russian credit card market, 2012

Russian credit card market, 2012

Card boom

According to results for the first half of 2012, the size of the Russian credit card market has risen above the half-‐trillion mark -‐ it grew by 36% to 500.3 billion Roubles as of 1 July compared with the beginning of the year. In Q2 the market growth rates accelerated to 18.3 % compared to 15% within the first three months of the current year. These growth rates give grounds to believe that we will surpass 2011 rates of growth, when the total card porKolio of Russian banks increased by 61.6%.

Trends: -‐The market growth rates increased from 15% in Q1 to 18.3% in Q2, with the volume reaching an amount in excess of 500 billion roubles; the growth for the half-‐year reached 36%;

-‐ Sberbank seized one fiIh of the market having increased the porKolio to almost 100 billion roubles; concentraLon has grown – the 5 top players control 57.2% of the market (according to results for Q1 – 55.7%);

-‐Based on the results for the second quarter, only five banks in the top 20 have increased their market shares: Sberbank, Tinkoff Credit Systems, Svyaznoy Bank, Alfa-‐Bank and Trust; for this purpose they had to maintain growth rates above the market average; one of the leaders, bank Orient Express slowed its growth.

-‐According to the results of the half-‐year, dramaLc growth of market share was demonstrated by Sberbank, which zoomed into the lead Q4 of last year reaching 19.8%; bank Orient Express, Tinkoff Credit Systems, Svyaznoy Bank and Trust also increased their share

Market size as of 01.07.12 500.3 billion roubles (+36% versus 01.01.12)

Bank Portfolio,-billion-roubles Market-shareSberbank 99,0 19,8%Russian-Standard* 75,8 15,1%VTB24 42,0 8,4%Orient-Express 35,7 7,1%TCS-Bank 33,6 6,7%OTP-Bank 24,4 4,9%Svyaznoy-Bank 23,9 4,8%AlfaNBank 17,8 3,6%HCF-Bank 14,9 3,0%Rosbank 14,3 2,9%

1

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Finding gear

As of 1 July 2012, in terms of credit cards porKolio, the top 10 included Sberbank (99 billion roubles), Russian Standard* (75.8 billion roubles), VTB24 (42 billion roubles), Orient Express (35.7 billion roubles), Tinkoff Credit Systems (33.6 billion roubles), OTP Bank (24.4 billion roubles), Svyaznoy Bank (23.9 billion roubles), Alfa-‐Bank (17.8 billion roubles), Home Credit (14,9 billion roubles), Rosbank (14.3 billion roubles).

The redivision of the market to the benefit of the more ac^ve players con^nued, although this has not yet affected the order of the posi^ons among the top 10 in terms of porKolio size – all the banks have retained their posi^ons in the ra^ng. The second half of the top 20 saw two swaps: Raiffeisenbank rose to 16th place, having powered past bank Avangard; and Trust climbed to 18th place, having ouKlanked MDM Bank.

Four banks from the top 10, succeeded in increasing their market shares in Q2, three of them significantly: Sberbank – from 18.1% to 19.8%, Tinkoff Credit Systems -‐ from 6% to 6.7%, Svyaznoy Bank -‐ from 4.2% to 4.8%. Alfa-‐Bank increased its market share from 3.5% to 3.6%, having returned to posi^ve growth ader shrinkage in Q1, when it declined from 3.7% to 3.5%. According to second quarter results in the second half of the top 20 only bank Trust was able to boast an increment to its share – from 1% to 1.1%.

Dynamics of credit cards porBolios, billion roubles

Banks 01.01.08 01.01.09 01.01.10 01.01.11 01.01.12 01.07.12Portfolio Market6share Portfolio Market6share Portfolio Market6share Portfolio Market6share Portfolio Market6share Portfolio Market6share

Sberbank(of(Russia 0,7 0,4% 2,5 1,2% 8,3 4,3% 25,4 11,2% 63,0 17,1% 99,0 19,8%Russian(Standard* 88,3 49,8% 70,9 34,5% 56,3 29,2% 49,5 21,7% 59,3 16,1% 75,8 15,1%VTB(24 3,6 2,0% 12,0 5,8% 19,2 10,0% 24,8 10,9% 34,5 9,4% 42,0 8,4%Orient(Express 0,0 0,0% 0,2 0,1% 1,5 0,8% 3,1 1,4% 23,1 6,3% 35,7 7,1%TCS(Bank 0,7 0,4% 4,5 2,2% 4,9 2,5% 9,6 4,2% 21,2 5,8% 33,6 6,7%OTP(Bank 5,0 2,8% 6,8 3,3% 6,9 3,6% 12,5 5,5% 19,1 5,2% 24,4 4,9%Svyaznoy(Bank 0,0 0,0% 0,0 0,0% 0,0 0,0% 0,2 0,1% 12,4 3,4% 23,9 4,8%AlfaLBank 5,3 3,0% 8,2 4,0% 8,6 4,5% 10,7 4,7% 13,6 3,7% 17,8 3,6%HCF(Bank 20,9 11,8% 21,7 10,5% 16,6 8,6% 11,1 4,9% 14,1 3,8% 14,9 3,0%Rosbank 2,9 1,6% 3,7 1,8% 3,5 1,8% 5,9 2,6% 11,2 3,0% 14,3 2,9%Citibank 6,8 3,8% 10,7 5,2% 12,0 6,2% 12,9 5,7% 11,2 3,0% 12,2 2,4%Credit(Europe 1,3 0,7% 2,9 1,4% 3,2 1,7% 5,2 2,3% 9,5 2,6% 10,4 2,1%Moskomprivatbank 1,9 1,1% 3,4 1,7% 2,7 1,4% 4,2 1,8% 7,8 2,1% 8,3 1,7%Renaissance(Credit 2,6 1,5% 5,2 2,5% 3,8 2,0% 4,1 1,8% 5,7 1,6% 7,8 1,6%GE(Money(Bank 5,1 2,9% 7,1 3,4% 5,2 2,7% 5,0 2,2% 5,6 1,5% 5,5 1,1%Raiffeisen(Bank 1,0 0,6% 1,9 0,9% 2,4 1,2% 2,8 1,2% 4,0 1,1% 5,5 1,1%Avangard 6,7 3,8% 9,1 4,4% 6,1 3,2% 4,3 1,9% 4,2 1,1% 5,4 1,1%Trust 1,0 0,6% 1,0 0,5% 0,4 0,2% 1,4 0,6% 3,7 1,0% 5,3 1,1%MDM(Bank 4,1 2,3% 6,3 3,0% 6,6 3,4% 5,5 2,4% 4,6 1,3% 4,5 0,9%Uralsibbank 1,0 0,6% 1,4 0,7% 1,5 0,8% 1,9 0,8% 3,1 0,8% 4,3 0,9%Others 18,5 10,4% 26,3 12,8% 23,1 12,0% 27,6 12,1% 37,0 10,1% 49,9 10,0%Total6 177,4 100,0% 205,8 100,0% 192,9 100,0% 227,6 100,0% 367,8 100,0% 500,3 100,0%


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Shares of the banks in the credit card market

19,8%&

15,1%&

8,4%&

7,1%&6,7%&

4,9%&

4,8%&

3,6%&

3,0%&

2,9%&

23,8%&

Sberbank&of&Russia&

Russian&Standard*&

VTB&24&

Orient&Express&

TCS&Bank&

OTP&Bank&

Svyaznoy&Bank&

AlfaLBank&

HCF&Bank&

Rosbank&

Others&

Due to the aggressive growth of these banks, other players have to put up with losses or with the status-‐quo. In Q2 Russian Standard reduced its market share from 15.3% to 15.1%, VTB24 – from 9% to 8.4%, Orient Express – from 7.2% to 7.1%, OTP Bank – from 5% to 4.9%, Home Credit – from 3.4% to 3%, Rosbank from 3.1% to 2.9%.

The movement vector was changed by Alfa-‐Bank and Orient Express as compared to Q1 – if the former is again increasing the market share ader reduc^on thereof at the beginning of the year, the lafer went in the red in terms of the dynamics of the market share ader the breakthrough in the first three months.


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Number of issued cards as of the end of the year, thousand units

The size of the credit card market, billion roubles

171,3%

200,0% 192,2%

227,6%

367,8%

500,3%

150%

200%

250%

300%

350%

400%

450%

500%

550%

2007% 2008% 2009% 2010% 2011% Q2,%2012%

2007 89442008 92962009 86012010 100472011 14500

In Q2 among 20 banks with the largest card porKolios only five were increasing the lending faster than the market (18.3%). These were the banks that were able to increase their market shares as a result. Sberbank increased the porKolio by 29.1% in the quarter, Tinkoff Credit Systems – by 31,7%, Svyaznoy Bank – by 34%, Alfa-‐Bank – by 19.4%, Trust – by 29.1%.

In absolute terms Sberbank (plus 22.3 billion roubles per quarter), Russian Standard (11 billion roubles), Tinkoff Credit Systems (8.1 billion roubles), Svyaznoy Bank (6.1 billion roubles), Orient Express – 5.2 billion roubles are leading in terms of the increment of their card porKolios. MDM Bank is the only one among the twenty to reduce the porKolio size – by 0.4% to 4.47 billion roubles.


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Leaders’ equator

Subject to the results of the half-‐year, Sberbank stands out of the group with the drama^c growth of its market share – by 2.7 points up to 19.8%. Having increased the porKolio to almost 100 billion roubles, the state giant has occupied the fidh part of the market and secured a foo^ng in the first line of the ra^ng. Sberbank succeeded in overtaking the market leader of many years, bank Russian Standard, in Q4 of the year 2011.

Another large state bank, VTB24, reduced its market share from 9.4% to 8.4%, while maintaining sufficiently high porKolio growth rates – 21.8% from the beginning of the year. But considering tough compe^^ve environment, when several players are increasing their porKolio simultaneously at priority rates, other players cannot afford just to keep pace.

Despite a slow-‐down in Q2, subject to the results of the en^re half-‐year, Orient Express succeeded in increasing the market share – by 0.9 subpoints up to 7.1%. Tinkoff Credit Systems increased the market share from 5.8% to 6.7%, Svyaznoy Bank -‐ from 3.4% to 4.8%, Bank Trust – from 1% to 1.1%. The other banks from the top 20 have remained flat, or reduced their market shares.

Dynamics of the major players during the year, billion roubles

-‐

20,00

40,00

60,00

80,00

100,00

120,00

Sberbank of Russia

Russian Standard*

VTB 24

Orient Express

TCS Bank


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Impressive are the growth rates of the ac^ve large players of the credit card market that target 100% increase within a year. Sberbank, Orient Express and Tinkoff Credit Systems have increased their porKolios by 57.2%, 54.6% and 58.6% respec^vely since the beginning of the year. In absolute terms the increment of the porKolios of these banks made up 36 billion roubles, 12.6 billion roubles and 12.4 billion roubles respec^vely.

As a result, the concentra^on in the credit card market has grown – as of 1 July five largest players account for 57.2% of the market (286.1 billion roubles from 500.3 billion roubles). Twenty major players control 90% of the market.

Svyaznoy Bank stands apart among the top ten, having increased its porKolio by 93.1% up to 23.9 billion roubles in half a year (7th place in terms of porKolio size). Among the second half of the top 20 high growth rates were shown by Renaissance Credit and Trust – by 36.1% and 43.2% in half a year, but in absolute terms this is rela^vely moderate – growth by 2.1 billion roubles and 1.6 billion roubles respec^vely.

Change of posiNons among the top 10

1

2

3

4

5

6

7

8

9

10

Sberbank of Russia

Russian Standard*

VTB 24

Orient Express

TCS Bank

OTP Bank

Svyaznoy Bank

Alfa-‐Bank

HCF Bank

Rosbank

Ci^bank

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26 July, 2012

Ader the period of stagna^on, the credit card market picked up and began growing fast again in the second half of year 2010. From 1 October 2010 to 1 April 2012, within a year and a half, the market size doubled. In 2011 its growth made up 61.6%. The results of the first half-‐year of the year 2012 allow for hoping that the last year’s growth rates will be exceeded. The Russians’ preferences con^nue shiding increasingly towards credit cards as a more technological and convenient method of credi^ng. Therefore, the credit card market may count on addi^onal dividends from the general buoyancy in the retail banking sector.

Note (*): The management of the bank Russian Standard believes that the bank should sLll be occupying the first line in the raLng in terms of the size of the credit cards porKolio, since some of the “card loans” are recognized by the bank in accounts 45505 (Loans and other means extended to natural persons for a period from 181 day to 1 year), 45506 (Loans and other means extended to natural persons for a period from 1 year to 3 years), 45507 (Loans and other means extended to natural persons for a period in excess of 3 years).

According to our experts’ opinion, a classical credit card is a call loan. For the purposes of the raLng we take into account the sum of the accounts 45508 (Loans and other means extended to natural persons on the on call basis) and 45509 (Loan extended subject to lack of means in the deposit account (“overdraI”)).

Leaders in terms of porBolio growth

Top 20 in terms of absolute growth for June, 2012

Increment, billion

roublesTop 20 in terms of absolute growth in a year since July, 2011

Increment, billion

roubles

Top 20 in terms of absolute growth from the beginning of 2012

Increment, billion

roublesSberbank of Russia 7,48 Sberbank of Russia 57,47 Sberbank of Russia 36,02Russian Standard* 3,91 Orient Express 26,89 Russian Standard* 16,49TCS Bank 3,32 Russian Standard* 22,79 Orient Express 12,61Orient Express 1,49 Svyaznoy Bank 20,07 TCS Bank 12,41VTB24 1,13 TCS Bank 18,06 Svyaznoy Bank 11,51Alfa-Bank 0,85 VTB24 12,47 VTB24 7,53OTP Bank 0,82 OTP Bank 8,78 OTP Bank 5,21SKB-Bank 0,79 Alfa-Bank 5,72 Alfa-Bank 4,17Svyaznoy Bank 0,73 Rosbank 5,31 Rosbank 3,09MTS Bank 0,63 HCF Bank 3,78 SKB-Bank 2,43Trust 0,41 Renaissance Credit 3,37 Renaissance Credit 2,08Renaissance Credit 0,38 Credit Europe 3,00 Sovcombank 1,67Gazprombank 0,33 SKB-Bank 2,55 Trust 1,60Rosbank 0,25 Sovcombank 2,46 Raiffeisen Bank 1,45Open Bank 0,17 Trust 2,31 Uralsibbank 1,28Raiffeisen Bank 0,16 Raiffeisen Bank 2,23 MTS Bank 1,25Sovcombank 0,16 Uralsibbank 1,95 Avangard 1,24Citibank 0,12 Moskomprivatbank 1,86 Citibank 1,09Avangard 0,12 MTS Bank 1,55 Gazprombank 0,85Pervomaisky Bank 0,11 Open Bank 1,51 Credit Europe 0,84Total 23,07 Total 213,25 Total 116,50


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This report is made by the specialists of the bank Tinkoff Credit Systems. For the purposes of drawing up the report, the Bank relied on the informaôn obtained from official sources. The volume of the porKolios is calculated as the amount of the undue principal debt according to Central Bank, with an addiônal expert evaluaôn of the secured assets.

Please contact Oleg Anisimov on any mafers related to cooperaôn, [email protected].

TCS credit cards: hfp://www.tcsbank.ru/credit. TCS deposits: hfp://www.tcsbank.ru/deposit.

© Tinkoff Credit Systems, 2012. All rights reserved. When quo^ng please refer to the bank Tinkoff Credit Systems.

russian credit card market, 2012

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