Its store lending market share has fallen below 25%

At the end of November 2011, the share of the leader in the express lending market in retail chains of HCF Bank fell below 25% for the first time in a long time; since the beginning of the year, the decrease was 3.3 percentage points. Those market participants who focus on working with regional retail chains are now able to increase their share.

According to a study by Frank Research Group, as of December 1, 2011, the volume of the lending market in retail chains (pos-lending) amounted to 175 billion rubles. The leader of this market, as at the beginning of last year, remains HKF-Bank, but its share for the first time since 2009 dropped below 25%, amounting to 24.5% in November. It was not the reduction in the portfolio of pos-loans that led to the decrease in the market share of HKF Bank; over the month, on the contrary, it grew by 600 million rubles, to 42.8 billion rubles, but this growth was less noticeable than that of other players, in in particular, its closest competitor (2nd place) OTP Bank, which over the month increased its portfolio of pos-loans by 2.6 billion rubles, to 36.5 billion rubles.

The decline in the market share of HKF Bank occurred throughout the past year, so, according to Frank Research Group, as of January 1, 2011 it was 27.8%, so over 11 months the decline was 3.3 percentage points. A similar situation was observed with Alfa Bank, one of the three leaders, although its decline was less noticeable: from 16.8% at the beginning of 2011 to 15.4% by December 1, and the total portfolio of pos-loans as of this date according to Frank Research Group, RUB 26.9 billion. Of the banks included in the top three, the only one that showed an increase in market share was OTP Bank; over the 11 months of last year, it increased by three percentage points, to 20.9% (as of November 1, the pos-loan portfolio was 36.5 billion rubles).

According to experts, this situation may be related to the peculiarities of OTP Bank’s business model. “Unlike HKF Bank and Alfa Bank, which are highly concentrated on working with large federal networks (such as M.Video or Eldorado), OTP Bank is more focused on working with regional networks and even by non-network players,” points out managing partner of Frank Research Group, Yuriy Gribanov. “In federal networks, the pos-lending market is more mature, there is high competition, which limits growth opportunities. In regional networks, competition is significantly lower, which gives OTP-bank its guidance. specifically to work with them, wider opportunities." “Our bank’s POS network is well diversified. We work with both federal and regional networks, both large and small, and individual stores,” confirms the head of OTP Bank, Zoltan Illes. Banks do not disclose data on what share regional and federal networks have among partners in the field of pos-lending. According to experts, the share of regional partners at OTP Bank accounts for about 75%, while for HKF Bank and Alfa Bank it is less than 50%.

HKF Bank and Alfa Bank do not agree that their market share is declining due to a business model focused primarily on large federal players. “Large federal chains are more efficient in terms of sales, since traffic there is significantly higher than in most regional chains,” points out senior vice president of Alfa Bank Andrey Sokolsky. “I don’t think that the results of OTP Bank are related to the business model, focused on cooperation with regional chains, rather, this is explained by dumping prices and conducting sales that are not very profitable for the bank, but allow for a quick increase in sales volumes of shares, but both of these reduce the profitability of the business.” HCF Bank associates the decline in its own market share with changes in consumer behavior. “Consumers who, at the beginning of market development, use pos-lending services, are beginning to get comfortable and move to more convenient and universal products (cash loans and credit cards,” says Evgeniy Sidorov, director of direct sales and marketing at HKF Bank. “As a result of development our sales channels and product line (the bank issues cash loans at points of sale), some of the traditional POS clients are switching to cash loans and credit cards."

Ksenia Dementieva

HKF Bank lost control over networks