14 Feb 2023 11:20

VTB sees retail lending increasing 11% in 2023, wants to grow with market

MOSCOW. Feb 14 (Interfax) - VTB expects retail lending to increase by 11% in 2023 and plans to grow in line with the market, the Russian state bank's deputy CEO, Anatoly Pechatnikov told reporters.

VTB's retail loan portfolio grew by 7% in 2022 to over 5 trillion rubles, including 3 trillion rubles in mortgage loans.

The bank's retail lending last year reached the 2020 level, totaling 1.8 trillion rubles. This included 970 billion rubles in mortgage loans and 735 billion rubles in cash loans.

VTB expects the retail loan portfolio in Russia to grow by 11% and exceed a record 30 trillion rubles (including securitization) in 2023, and the state bank intends to grow along with the market.

"The start of the year is promising, we lent out 100 billion rubles across the bank [in January]. And in general, despite all the restrictions in unsecured lending, banks have not yet modernized their procedures for assessing borrowers in terms of creditworthiness. We're seeing strong sales of unsecured loans for January already," Pechatnikov said.

VTB expects Russian banks' mortgage portfolio to grow by 12-14% this year, with sales in this segment possibly topping 5 trillion rubles, which would exceed the 2022 figure.

"We will see a change in proportion this year. While last year loans were primarily issued under government [subsidized mortgage] programs for new residential developments, this year consumer interest has returned to secondary residential real estate. Obviously, foremost due to the difference in prices," Pechatnikov said, adding that amid the general drop in interest rates this year 60% of transactions will be made on the secondary market.

VTB is also seeing interest in single-family residential construction, where mortgage lending could grow by 25-50%, although this market will remain small at 170 billion-200 billion rubles.

In the automobile financing segment, VTB expects sales to jump 40% given a favourable macroeconomic situation, to 1 trillion rubles in 2023 from more than 715 billion rubles in 2022. Sales are expected to break down into 88% financing for used automobiles and 12% for new vehicles.

VTB's portfolio of classic savings instruments grew by 4% in 2022, driven by classic deposits, which increased by 22% to over 3.2 trillion rubles. Ruble deposits saw the strongest growth and reached 88% of the total deposit portfolio.

Russian banks' portfolio of classic liabilities will grow by 5.9% to 38.8 trillion rubles in 2023, VTB forecast. The state bank expects its portfolio of classic retail savings to grow faster than the market.

The portfolio of foreign currency retail savings in Russia will continue to stagnate and shrink by 8-9% after currency revaluation, VTB forecast. Its share of the total portfolio will decrease by 9%.

"The de-dollarization of liabilities will continue this year, since with near-zero interest rates depositors with U.S. dollars and euros will incur a direct loss from inflation. Clients will gradually convert such deposits into rubles and alternative currencies; among other things, demand will continue to grow for deposits in yuan. The total portfolio of VTB clients' funds in the Chinese currency could exceed CNY10 billion this year. As the public grows accustomed, savings or current accounts in yuan, deposits in other alternative currencies, as well as combined products will emerge on the market," Pechatnikov said.

VTB said other trends on the market for raising retail funding include the growth of demand for ruble bonds, which will be popular given the return of the tax in deposit income, and the emergence of new forms of borrowing that offer a higher return or peg to foreign currency, such as securitized bonds and the "replacement" bonds of Russian issuers. VTB also expects an increase in demand for borrowing in "friendly" currencies, foremost yuan.