24

April 2012

Credit Card Market of Russia, 1-st Quarter 2012

Volume of the credit market as on 01.04.12
422 bn. Rubles (+15% as compared with 01.01.12)

Sberbank Russian Standard* VTB 24 Orient Express TCS Bank OTP Bank Svyaznoy Bank Alfa-Bank HCF Bank Rosbank

, .
76,6 64,8 37,9 30,5 25,5 21,3 17,8 14,9 14,3 13,0

18,1% 15,3% 9,0% 7,2% 6,0% 5,0% 4,2% 3,5% 3,4% 3,1%

*Russian Standart believes that it conGnues to rank rst taking into account term credits.

New record
In 1-st quarter 2012 the credit card market of Russia grew by 15%, the aggregate volume of porBolio reached 422.9 bn. Rubles. Sberbank, a new leader of the raGng, has increased the breaking away posiGon, and the ve biggest players are growing faster than the market. Tendencies: Sberbank has strengthened its leadership. Russian Standart, a pioneer of the credit retail market, retains its posi;ons. New leaders of the market maintain the status-quo in a violent compe;;ve struggle, keeping the rate of porAolios growth higher than the market (20-40% per quarter). The second year in a row the market shows high rates of growth (more than 60% per year, in the 1-st quarter 15%) The second wave of the credit boom in Russia, which more and more experts begin to talk about, diers by the increased presence of the card segment. Over 1.5 years, since the beginning of the 4-th quarter 2010, the credit card market volume has doubled. A high concentra;on top 5 players control 55.7% of the market, and, in most cases, these are new leaders (Sberbank, Vostochniy, Tinko Credit Systems).

24 April 2012

Credit Card Market of Russia, 1-st Quarter 2012

According to the results of the rst three months of 2012 Sberbank managed not only to retain the leadership at the credit cards market, but, as we suggested, it increased the breaking away. Over the quarter the share grew from 17.1% to 18.1%. The volume of the porBolio as on April 1, 2012 equaled 76.64 bn. Rubles. For the rst Gme in history the biggest Russian bank ranked rst at this market in the 4-th quarter 2011. Since the beginning of the year the distribuGon of places in the top 5 has not changed Sber is followed by Russian Standart (porBolio 64.76 bn. Rubles), then goes VTV24 (37.91 bn. Rubles), bank Vostochniy (30.54 bn. rubles) and Tinko Credit Systems (TCS bank, 25.51 bn. Rubles). Having retained their posiGons in the raGng some players reduced their market shares. Among them the Russian Standart bank (15.3% against 16.1%), VTB24 (9% against 9.4%) and OTP Bank (5% against 5.2%, 6-th rank). Banks Vostochniy and TCS in the 1-st quarter increased the market shares from 6.3% to 7.2% and from 5.8% to 6% accordingly. Another acGve player of the market the Svyaznoy bank increased its share from 3,4% to 4.2% having risen from the 9-th to the 7th rank according to this index. Alfa bank retains the 8-th rank, whose share of the market decreased from 3.7% to 3.5% (porBolio 14.9bn. rubles). Home Kredit and Rosbank rank 9 and 10 14.35 bn. and 12.98 bn. Rubles).

Dynamics of the Credit Cards Market, Bn. Rubles

Sberbank(of(Russia Russian(Standard VTB(24 Orient(Express* TCS(Bank OTP(Bank Svyaznoy(Bank AlfaLBank HCF(Bank Rosbank Citibank Credit(Europe Moskomprivatbank Renaissance(Capital GE(Money(Bank Avangard Raiffeisen(Bank MDM(Bank Trust Uralsibbank Others Total8

01.01.08 01.01.09 01.01.10 01.01.11 01.01.12 01.04.12 Portfolio Market8share Portfolio Market8share Portfolio Market8share Portfolio Market8share Portfolio Market8share Portfolio Market8share 0,7 0,4% 2,5 1,2% 8,3 4,3% 25,4 11,2% 63,0 17,1% 76,6 18,1% 88,3 49,8% 70,9 34,5% 56,3 29,2% 49,5 21,7% 59,3 16,1% 64,8 15,3% 3,6 2,0% 12,0 5,8% 19,2 10,0% 24,8 10,9% 34,5 9,4% 37,9 9,0% 0,0 0,0% 0,2 0,1% 1,5 0,8% 3,1 1,4% 23,1 6,3% 30,5 7,2% 0,7 0,4% 4,5 2,2% 4,9 2,5% 9,6 4,2% 21,2 5,8% 25,5 6,0% 5,0 2,8% 6,8 3,3% 6,9 3,6% 12,5 5,5% 19,1 5,2% 21,3 5,0% 0,0 0,0% 0,0 0,0% 0,0 0,0% 0,2 0,1% 12,4 3,4% 17,8 4,2% 5,3 3,0% 8,2 4,0% 8,6 4,5% 10,7 4,7% 13,6 3,7% 14,9 3,5% 20,9 11,8% 21,7 10,5% 16,6 8,6% 11,1 4,9% 14,1 3,8% 14,3 3,4% 2,9 1,6% 3,7 1,8% 3,5 1,8% 5,9 2,6% 11,2 3,0% 13,0 3,1% 6,8 3,8% 10,7 5,2% 12,0 6,2% 12,9 5,7% 11,2 3,0% 11,9 2,8% 1,3 0,7% 2,9 1,4% 3,2 1,7% 5,2 2,3% 9,5 2,6% 10,0 2,4% 1,9 1,1% 3,4 1,7% 2,7 1,4% 4,2 1,8% 7,8 2,1% 7,9 1,9% 2,6 1,5% 5,2 2,5% 3,8 2,0% 4,1 1,8% 5,7 1,6% 6,6 1,6% 5,1 2,9% 7,1 3,4% 5,2 2,7% 5,0 2,2% 5,6 1,5% 5,5 1,3% 6,7 3,8% 9,1 4,4% 6,1 3,2% 4,3 1,9% 4,2 1,1% 4,7 1,1% 1,0 0,6% 1,9 0,9% 2,4 1,2% 2,8 1,2% 4,0 1,1% 4,6 1,1% 4,1 2,3% 6,3 3,0% 6,6 3,4% 5,5 2,4% 4,6 1,3% 4,5 1,1% 1,0 0,6% 1,0 0,5% 0,4 0,2% 1,4 0,6% 3,7 1,0% 4,1 1,0% 1,0 0,6% 1,4 0,7% 1,5 0,8% 1,9 0,8% 3,1 0,8% 3,7 0,9% 18,5 10,4% 26,3 12,8% 23,1 12,0% 27,6 12,1% 37,0 10,1% 42,7 10,1% 177,4 100,0% 205,8 100,0% 192,9 100,0% 227,6 100,0% 367,8 100,0% 422,9 100,0%

24 April 2012

Credit Card Market of Russia, 1-st Quarter 2012

Banks Shares at the Credit Cards Market
Sberbank%of%Russia%
18,1%% 25,1%%

Russian%Standard% VTB%24% Orient%Express% TCS%Bank% OTP%Bank% Svyaznoy%Bank% AlfaKBank% HCF%Bank% Rosbank% Others%

3,1%% 3,4%% 3,5%% 4,2%% 5,0%% 6,0%% 7,2%% 9,0%%

15,3%%

The ve biggest players control more than a half of the credit card market their share comprises 55.7% (235.4% bn. Rubles out of 422.9 bn. Rubles). In which case, the composiGon of the heavyweights has considerably changed aaer the crisis. In June 2008 a new champion Sberbank pracGcally was not present at the market. Once the most conservaGve and slow of the credit organizaGons it has managed to gain speed in the highly technological segment over the last two years. The latest top-10 includes other players, which have shown a tremendous rise in the course of several years Tinko Credit Systems, Vostochniy, Svyaznoy. These banks and other acGve players take places of Home Kredit, Citybank, GE Money, MDM bank, Bank Moskvy, Vozrozhdeniye (see the table) losing their posiGons at the credit cards market. During the recent years Russian Standart (from 49.8% in January 2008 to 15.3%) and Home Kredit (from 11.1% to 3.4%) suered most signicant losses.

24 April 2012

Credit Card Market of Russia, 1-st Quarter 2012

Number of Issued Credit Cards as on the Year End
2007 2008 2009 2010 2011 8944 9296 8601 10047 15026

The present day stability of the market is deceiving it hides an intensive work of new acGvists of the credit cards market. The rates of growth of their porBolios make to recollect the credit boom of 2006 the beginning of 2008. Only during March 2012 Sberbank increased the credit cards porBolio by 6.1 bn. Rubles, Svyaznoy by 2.3 bn. Rubles, Vostochniy by 1.9 bn. Rubles, VTB24 and TCS Bank by 1.5 bn. Rubles. The revival aaer the post-crisis plateau began in the second half of 2010, and since the beginning of the 4- th quarter of 2010 the volume of the credit card market has pracGcally doubled - from 216.7 bn. Rubles (as on October 1, 2010) to 422.9 bn. Rubles (as on April 1, 20120. In which case, the most signicant growth was noted in the last year, making 71% - from 247.5 bn. Rubles as on April 1, 2011. Over the calendar year, from January to December 2011, the markets volume increased by 61.6%.

Credit card market Volume, Bn. Rub.

450% 425% 400% 375% 350% 325% 300% 275% 250%

227,6% 367,8% 422,9%

225% 200%
177,4%

205,8% 192,9%

175% 150%

2007%

2008%

2009%

2010%

2011%

I%.2012%

24 April 2012

Credit Card Market of Russia, 1-st Quarter 2012

Sberbank, Credit Cards PorNolio, Bn. Rub.
80" 70" 60" 50" 40" 30" 20" 10" 0" 2008" 2009" 2010" 2011" 2012"

Russian Standart, Credit Cards PorNolio, Bn. Rub.

90# 80# 70# 60# 50# 40# 2008#

2009#

2010#

2011#

2012#

The beginning of the year makes it possible to expect high rates of the market growth in the 1-st quarter 2012 its volume increased by 15%. The new leaders porBolios grow faster than the market: Sberbank showed growth by 21.7%, Vostochniy by 32.3%, Tinko Credit Systems by 20.4%, Svyaznoy by 44.1%. The last in the top-10 Rosbank also managed to outdistance the market slightly, it increased its porBolio by 16.2%. The rates of growth of other major banks, which have cut their shares at the market, are lower than the average index at the market. Despite its lagging behind in the growth one can cerGfy for sure the returned acGvity of the Russian Standart bank. Aaer the reducGon of the credit cards porBolio in 2009-2010 the bank began to increase again its client base. If such ajenGon to the market is maintained, Russian Standart, most probably, will retain the 2-nd rank in the raGng unGl the end of the current year, as a minimum. The banks management, nevertheless, believes that the bank should retain the rst rank unGl now, because a part of the card credits the bank shows at accounts 45505 (Credits and Other Assets Provided to Natural Persons for a Period Ranging From 181 Days to 1 Year), 45506 (Credits and Other Assets Provided to Natural Persons for a Period Ranging from 1 Year to 3 Years), 45507 ((Credits and Other Assets Provided to Natural Persons for a Period Exceeding 3 Years).

24 April 2012

Credit Card Market of Russia, 1-st Quarter 2012

For the raGng we keep record of the sum of accounts 45508 (Credits and Other Assets Provided to Natural Persons unGl They Are Demanded) and 45509 (Credit Provided in the Case of a Shortage of Funds at the Deposit Account (Overdraa). The Vostochniy bank, which made a spurt at the market last year, conGnued to increase quickly its card porBolio. In which case, the bank sGll conGnues to develop the products, which it presents to its clients as cash credits. For their provision and servicing Vostochniy uses the mechanism of credit cards issue, keeping record of them at account 45508, which ensures it a rank in the raGng. A high demand on credit products makes it possible to maintain opGmisGc expectaGons for the current year for the credit card market as well. Recently, the president of the VTB24 bank, ex-minister of nance Mr. Mikhail Zadornov shared his forecast on the growth of the market of all retail crediGng in Russia more than 30%, closer to 36%. The forecast of the Central Bank is more conservaGve 20-25%. The credit card market grows by the outdistance rates, and has all chances to exceed the last years rates, having increased by more than 60%.

VTB24, Credit Cards PorNolio, Bn. Rub.

40"

30"

20"

10"

0" 2008"

2009"

2010"

2011"

2012"

Vostochniy, Credit Cards PorNolio, Bn. Rub.

40"

30"

20"

10"

0" 2008"

2009"

2010"

2011"

2012"

24 April 2012

Credit Card Market of Russia, 1-st Quarter 2012

TCS Bank, Credit Cards PorNolio, Bn.Rub.
30"

20"

10"

0" 2008"

2009"

2010"

2011"

2012"

20"

OTP Bank, Credit Cards PorNolio, Bn. Rub.

10"

0" 2008"

2009"

2010"

2011"

2012"

Such development of events may be disrupted by serious crisis phenomenon in Russian economy on the whole or in the nancial sector. This risk cannot be ruled out because in the opinion of many inuenGal nanciers one of the hotbeds of the global economy problems, a debt crisis of the European countries, has not been exGnguished yet. Nevertheless, a temporary soluGon has been found, the nearest prospect looks predictable. Some other external and internal risk factors remain valid, but so far the situaGon can be characterized as favorable. The problem of funding at the capital markets, which has sharpened due to a collapse of the stock market last summer autumn for Russian banks lost its urgency this year for the Gme being. In the beginning of the year a window opened, and some players successfully placed their debt securiGes. In March OTP Bank placed an issue of bonds for 6 bn. Rubles, and in April TCS Bank ajracted at the MICEX (Moscow Interbank Currency Exchange) 1.5 bn. Rubles. Favorable market condiGons enable banks to conGnue to increase crediGng at a high rate.

24 April 2012

Credit Card Market of Russia, 1-st Quarter 2012

An increased number of users of the Internet and mobile ajachments, as well as the general growth of the level of technical literacy of the populaGon, play in the hands of the banks, which develop such highly technological instrument as credit cards. 57.8 ml. residents of Russia or 50% of the populaGon aged 18 years and older use the Internet, at least, once a month, as it is evident from the Public opinion Funds data. In the beginning of the year several players of the Russian card market announced simultaneously about technological product innovaGons and about launching hew mobile ajachments for users of their cards. Besides, in the spring new large-scale adverGsing campaigns of the leading players started, which included a signicant presence at TV channels. All this makes it possible to express condence that in the near future the market will set many new records.

Svyaznoy Bank, Credit Cards PorNolio, Bn.Rub.

20"

10"

0"

2008"

2009"

2010"

2011"

2012"

Alfa- bank, Credit Cards PorNolio, Bn. Rub.

20"

10"

0" 2008"

2009"

2010"

2011"

2012"

24 April 2012

Credit Card Market of Russia, 1-st Quarter 2012

HKF Bank, Credit Cards PorNolio, Bn. Rub
30#

20#

10# 2008#

2009#

2010#

2011#

2012#

Rosbank, Credit Cards PorNolio, Bn. Rub.

20"

10"

0" 2008"

2009"

2010"

2011"

2012"

This report is made up by specialists of the Tinko Credit Systems bank. While preparing the report the Bank was guided by the informaGon received from ocial sources. The porBolios volume was calculated as a volume of undue debt on the principal debt according to the Central Banks data with an addiGonal expert assessment of the securiGzed assets. Please, address Mr. Oleg Anisimov, o. anisimov@tcsbank.ru regarding collaboraGon issues.

Credit cards of TCS: hjp://www.tcsbank.ru/credit. Deposits of TCS: hjp://www.tcsbank.ru/deposit.

Tinko Credit Systems, 2012. All rights are protected. When quoGng, please, refer to the bank Tinko Credit Systems.