Analytics, Banks, Financial Services, Lithuania
International Internet Magazine. Baltic States news & analytics
Thursday, 28.03.2024, 17:42
Lithuania`s consumer credit: The number of contracts declined
‘Last year, the number of new consumer credits extended
dropped, but their volumes increased and their repayment period lengthened. The
consumer credit market shrank drastically in 2016; as a result, last year, the
number of extended credits decreased by another 5% down from a peculiar
‘floor’, said Vytautas Valvonis,
Executive Director of the Supervision Service.
Last year, consumer credit lenders (other than credit
institutions) and three peer-to-peer lending platforms granted about 470
thousand new consumer credits. This is almost 5% less than in 2016; however,
the total amount borrowed increased by 17.7%, to almost EUR 370 mln.
At the end of 2017, the number of those who were late to
repay their credits for more than 90 consecutive days was twice as small as at
the end of 2016: out of nearly 485 thousand consumer credits – slightly more
than a tenth. The total amount of resulting arrears (including late payment
interest, penalties and other amounts payable under contracts) stood at EUR
38.9 mln and was nearly twice as small as at the end of 2016. Most of this
contraction is related to the sale of terminated consumer credits to debt
recovery companies.
In 2017, linked consumer credits comprised half of the total
amount of extended credits. About 207 thousand of them (EUR 183.2 mln) were
extended, a decrease of 11.3% from 2016. The average amount of one such credit
rose by a fifth, to EUR 884; the average annual interest rate was 5.6%, the
average annual percentage rate of charge –13.7%, and the medium term was three
years.
Credits below EUR 290 remain the most expensive and at the
same time the riskiest type of consumer credit. Last year, compared to 2016,
they dropped by a fifth though. The average amount of consumer credit (both
below and above EUR 290) was EUR 680 (compared to almost EUR 540 the year
before), the average annual percentage rate of charge fell from 77 % to 60 %,
while the average interest rate – from 46% to 38%. In most cases the borrowing
term was two years.
Last year, compared to the year before last year, lending
via peer-to-peer lending platforms more than doubled: the amount of extended
consumer credits stood at EUR 17.7 mln (in 2016 – EUR 8.4 mln). The annual
percentage rate of charge for consumer credit dropped from 37 % to 29 %, the
average interest rate – from 21% to 17.5% over the year. The medium term of
borrowing lengthened somewhat, to about three years, and the average amount
borrowed increased to about EUR 2.5 thousand.
In its supervision of the consumer credit market, in 2017
the Supervision Service of the Bank of Lithuania imposed six penalties and gave
three notices to consumer credit providers and operators of a peer-to-peer
lending platform; one company was eliminated from the Public List of Consumer
Credit Providers. The penalties were imposed for violations related to the
calculation of the default on liabilities, reduction of consumer credit amount
upon its early repayment, assessment of creditworthiness, etc. There have been
fewer cases of essential violations in creditworthiness assessment.