OREANDA-NEWS. November 06, 2014. Home Credit & Finance Bank (“HCFB” or “the Bank”) notes the first signs of improvement in the quality of the loan portfolio. Generations of loans issued after requirements for borrowers were tightened in the summer of 2013, show a higher quality. HCFB expects an improvement in its financial performance in 2015, assuming the economic backdrop remains stable.
 
HCFB was the one of the first in the market to take tough measures aimed at improving the quality of the loan portfolio in the summer of2013. The Bank has strengthened the interaction with credit bureaus, increased requirements for borrowers, and limited the amount and the time period over which the new loans may be issued. The Bank has focused on issuing low-risk loans with a full underwriting procedure.

The first results of these measures are now being seen. Defaults have significantly reduced for loans underwritten since summer2013. For example, the number of the new loans which defaulted on the first repayment decreased by a factor of five, down to just 0.5% of loans. Of the new loans issued since summer 2013, the proportion that were overdue by more than 30 days by their six repayment fell to 2% from 6% for the first quarter of 2014.

The cost of risk has gradually decreased, and for the newly underwritten loans constitutes only about 6%. Loans issued since July 2013 make up almost half of the overall bank's loan portfolio. The bank's capital adequacy remains significantly above the minimum level required by the central bank.

"As we have previously reported, the challenging market situation has put pressure on the dynamics of our portfolio and has lengthened the time to obtaining reasonable confidence on the outcome. However, given the short maturity of our loans (1 to 2years on average), the full replacement of the former loan portfolio with the one that is underwritten with more stringent criteria will be completed as early as next year. We believe that the macroeconomic situation will stabilize. And we expect that our financial performance will positively improve in the next year ", - said Ivan Svitek, chairman of HCFB.