Tinkoff Bank Research: Credit Card Market Continues Moderate Growth in 2Q 2017

Moscow, Russia — 2 August 2017.
Tinkoff Bank publishes the findings of its research on the Russian credit card market in 1H 2017. The research was carried out by Tinkoff Bank’s team based on the data of the Central Bank of Russia (CBR) and took into account undue debt (demand loans and overdrafts to individuals) only.

In 2Q17, the credit card market continued moderate growth. Similarly to 1Q17, the expansion was primarily driven by two banks — Sberbank and Tinkoff Bank.

According to the research, by 1 July 2017, the credit card market volume reached RUB 1,044 bn, a record high since the beginning of 2016. The market rose by RUB 22.6 bn in 1Q17 and RUB 22.8 bn in 2Q17. May saw the highest monthly growth of RUB 16.9 bn, whereas, in April and June, the increase was only marginal at RUB 4 bn and RUB 1.9 bn, respectively.

With larger market shares of Sberbank and Tinkoff Bank, the market became more concentrated. In 6M17, Sberbank’s portfolio increased by RUB 33.8 bn to RUB 461.5 bn, and Tinkoff Bank’s portfolio grew by RUB 15.4 bn to RUB 117.9 bn as at 1 July 2017. Despite the aggregate portfolio of Sberbank and Tinkoff Bank adding a total of RUB 49.2 bn, the market rose by only RUB 45.4 bn as a result of contracting portfolios in some other banks. The Russian Standard Bank, OTP Bank and Credit Europe Bank saw the biggest drops, as their portfolios shrank by a total of RUB 7.7 bn in 1H17.

As at 1 July 2017, the shares of the three largest banks in the credit card market were as follows: Sberbank — 44.2%, Tinkoff Bank -11.3% and VTB 24 — 7.8%.

The number of credit institutions holding a portfolio of over RUB 1 bn went down to 31, with their aggregate market share as at 1 July 2017 totalling 98.6%.

The only change among the Top 10 credit card market players in 2Q17 was due to the contracting portfolio of B&N Bank Credit Cards, which lost its Top 10 ranking helping Citibank rise to the 10th place with a portfolio of RUB 15.2 bn.

Orient Express Bank’s portfolio rose by 8.3% YTD, or RUB 3.2 bn in absolute terms.

Three (Russian Standard Bank, OTP Bank and Credit Europe Bank) of the Top 10 credit card banks saw their portfolios shrink. Credit Europe Bank saw a marked contraction in its portfolio losing RUB 0.5 bn in 1Q17 and RUB 0.6 bn in 2Q17, or 6.5% of its RUB 15.7 bn portfolio (as at 1 July 2017).

The Top 7 players by far outperform the others, while the banks ranking from 8th to 13th have portfolios of almost the same size of around RUB 14–16 bn, which means that this segment is likely to see the strongest competition in the market.

Oliver Hughes, CEO of Tinkoff Bank, commented: «1H17 brought no major surprises in the credit card market. Moderate growth was the key trend, which we expect to continue well into 2H17. In our business, we continue to foster organic growth coupled with stringent risk controls. As a result, in 1H17, Tinkoff Bank’s portfolio reached RUB 118 bn, while its share of the credit card market rose by 0.5 p.p. to 11.3%.»

Credit Card Market Research 2Q 2017

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