Page 36 - IFR Opportunities in Russian capital markets

CHAPTER02
ifrintelligence reports/Opportunities in: Russian Capital Markets
Sberbank boasts the largest retail portfolio, at US$21bn, and announced its intention to focus on the mortgage market, which represents 20% of the bank’s portfolio. It does not plan to expand into the auto loans and consumer finance markets, as it considers them too risky. The bank launched a pilot credit card project in 2006 but cancelled it because of problems with controlling bad debt. Sberbank is likely to concentrate on its personal loans business and leave the consumer finance business to the specialists. Numbers are US$m
Table 2.2: Top Russian consumer loan providers, 2006 (%, US$m)
Source: Company reports, Alfa Bank estimates
Car loans
Market share % Portfolio as of July 1, 2006 (US$m)
Russian Standard 37 1,600 Home Credit and Finance 20 840 Rosbank 13 580 Investsberbank 7 300 Finansbank 6 250
Booming car loans are causing horrendous traffic jams in Moscow and increasingly in the other regional capitals. The car loan segment totalled US$9bn at the end of 2006. As expected, this sector was not a top performer, with market share remaining at a flat 11%. This niche is still dominated by Rosbank, with 16% market share, although Russian Standard Bank greatly increased its penetration in this segment in 2006 (see Table 2.3).
Table 2.3: Top Russian car loan providers, 2005, 2006 (US$m, %)
Auto loans Market share Auto loans Market share Banks portfolio, 2005 2005 % portfolio, 1H06 1H06 %
Source: RBC, CBR, Alfa Bank Research
Credit cards
Auto loans portfolio, 2006
Market share, 2006 %
Rosbank
MDM
Rusfinans
Russian Standard
Raiffeisen
International Moscow
UralSib
Gazprombank 98 2.6
1,191 19.9 616 10.3 234 3.9 247 4.1 504 8.4 356 5.9 307 5.1 161 2.7
1,408 15.6 873 9.7 843 9.3 656 7.3 600 6.6 580 6.4 398 4.4 225 2.5
837 22.4 298 8.0 150 4.0
99 2.7 417 11.2 240 6.4 282 7.6
The banks' drive to capture retail customers began with campaigns to issue debit cards to their biggest corporate customers (which has had a side-effect of reducing tax avoidance by increasing transparency through the decrease in the use of cash to pay wages) but the first true credit cards have only just appeared.
The use and volumes were up threefold in the first half of 2006, to US$4bn from US$1bn at the end of 2005. Again it was consumer credit pioneer Russian Standard that is leading the charge (see Table 2.4). Most of the other banks with retail aspirations are at least six months behind ‘the Vodka Bank’ – so called as its owner Rustam Tariko also owns the Russky Standart premium vodka brand.
Table 2.4: Top Russian credit card issuers, 1H2006 (US$m, %)
Bank 1H06 portfolio, US$m Market share %
Source: Company reports, Alfa Bank estimates
Mortgages
However, the really big gains will be in the mortgage market, which is still in its infancy but already a US$6bn business that is expected to grow 10–20 times in the next decade.
Russian Standard
Home Credit and Finance Citibank
Investsberbank
3,100 78 220 6 130 3 130 3
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