Effective customer management will be key to avoiding spikes in delinquency rates
MOSCOW — December 12, 2013 — FICO (NYSE:FICO), a leading predictive analytics and decision management software company, and the National Bureau of Credit Histories (NBKI), Russia’s leading credit bureau, today released data showing that Russian borrowers’ credit health continued to deteriorate in October 2013. The country’s FICO® Credit Health Index fell to 102, down from 104 last quarter, and just 2 points above the low experienced in late 2009.
April 2012 saw the first index decrease since October 2009. However, since then, the index has continued to worsen through to the current quarter. With the index continuing its downward trend, consumer performance needs to be closely monitored in the coming quarters.
The FICO Credit Health Index measures Russia’s overall credit health, based on the percentage of consumer loans and credit cards reported to NBKI that are delinquent by more than 60 days. Since January 2012, this “bad rate” has increased from around 7 percent to 10.7 percent.
“As the FICO Credit Health Index continues to decline, we advise lenders to actively communicate with borrowers who are missing payments,” said Evgeni Shtemanetyan, who directs FICO’s operations in Russia. “This continuing fall in consumer credit health presents a concern for Russian lenders, and as they grant more unsecured consumer loans and credit cards, delinquency rates will likely continue to rise. With a larger credit economy must come greater consumer education about credit, and a more thorough collections program to tackle late credit repayments and maintain strong profitability.”
This quarter, all regions within Russia had lower FICO Credit Health Index scores than the previous three quarters. The Severo-Kavkazskii region proves to be the most volatile in terms of quarter on quarter change, while Centralny is the least volatile region. The credit health of consumers in Centralny and Privoljskii, the two largest regions, has declined by 2 and 3 points respectively when compared to last quarter, which brings both regions’ indices to 7 points lower than in January 2013.
Looking at the year-on- year change, the lowest populated region, Severo-Kavkazskii, has shown the largest reduction, with a drop of 12 points since January to 95 points in October 2013, which is a 4-point fall since the previous quarter. The Uralskii (index 98), Severo-Kavkazskii (index 95), Sibirskii (index 99) and Yujnyi (index 99) regions have shown the lowest FICO® Credit Health Indices when compared across all quarters. The regions of Centralny (index 106), Privoljskii (index 104) and Severo-Zapadnyi (index 104) are at least outperforming the total population index of 102.
FICO and NBKI share this data with Russian lenders to improve their understanding of the market, and help them extend credit to consumers safely. More than half of the top Russian banks use FICO® Scores delivered by NBKI.
National Bureau of Credit Histories (NBKI) is the largest credit bureau in the Russian Federation. It was created in 2005, and counts among its shareholders major commercial banks and international companies CRIF and TransUnion. Its main specialty is an integrated center that stores and processes comprehensive data for creditors’ decision making. As of July 2013, NBKI consolidates data about 120 million loans from 1,600 Russian creditors. The bureau provides the Russian market with modern high-tech solutions for risk assessment and control.
FICO (NYSE: FICO), formerly known as Fair Isaac, is a leading analytics software company, helping businesses in 80+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company’s groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption — such as the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health. FICO: Make every decision count™.
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