Russia’s Alfa-Bank can maintain strong growth in retail lending despite new curbs on the segment, according to chief executive Vladimir Verkhoshinskiy.
In response to rising concerns about over-indebtedness among retail borrowers, the Central Bank of Russia (CBR) in October implemented a raft of new regulation designed to slow the pace of retail lending growth.
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Russian banks are now obliged to calculate debt service to income (DSTI) ratios for retail borrowers. Loans to consumers with high DSTI levels incur substantially higher risk-weightings. The CBR has also raised risk weights for mortgages with loan-to-value ratios above 80%.
This follows measures in April that sharply increased risk weightings for unsecured consumer loans with an effective interest rate of more than 10%. Central bankers expect the two rounds of regulation to slow retail lending growth to 10% in 2020 from close to 20% during the past two years.
One of the leading drivers of growth in the segment has been Alfa-Bank. Russia’s largest privately owned lender grew its retail portfolio by 60% last year.
Verkhoshinskiy insists that this outperformance has been achieved without compromising standards.
“Our retail growth has come from a low starting point, improved cross-selling and from attracting new customers,” he says.
