This report analyses the housing lending in the Czech Republic for the 4Q2012. 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 business for each bank.
This report focuses specifically on development in Sberbank Czech Republic in the 4Q2012. The key highlights are:
Mortgage loans represented nearly 30% of all bank loans in 4Q12. The mortgage business generates around 15% of banks’ profits.
Sberbank continues to march ahead...
Sberbank is continuing with the aggressive approach towards mortgage lending it started about a year ago. In 4Q, mortgage loans increased by a further 3.7% qoq, while annual growth sped up to 19.8% yoy in 2012. That is compared to a market which grew 2% 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 1.2% of the total at the end of 2012. This is a 131% overall increase, implying an annual growth of 18.2%.
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. 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 4Q.
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 2012. 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, we believe mortgage lending business generates around 15% of Sberbank’s overall 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
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