- I have often heard private bankers complain
that the mortgage sector is an “unlevel” playing field. Do you agree that
privately-owned and state banks are not competing at arm’s length?
- Dmitry Leus: I agree, but we should keep in mind that unequal conditions do
not only prevail on the mortgage market. A big player such as Sberbank is able
to provide SME lending at a rate of 8% p.a. whereas our average-weighted cost
of funds ranges between 8.5 and 8.75%.
On the other hand, we have our
own competitive advantages. We can afford to show flexibility when it comes to
evidentiary requirements with regard to a client’s income. In addition, as a
small bank, we can immediately adapt to sudden market changes. To turn around a
big bank is something else. Our mortgage rates are therefore cheaper than
Sberbank’s at the moment. This is because we were recently able to sell an
important portfolio of securities, and have even excess liquidity now. These
funds need to be invested somewhere, and this enables us to lend at lower
margins.
Every international consultant
will confirm that an ideal credit portfolio should have the following outlook:
50% of it should be invested into collateralized loans, 10-15% should be
invested into consumer lending, or other high-yield credits, and 20-30% should
be kept in treasury bonds or other safe-haven securities which can easily be
sold or refinanced with the Central Bank.
- You have recently engaged in consumer
lending. What has been your experience?
- Dmitry Leus: We had mortgage rates starting at 9.95% and noticed that some
client agreed to these conditions. The average rate on the market is currently
10%. We can afford lower rates and have no plans to raise them because we
dispose of sufficient liquidity. However, at some point we will nevertheless
have to increase our rates, because the next wave of funding is likely to be
more expensive. In any event, consumer loans are a good way of boosting our
overall profitability
- There are many similar products on the
market now. What is your competitive
advantage?
- Dmitry Leus: The most important thing in consumer
lending is a good organization of sales, in addition to a high-quality client
service. For instance, our “New Year’s Loan” is designed for people who cannot
afford to buy Christmas presents for their beloved ones. What counts for such
clients is the speed at which the loan is issued. They are not bothered by the
fact that they will have to pay a premium of RUB 200 per month. We can offer a
quick service if the client has good scores and underwriting results. The first
criterion is credit scores. Some lenders get satisfied with good scores and
will mechanically award the loan. For us, scoring is just the first step, the
second step being underwriting. We may not have the lowest rates on the market,
but in order to keep default rates low we put quality over volume.
- Let’s return to funding. Is it correct to say that client deposits
constitute about half of your liabilities?
- At the same time, I understand you are not
attracting clients by means of higher deposit rates. By which means do you
attract them?
- Dmitry Leus: I have the impression that we have less and less people shopping
around and going from bank to bank in search of the best interest rates.
- Well, I shop around...
