Russians’ Credit Performance Remains Steady at Historic Low, According to Data from FICO and NBKI

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Highlights:

  • FICO® Credit Health Index for Russia has held steady since summer 2015, following a slide that took it to a seven-year low
  • 16 percent of Russian credit accounts are delinquent, more than twice as many as in January 2012
  • FICO Credit Health Index measures the percentage of delinquent consumer loans and credit cards reported to NBKI, Russia’s largest credit bureau

Following a seven-year rollercoaster rise and fall, the credit performance of Russian consumers has held steady since last summer, according to data from analytic software company FICO and National Bureau of Credit Histories (NBKI), Russia’s leading credit bureau. The FICO® Credit Health Index, which started a sharp decline in January 2012, has remained at just under 90 for months. While tracking only began in 2008, FICO and NBKI believe the current bad rate is the highest ever for Russia.

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. The April index of 89 means that 16 percent of Russian credit accounts were delinquent, compared with 14 percent one year ago and just 7 percent in January 2012.

Every one of the eight federal regions tracked is below the index’s benchmark score of 100, established in October 2008. The average drop since January 2012 has been 25 points, with Severo-Kavkazskii experiencing the largest drop of 32 points and Centralnyi experiencing the smallest drop of 15 points. The regions Centralnyi (index 93), Severo-Zapadnyi (index 93) and Privoljskii (index 91) are the only regions outperforming the total population index. Severo-Kavkazskii continues to have the lowest index value at 82, and the regions Sibirskii, Uralskii and Yujnyi also have scores below Russia’s overall score.

“Delinquencies have definitely leveled off,” said Evgeni Shtemanetyan, who directs FICO’s operations in Russia. "The long fall in the index represented a period of rapid growth in consumer credit, particularly in higher-risk credit cards. To prevent further spikes in credit risk and losses, Russian credit risk managers should seek out best practices in managing their customers, particularly those who have higher levels of unsecured debt.”        

“By the beginning of 2016, the share of ‘bad’ loans in the portfolios of creditors had reached its highest point,” said Alexander Vikulin, CEO of NBKI. “Although the level of overdue loans in retail lending remains high, its growth rate is significantly lower than in 2014-2015. This makes it possible to talk about the gradual stabilization in the retail lending market. At the same time, Russian borrowers’ ability to service their credit obligations is complicated by the continuing decline in their real incomes. Therefore, there is still a high risk that the rate of growth of overdue debts and the onset of defaults will resume."

FICO and NBKI share this data with Russian lenders to improve their understanding of the credit market, and help them extend credit to consumers safely and profitably. More than half of the top Russian banks use FICO® Scores delivered by NBKI.

About 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 April 2016, NBKI consolidates data about 77 million borrowers and 184 million loans from 3800 Russian creditors. The bureau provides the Russian market with modern high-tech solutions for risk assessment and control.

About FICO
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956 and based in Silicon Valley, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 165 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, telecommunications, health care, retail and many other industries. Businesses in more than 100 countries use FICO solutions for a wide range of mission-critical applications, from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of airplanes and rental cars are in the right place at the right time. Learn more at http://www.fico.com.

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