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Central & eastern EuropeJuly 3 2005

Consumer lending

In recent years, there has been a rapid increase in consumer lending. At the same time, despite high average annual growth rates in this segment for the past three years (48%-50%), the market is set to expand further. The retail loans/GDP ratio is not more than 3% compared with 74% in the US, 52% in the EU and an average of 20% in the developing countries.

by Alexander I. Sobol

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Although there are positive trends in many areas of banking there is the threat of a very serious problem, which could negate progress. This is the extremely low level of capitalisation, which significantly restricts further opportunities for the banking business. The capital of each of the top 10 worldwide banks exceeds the total capital of the Russian banking sector.

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