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 busines for each bank.
This report focuses specifically on development in Komercni Banka in the 4Q2012. The key highlights are:
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Mortgage loan growth slowed down to 6.3% yoy, while sales of new mortgages dropped to last year’s level in 4Q12.
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The top 3 banks further cemented their market position to over 65% in 2012. They sold more than 70% of the new mortgages in 4Q12.
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ČSOB is the clear winner for the year 2012, while GE Money Bank and Raiffeisenbank lost the most.
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Mortgage loans represented nearly 30% of all bank loans in 4Q12. The mortgage business generates around 15% of banks’ profits.
Housing lending momentum deteriorates...
Komerční Banka’s mortgage loans increased 2.2% qoq in 4Q (and 8.4% yoy in 2012 overall), slightly more than the overall market. On the other hand, the loans provided by Modrá Pyramida (Komerční’s building society) dropped a further 1% qoq or 4.1% yoy.
...and the bank stopped gaining market share
Komerční banka has been growing faster than the market since the end of 2010 and in 4Q12 a further 3 bp of the market was grabbed. As a result, the bank held 19.03% of all Czech mortgage loans at the end of 2012, according to our calculations (see chart 46 on page 13). The bank clearly benefits from its superior funding and capital positions when compared to the smaller players. Having said that, the bank has not been as aggressive as its peers ČSOB and Česká Spořitelna in the most recent quarters. This is in particularly visible when we look at quarterly sales of new mortgage loans, where Komerční’s market share is some 5-10% lower than that of its peers. In addition, 4Q seems to be a pretty weak quarter for Komerční banka as it sold nearly 13% fewer mortgages than last year and 40% fewer mortgages than its rival Česká spořitelna.
Mortgage lending – 14% of Komerční’s profit?
Mortgage loans represented 29.5% of Komerční’s total loans at the end of 2012. That is up from the figure of 15% seen a decade ago, implying an impressive annual growth of 22%. The massive growth in volumes made a difference to the bottom line of the bank. When Hypoteční banka’s financials are taken as a benchmark (for more details see page 9), we believe mortgage lending business generates around 14% of Komerční Banka’s overall profitability now.
This is less than the 24% of Raiffeisenbank and 20% of ČSOB, but more than the 12% we calculated for Česká Spořitelna.
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