23 Sep 2009 14:38

Growth in overdue loans to peak in mid-2010

MOSCOW. Sept 23 (Interfax) - The rate of growth in overdue loans at Russian banks will peak in mid-2010, the president and CEO of VTB 24 , Mikhail Zadornov, said.

"In mid-2010 the country will hit the peak of unemployment and correspondingly peak growth in overdue debt," Zadornov told journalists on Wednesday.

Zadornov cited statistics for Russia's 30 biggest banks, excluding Sberbank Russia , that show the increase in overdue loans did not slow substantially in August. According to that data, the rate of growth in overdue debt for the total loan portfolio was 8.5% in August, including 9% for corporates and 5% for individuals. "That's a little less than in May, but unfortunately no substantial slowing has been recorded. There has been no breakthrough," he said.

The retail lending market contracted 8.3% in January-July, he added. Among the major banks, only Rosselkhozbank was able to post growth in retail lending in the seven months.

"It is difficult to count on growth in loan portfolios before the second quarter of 2010, but there won't be significant shrinkage," he said, adding that lack of demand was the main cause.