - to 8.5 thousand rubles. The growth of the share of online loans in this segment in 2021 amounted to 12 pp. - up to 87%, in the segment of long-term loans, the growth amounted to 19 pp. - up to 41%. The increase in the share of online loans occurred against the background of an increase in the concentration of the online portfolio around the largest participants who can afford investments in technological infrastructures.
The net profit of MFIs at the end of 2021 increased by 58% - to 29.2 billion rubles. The main contribution to the growth was made by large and medium-sized participants, including due to the growth of income from non-core activities (various types of insurance, telemedicine, SMS informing, expanded service package, and so on).
The industry profitability indicator was 18.4% and exceeded the pre-pandemic [coronavirus pandemic COVID-19 - approx. TAdviser] levels. At the same time, the median profit margin for a wide range of companies remained low.[7]
The microloan market in Russia grew by a third, to 328-330 billion rubles
The volume of the microfinance market in Russia at the end of 2021 amounted to 328-330 billion rubles against 249 billion rubles in 2020. This is evidenced by the data of the National Rating Agency (NRA), which Kommersant published on February 10, 2022.
The NRA reports that the bulk of the MFI portfolio (about 77%) in 2021 was long-term loans (installation loans, IL) and loans to small and medium-sized businesses. The share of short payday loans (PDLs) rose to 23% from 21% in 2021. According to experts, an increase in the share of PDL should not be expected, since given the reduction in the maximum rate, this product becomes less profitable for MFIs. The pressure will also be exerted by the restriction on the maximum debt burden, because it is in this segment that the largest share of problem customers.
| | Without the transformation of the previous business models, PDL loans can even show negative profitability under new regulatory restrictions, most of the segment's companies are already actively reorganizing processes and testing new products, "Elman Mehdiyev, head of the MiR SRO council, told the publication. | |
Experts interviewed by the newspaper expect the greatest prospects in the IL segment. In particular, in this segment there is traditionally a better and more reliable audience of borrowers, explained in the MCC "Arithmetic." In addition, as noted by Roman Makarov, General Director of IFC Zaimer, these loans will especially intensively develop in the online channel at the expense of large players, which will aggravate the competition in the market for better clients.
According to experts, the natural consequence of the restrictions of the COVID-19 coronavirus pandemic was the increase in the importance of the online segment of MFIs, which made the main contribution to the market recovery and reaching pre-crisis levels in 2019. Uncertainty in the development of the epidemiological situation and the measures taken by the government to counter the spread of coronavirus infection have strengthened the activity of companies to improve remote sales channels. [8]
Notes
- ↑ Analysts predicted that less than 1 thousand will remain in Russia. IFI
- ↑ The survey showed that among MFI clients the shares of IT workers are growing
- ↑ Microfinance Market Trends in 2023
- ↑ Warned does not mean borrowed
- ↑ In 2022, the microfinance market in Russia will decrease by 5.7%: from 31.7 to 29.9 billion rubles.
- ↑ The number of MFI borrowers for the crisis year increased by more than 3 million people
- ↑ in 2021, the share of "payday loans" increased from 21.7% to 23.4%
- ↑ Microloans will slow down regulation
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