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 announced that Russian borrowers’ credit repayment delinquencies remained stable from October 2013 to January 2014. This was the first time in 18 months that the country’s FICO® Credit Health Index did not decrease from the previous quarter, and indicates that the two-year fall in Russians’ credit performance may have stopped.
Russian Consumers’ Credit Health Stable After Two-Year Decline
Understanding the FICO Credit Health Index
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. In January, 10.7 percent of Russian credit accounts were delinquent, compared with 7.05 percent in January 2012.
”The development of the credit market, especially the growth in unsecured lending that peaked in 2012, contributed to the rapid increase in delinquencies,” said Alexander Vikulin. CEO of NBKI. “Over the past year, banks improved their risk management systems, and that had a beneficial impact on the quality of their portfolios. However, we should note that the index of credit health is far from its high, despite the stabilisation. The lending market needs to continue making improvements in the careful selection of borrowers and in the implementation of new risk management instruments.”
Regional Credit Health Variations in Russia
Most regions had the same index as the previous quarter. Only Severo-Kavkazskii and Uralskii had lower indexes than in October, and those reductions were by a mere 1 point. For the fourth quarter in a row, three regions outperformed the country-wide index: Centralnyi (index 106), Privoljskii (index 104) and Severo-Zapadnyi (index 104).
Factors Influencing Recent Credit Trends
“There is no reason yet for long-term optimism,” said Roman Bozhyev, chief portfolio risk manager at Alfa-Bank. “One major factor in halting the fall of the index was the slowdown in lending, caused by the regulator’s actions to ‘cool down’ the retail lending market and stop the quality of borrowers from getting worse. It’s too soon to say that the index’s fall has been reversed. The fact is that the macroeconomic indicators stop us from being too optimistic. In my opinion, the slowdown in lending and the enhancement of bank portfolios could be temporary. If bank portfolios fail to show brisk growth in 2014, then in 10-12 months a number of good loans will be paid off, and the share of bad debts in bank portfolios will rise, causing the index to drop again.”
“Credit expansion has been good for the Russian economy, and banks have been focused on how to control the risk that comes with this expansion,” said Evgeni Shtemanetyan, who directs FICO’s operations in Russia. “All lenders should maintain their focus so that they can ensure the health and sustainability of their bottom lines.”
FICO and NBKI Support Safe Lending Practices
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.
About NBKI
About the National Bureau of Credit Histories
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 January 2014, NBKI consolidates data about 140 million loans from 1,800 Russian creditors. The bureau provides the Russian market with modern high-tech solutions for risk assessment and control.
About FICO
FICO: Global Analytics and Credit Expertise
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, optimise operations and meet strict government regulations. Many of our products reach industry-wide adoption. These include the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximise flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health. FICO: Make every decision count™. Learn more at www.fico.com.
For FICO news and media resources, visit www.fico.com/news.
FICO and “Make every decision count” are trademarks or registered trademarks of Fair Isaac Corporation in the U.S. and other countries.
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 announced that Russian borrowers’ credit repayment delinquencies remained stable from October 2013 to January 2014. This was the first time in 18 months that the country’s FICO® Credit Health Index did not decrease from the previous quarter, and indicates that the two-year fall in Russians’ credit performance may have stopped.
Russian Consumers’ Credit Health Stable After Two-Year Decline
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. In January, 10.7 percent of Russian credit accounts were delinquent, compared with 7.05 percent in January 2012.
”The development of the credit market, especially the growth in unsecured lending that peaked in 2012, contributed to the rapid increase in delinquencies,” said Alexander Vikulin. CEO of NBKI. “Over the past year, banks improved their risk management systems, and that had a beneficial impact on the quality of their portfolios. However, we should note that the index of credit health is far from its high, despite the stabilisation. The lending market needs to continue making improvements in the careful selection of borrowers and in the implementation of new risk management instruments.”
Most regions had the same index as the previous quarter. Only Severo-Kavkazskii and Uralskii had lower indexes than in October, and those reductions were by a mere 1 point. For the fourth quarter in a row, three regions outperformed the country-wide index: Centralnyi (index 106), Privoljskii (index 104) and Severo-Zapadnyi (index 104).
“There is no reason yet for long-term optimism,” said Roman Bozhyev, chief portfolio risk manager at Alfa-Bank. “One major factor in halting the fall of the index was the slowdown in lending, caused by the regulator’s actions to ‘cool down’ the retail lending market and stop the quality of borrowers from getting worse. It’s too soon to say that the index’s fall has been reversed. The fact is that the macroeconomic indicators stop us from being too optimistic. In my opinion, the slowdown in lending and the enhancement of bank portfolios could be temporary. If bank portfolios fail to show brisk growth in 2014, then in 10-12 months a number of good loans will be paid off, and the share of bad debts in bank portfolios will rise, causing the index to drop again.”
“Credit expansion has been good for the Russian economy, and banks have been focused on how to control the risk that comes with this expansion,” said Evgeni Shtemanetyan, who directs FICO’s operations in Russia. “All lenders should maintain their focus so that they can ensure the health and sustainability of their bottom lines.”
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.
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 January 2014, NBKI consolidates data about 140 million loans from 1,800 Russian creditors. The bureau provides the Russian market with modern high-tech solutions for risk assessment and control.
About FICO
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, optimise operations and meet strict government regulations. Many of our products reach industry-wide adoption. These include the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximise flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health. FICO: Make every decision count™. Learn more at www.fico.com.
For FICO news and media resources, visit www.fico.com/news.
FICO and “Make every decision count” are trademarks or registered trademarks of Fair Isaac Corporation in the U.S. and other countries.
