Source: Central Bank of the Russian Federation in English
The portfolio of loans granted by microfinance organisations (MFOs) to small and medium-sized enterprises (SMEs) increased by nearly one third (29%) during the last year, according to the 2019 Q2 Trends in the Market of MFOs for Business Financing, an information and analytical commentary prepared by the Bank of Russia’s Microfinance Market Department. Total loans extended to SMEs in the second quarter grew by 33% as compared to 2019 Q1.
Microfinance organisations for business financing are companies specialising in lending to SMEs. The state register currently numbers 237 such MFOs, most of which (77%) are government-owned companies operating under state programmes for SME support and development. Such companies have a lower risk appetite and carry out a more thorough borrower assessment. Therefore, overdue loans in this segment amount to 9.3% (which is 18 pp below the market average).
The trend of the last six months was an increase in the proportion of commercial MFOs (64% of the proportion of government-owned MFOs) in the volume of business financing for SMEs. In 2019 Q2, private MFOs demonstrated an increasing interest in this business model and became a growth driver for this market segment.
However, the average loan granted to SMEs by government-owned MFOs remains considerably larger (1.57 million rubles) as compared to commercial MFOs (0.69 million rubles). Yet, commercial MFOs disbursing smaller loans with longer maturities boast a faster growing number of effective agreements. This can be explained by the fact they do not have any restrictions in choosing borrowers.
Almost a half of MFOs grant loans to small businesses at 7–10% p.a. interest rates – these are the findings of the survey carried out among 111 companies (47% of all MFOs specialising in business financing). According to the respondents, it is necessary to extend the permitted period of lending to SMEs, due to an increase in the maximum loan amount from 3 to 5 million rubles among other factors.
As noted in the analytical commentary, MFOs themselves are also classified as small and medium-sized enterprises. The number of new jobs created in this industry over the last 2 years increased by 30%, and tax payments over 2018 grew by 65.8% compared to 2017 and more than twice against 2016.
26 September 2019