Russia Microfinance Trend Report 2008-2009

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Jun 11, 2010
Summary: 

The year 2008 was a challenging one for Russia’s microfinance market due to the global financial crisis and a slowdown of the country’s economic growth. Since Russia was more affected by the crisis than other countries in Eastern Europe and Central Asia, the microfinance sector could not escape the impact. The public, concerned over the threat of ruble devaluation, began to withdraw their savings and convert them into foreign currency, resulting in a massive outflow of savings from Russian microfinance institutions (MFIs). Meanwhile, external funding from investors and commercial banks dwindled as delinquencies on business loans climbed. Moreover, rising unemployment caused higher delinquency rates on consumer loans, which comprise a major part of Russian MFIs’ portfolios.

The financial downturn was not so noticeable in 2008, since the global crisis began to affect Russia only in the last quarter of the year. The impact of the crisis was at its highest in 2009, as confirmed by the findings of the 2009 crisis monitoring that demonstrated a drop in loan portfolio and higher portfolio-at-risk (PAR). The drop in loan portfolio was mainly due to a decline in demand both for consumption loans, as consumers preferred to save rather than spend during a period of instability, and for microenterprise loans, as business activity decreased in response to lower consumer demand.

The Russia Microfinance Trend Report for 2008-2009 is based on the findings of three studies: the sixth annual round of microfinance market monitoring, a benchmarking project based on data from 85 Russian MFIs, and the 2009 crisis monitoring effort. Produced by MIX in conjunction with Russian Microfinance Center (RMC) and Russian SME Resource Center (RCSME), the report covers the following topics: findings of the crisis monitoring, the macroeconomic environment and state of the microfinance industry in Russia, trends in microcredit services and in deposit mobilization, the funding structure of Russian MFIs, and the financial performance of Russian MFIs in 2008-2009.

For the Russian version of this report, please click here.