Page 103 - IFR Opportunities in Russian capital markets

CHAPTER04
ifrintelligence reports/Opportunities in: Russian Capital Markets
Table 4.5: Russian retail banking structure, 2004–1H2006 (US$bn)
US$bn 2004 2005 1H2006
Total retail loans 22.0 41.0 55.7
Source: RBC rating, Company reports, Alfa bank estimates
Mortgages have been growing exponentially since the pioneer Delta Credit Bank introduced the first a few years ago, but lending really picked up momentum in 2005 and has been doubling every year since. The market tripled in 2006 to reach a total of US$12.4bn, or about 1.3% of GDP, up from US$4bn at the end of 2005, and is expected to at least double again in 2007.
Mortgage growth was around US$2.5bn in the first half of 2006, accelerating remarkably in the second half to end the year at US$6bn. Alfa Bank says that this accelerated growth was due to a palpable slowdown in real estate prices in the fourth quarter of 2006, after spiking by nearly 50% in the first half of the year. Housing prices have been increasing very fast in recent years and put on another 70% in 2006 alone; however, real estate experts say they believe the market is nearing its top and expect the rate of increase of prices to slow in 2007.
Although Sberbank remains the largest player with a US$5.8bn loan portfolio, its market share dropped significantly from 63% in 2005 to 47% in 2006. In 2006, growth was increasingly fuelled by outsiders, such as Moskommertsbank and KIT Finance, both of which are now in the top five lenders, with respective portfolios of US$599m and US$409m. Russia's state-owned bank, VTB, the second-largest bank in the country, is leading the growth after its mortgage portfolio increased by 270% in 2006 to reach US$875m by the end of 2006 (see Tables 4.6 and 4.7).
Mortgage 0.9 3.0 6.2
Auto loans Consumer finance Credit cards Personal loans
2.5 4.5 6.0 1.8 3.0 4.5 0.5 1.0 4.0
16.3 29.5 35.0
Table 4.6: Mortgage loan market, 2005–06 (US$m, %)
Mortgage Market share Mortgage Market share
Mortgage portfolio, 2006
Market share 2006 (%)
Bank portfolio, 2005 2005 (%) portfolio, 1H06
Source: RBC, CBR, Alfa Bank Research
Table 4.7: Mortgage market leaders, 1H2006 (US$m, %)
1H06 (%)
Sberbank 2,487 VTB 229 Moskommertsbank 2 DeltaCredit 183 KIT Finance 9 UralSib 90 Gazprombank 79 Raiffeisen 160
63 3,717 5.8 334 0.1 107 4.6 275 0.2 83 2.3 187 2.0 n.a. 4.0 186
57.2 5,841 47.0 5.1 931 7.5 1.6 599 4.8 4.2 421 3.4 1.3 409 3.3 2.9 395 3.2 n.a. 306 2.5 2.9 268 2.2
Portfolio as of 01/07/06
Sberbank 3,717
Portfolio as of 01/01/06
2,487 119 190 90 159 46.3 n.a. 70.7
Average loan size
22,700 99,600 n.a. 29,800 112,900 79,700 36,300 107,300
Market share %
60 5 4 3 3 2 2 2
1H06 TD growth (%)
49 181 45 108 17 189 n.a. 65
VTB Group
DeltaCredit
UralSib
Raiffeisen
Absolut bank
Zapsibcombank
Banque Société Genéralé Vostok
Source: RBC-rating, Company reports, Alfa Bank estimates
334 275 187 186 134 134 117
The growth of mortgages is partly due to the Kremlin's policy of promoting home ownership, which hopes to repeat the US experience where they acted as a sort of social cement; the idea is that if people own their own homes and have to meet payments, they tend to have more stable lifestyles.
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