Low Debt in Russia

Only 24 percent of Russians take out loans and only 18 percent have deposits with banks, while most Europeans use two to four financial products, and some, five to six, according to Ivan Svitek, chairman of the board of Home Credit Bank.

According to the World Bank, Russia has only a quarter of the global average number of bank branches. Additionally, IMF research shows that the debt of individuals to credit institutions in Russia amounts to only 9 percent of GDP. In comparison, in the United States, the ratio of personal debt to GDP is 85 percent. Furthermore, 44 percent of Russians live in parts of the country where there are no retail banks.

According to the National Agency for Financial Studies, 74 percent of Russians use bank cards, but 92 percent of all cards issued are salary cards – issued by a bank at the insistence of a company for employees to access salary deposits. At that time there were 11 million credit cards in circulation in Russia, a country of 140 million people.

The market for retail loans and credit cards in Russia began to explode in the mid-2000s, when incomes began to grow. The business peaked in 2008, just before the crisis. The banks most active in this sector were private commercial banks and Russian subsidiaries of international banks.

Currently, most banks provide credit cards free of charge, although some still charge between $60-$100 to issue a card. Interest rates are higher than those on regular loans, but cards can be obtained within 15 minutes. Cardholders have to pay not only interest but also card service fees, which, as a rule, amount to a minimum of $20 per year. Some banks do not charge anything for the first year, but all banks charge a commission (from 2.5 percent of the loan, or a minimum of 200 rubles ($8)) for withdrawing cash from an ATM.

Although the anxiety caused by the debt crisis in the eurozone prevents bankers from being optimistic about the future, the impressive growth of consumer lending is hardly at risk. Russian banks have promised not to decrease lending, as was the case three years ago, but the cost of borrowing may become more expensive.