This report analyses the performance of the Bank for the 3Q2014. You will find all the necessary details regarding volume growth, market share, margin and asset quality development in the Bank.
The key highlights are:
Equa Bank shows another loss...
Equa Bank reported another quarterly loss, this time CZK 62.3 mil. This is less than CZK 110 mil. it showed last year, but still implies a high negative ROE of 15.8% for the last 12 months.
...unlike its rival Air Bank
Despite some improvement and the very strong balance sheet momentum, Equa Bank remains deeply loss-making. This is in sharp contrast to the already profitable Air Bank (generating ROE of 7%), a 3-year-old start-up.
However imperfect this might be, a quick comparison of the two banks could be an interesting exercise. We see following differences at first glance:
• Focus & Execution
• Margins
• Cost efficency
Focus and execution
A start-up with a clear strategy backed by a strong owner (Air Bank) seems to be the key difference to a bank with a longer but problematic history of changing ownership, strategy and managements (Equa Bank).
Three years after its start-up, Air Bank attracted twice as many loans and deposits as Equa Bank. In addition, Air Bank has built up a strong marketing profile through this process.
Margins
Monetizing of Air Bank's client base (through re-pricing of deposit base and adding high-yielding loans to its product mix) seems to be the second milestone and difference to Equa Bank. Within less than 18 months, Air Bank managed to double its net interest margin to more than 3.0%.
Cost efficiency
Thanks to the different profile, history and momentum of the two banks, Equa Bank's more extensive branch network, and higher wages, there is a vast difference in cost efficiency of the two banks.
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