Credit card debt soaring in Russia 

The higher credit card arrears are linked to loans issued during the crisis period of 2022, economists say

Credit card debt soaring in Russia 
24 Jun, 2023 07:56 HomeBusiness News

Credit card debt soaring in Russia 

Delinquency on payments reached 9% in May, statistics show

The rate of delinquency on credit card debt payments in Russia increased sharply in May, business daily Kommersant reported on Friday. Economists link the rise in overdue payments to the crisis period of 2022, when some Russians turned to credit cards to cover their expenses.

This reportedly led to a surge in the number of cards issued. During the spring, Russian banks issued an average of 2 million credit cards per month, compared to less than 1.8 million per month in the same period last year, the outlet said, citing data from the credit history bureau.

The total volume of overdue payments has reached 225 billion rubles ($2.6 billion), amounting to 12% of the overall portfolio, while payment arrears on credit cards surged by 9% in May compared to the previous month.  

In quantitative terms, nearly 6% of all issued credit cards are now behind in payments, representing the highest level since last October. The volume of arrears has surpassed the growth rate of the segment’s portfolio for the first time since the beginning of the year and amounted to 1.9 trillion rubles ($22.4 billion) as of May 31, according to the bureau.  

This is a new situation for Russia’s credit card market, which may push banks to “adjust their credit policies, and first of all this will affect the mass segment, in which such an imbalance is observed,” said Oleg Lagutkin, the head of Scoring Bureau.   

However, given the recovering consumer demand in Russia, economists do not expect lenders to “tighten the screws” sharply and generally attribute the overdue payments to cards issued during the crisis period of 2022, when credit cards compensated for the unsatisfied demand for cash loans.  

“New [credit cards] issues may well behave quite adequately in terms of risk policies of banks,” managing director of the National Credit Ratings agency, Mikhail Doronkin, said.   

Credit cards are generally characterized by a higher level of arrears, but this is offset by the higher margin banks make on them, he concluded.