Russian household debt hit an all-time high in the first quarter of this year, Russia’s central bank said in a report on Tuesday.

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“Just before the start of the crisis (linked to the sanctions due to the Russian offensive in Ukraine, editor’s note), the personal loan market reached the highest level of household debt at a macro level since the beginning observations”, or 10.6% of the disposable income of the population, against 10.2% at the same period in 2021, according to this report.

The central bank notes that in the context of the deteriorating economic situation and a rise in the cost of credit last March, when it had suddenly increased its key rate, the issuance of new consumer credit has however decreased.

In March-April, the issue of new consumer credit thus fell by 3.4%. The bank does not note any significant deterioration in the quality of loans to individuals.

“However, in March-April, a significant increase in the share of consumer loans for which the next payment was missed was recorded”, from 5.3 to 7.5%, “indicating a potential increase in non-performing loans in the future,” the bank noted in its report.

In the wake of the first sanctions after the entry of Russian troops into Ukraine on February 24, the central bank drastically increased its key rate from 10% to 20%, before starting a gradual decline. It is currently at 11%.

The Russian population is likely to suffer seriously from the sanctions: inflation (at 17.8% annually in April), combined with a drop in income due to the layoffs which are beginning and an increased recourse to partial unemployment by factories in lack of parts foreign countries, will significantly reduce the purchasing power of Russians, especially since they have little savings.