This report analyses the housing lending in the Czech Republic for the 1Q2013. You will find all the necessary details regarding volume growth (for both, the mortgage as well as Building Society lending), market share, margin and asset quality development in the mortgage segment. Also, based on the example of Hypotecni Banka, we calculate profitability of the mortgage busines for each bank.
This report focuses specifically on development in Sberbank CZ in the 1Q2013. The key highlights are:
Sberbank continues to march ahead...
Sberbank is continuing with the aggressive approach towards mortgage lending it started about a year ago. In 1Q13, mortgage loans increased by a further 3.0% qoq, while annual growth remained strong at 18.9% yoy in the last four quarters. That is compared to a market which grew 1% qoq and 6.3% yoy.
... although still from a low starting-point
Despite the fact that the bank (formerly known as and owned by Volksbank) was taken over by Russia’s Sberbank only last year, the bank has not taken any time out. 2012 was a very strong year, while the bank seems to have been speeding up its growth.
From having 0.9% of the mortgage market at the end of 2007, Sberbank was holding 1.26% of the total at the end of March 2013. This is a 137% overall increase, implying an annual growth of over 18%.
In terms of new production, the bank sold more than 2% of the new mortgages generated on the market in the second half of 2012 and 1Q13. When the net change in the overall mortgage loan book is taken as the basis, Sberbank’s market share had already reached 3.4% in 4Q12 and 1Q13.
When compared to its nearest peers, Sberbank seems to be one of the most aggressive small players.
Mortgages – around 15% of Sberbank’s profit?
Residential mortgage loans represented nearly a fifth of Sberbank’s total loans at the end of March 2013. Although this is 7% higher than five years ago, it is still relatively low compared to the market (over 29%), or Raiffeisenbank (35%), for example.
When Hypoteční banka’s financials are taken as a benchmark (for more details see page 9), we believe mortgage lending business generates around 15% of Sberbank’s overall operating profitability now. This is less than the 24% of Raiffeisenbank and 20% of ČSOB, the two universal banks most exposed to the mortgage business, but more than the 10-15% we calculated for UniCredit Bank.
Thanks mainly to the one-off losses the bank made in 4Q12, share of profit coming from the mortgage lending business increased to over 30% in the last four quarters ended in March 2013, on our calculations
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