Banks announced a reduction in interest rates on deposits and loans after the Central Bank
“Equifax” in statistics takes into account only debit cards to which the overdraft option is connected. Banks of “not the first echelon” usually offer such a product, explained Oleg Lagutkin, General Director of Equity Bank.
The combined credit bureau (the only BKI that has data from Sberbank) includes in its statistics on overdrafts debts not only on debit cards, but also on installment cards, if banks define debt as an overdraft, explained his representative. According to the OKB, in May the average overdraft limit amounted to 42 thousand rubles, and compared with March, the indicator decreased by only 7.3%. He, like issuing overdraft cards, recovered after a sharp decline in April.
The National Bureau of Credit Histories (NBCH), which is also included in the top 3 Russian credit indexes, does not keep such statistics, a representative of the bureau said.
Why banks have changed overdrafts
A decrease in the number and volume of open overdrafts on cards is a direct consequence of bank policies in a pandemic, Lagutkin said. “By changing their lending policies after the start of the self-isolation regime, lenders extended most of the measures not only to popular consumer loans,” adds the General Director of Equifax Investment Company.
Banks reduced overdraft limits due to a general decrease in real incomes of the population, says Mikhail Doronkin, head of the bank ratings department of the NKR agency. According to him, this may be due to the peculiarities of the methodology for calculating such limits.
“If, when opening a credit card, banks can request information on income from customers to assess their reliability and set a limit, then in the case of a debit card, overdraft limits are often set automatically and do not take account transactions into account,” the analyst explains. In the pre-crisis period, providing customers with an overdraft allowed banks to earn money on those who “went into the red” or did not suspect an overdraft. “Under current conditions, the presence of such an option, on the contrary, could increase the risk of non-return,” he adds.
“Issuance of overdraft cards, including installment cards, declined significantly during quarantine, as did issuance in other lending segments. Moreover, the reduction was not so strong compared to that which we observe in the segment of credit cards, ”noted Artur Design Bureau General Director. This could be due to a lower available limit on these cards than on credit cards, which means less risk for banks, he added.
In a crisis, banks could cut low-demand products in order to reduce credit risk, agrees Sergey Grishunin, head of the rating service of the National Rating Agency (NRA). He draws attention to the fact that banks, as a rule, require customers to repay the overdraft in a short time, and the interest rate on such loans is higher than on classic credit cards. “Based on all this, it is simply unprofitable for banks to keep a product that most likely a“ good ”borrower will not use (they have a credit card, often with bonuses). A “bad” bank is not profitable, ”the expert concludes.
Bank customers began to complain about a reduction in credit card limits
Which banks give customers an overdraft
According to Frank RG, there are now special cards with overdraft in the lines of five organizations: Absolut Bank, Asia Pacific Bank, Uralsib, Center-Invest Bank and Transcapitalbank. The representative of Uralsib told RBC that the bank does not offer such a product, the remaining banks did not respond to inquiries.
Which banks offer overdraft on their debit cards as an option, Frank RG does not track. Most of the large organizations surveyed said they did not provide such a service. Among them are Sberbank, Gazprombank, Otkrytie, Alfa Bank, Promsvyazbank, Sovcombank, UniCredit Bank, Home Credit, Zenit, Ak Bars, Renaissance Credit and MTS Bank. However, on the banki.ru profile forum, there are many reviews of customers of large banks about connecting an overdraft without notice, technical overdraft and other problems associated with this product.
The only bank that has confirmed the availability of the overdraft option for debit cards is VTB. Such a service is offered to salary clients, a bank representative said. “In March-May, the bank did not change the terms of connection and the average size of limits for this product. “We do not notice any changes in client preferences for disabling or activating overdraft services,” he added.
Will banks become more loyal to using overdraft
“There is a version that it’s precisely by such actions that banks are preparing for the end of exemptions regarding the accrual of reserves. We believe that overdrafts in the event of a crisis may even disappear or remain only with premium customers of banks, ”says Grishunin. On Friday, June 26, the Bank of Russia announced a partial curtailment of support measures for banks introduced at the onset of the crisis. But softened reserve requirements will continue until September 30.
The Central Bank will prohibit paying with expired cards
Banks must form reserves not only for loans actually issued, but also for unused limits, taking into account demand ratios. Overdraft is included in this category, said the director of bank ratings of Expert RA, Ivan Uklein. According to him, banks are so far “reinsured”, and after lifting sanitary restrictions and stabilizing the situation on the labor market, the policy of creditors regarding opening overdrafts will become softer.
In June, the retail lending market experienced a recovery, says Lagutkin from Equifax. According to him, this may in the future have an impact, including on the overdraft segment.