Retail lending

Loan portfolio changes

In 2011, the Bank provided more than 4.3 million retail loans for a total value of RUB 1,230 billion, or 1.7 times the figure for 2010. This resulted in a 36.8% increase in our retail loan portfolio, which is now worth RUB 1,806 billion.

Developing our product range

In the first quarter of 2011, the Bank launched a new retail product range that envisages individual lending terms for different borrower groups: employees of the Bank and its subsidiaries, employees of corporate customers that participate in salary programmes, etc. Discounts to interest rate are available for borrowers with good credit histories. In 2011, Sberbank increased its market share in the mortgage lending segment from 45.8% to 46.9%, thereby strengthening its leading position in this market segment. This was largely driven by special offers resulting in more than 60,000 new loans issued for RUB 65 billion. These offers included V Desyatku! (All Tens: interest rate 10% p.a., initial deposit 10%, maturity 10 years) and Vozmi za 8 (Take it for 8: interest rate 8% p.a., maturity up to 8 years, decision made within 8 days). The Bank has been, and is still, actively involved in programmes such as Government-Backed Mortgages, Building Societies, Military Mortgages, Mortgages Plus Child Benefit and Mortgage Refinancing.

Car lending is another important line in the Bank’s retail business. In 2011, the Bank simplified and expedited its lending process. Borrowers may now apply for a car loan directly at dealerships through Sberbank’s automated systems, which significantly reduces the application processing time. Furthermore, written consent is no longer required from a borrower’s spouse to collateralise vehicles purchased under the loan. To get a car loan, applicants now have to provide only two documents.

High Speed, Low Cost is a special offer we launched in 2011 to offer car loans at affordable rates. It helped buck the trend of our declining car loan portfolio. During the promotion campaign, Sberbank issued about 73,000 car loans for RUB 29 billion.

In the consumer lending business, according to the Bank's principles a borrower’s creditworthiness and ability to repay the debt affects the cost of lending. In 2011, the Bank introduced two new borrower categories. The first is young people aged between 18 and 20. Loans to these borrowers are guaranteed by their parents. Loan conditions stipulate a required length of current employment of 4 months. The second is pensioners whose pensions are paid into a Sberbank account. Sberbank continued to improve its value propositions for consumer loans: the maximum limit for uncollateralised loans and loans guaranteed by individuals was doubled. Additionally the upper age limit to qualify for an uncollateralised loan was increased to 65 years and a pilot project to relax the requirements for a borrower’s residence registration was launched.

The Bank continued its involvement in the Experimental Government- Backed Student Loan Programme. Considering past experience, Sberbank simplified the type of university certificate to be submitted by the borrower to confirm academic performance, improved relationships with universities and revised the criteria for selecting educational institutions and assessing students’ performance. Over the year, our student loan portfolio grew 20% to almost RUB 380 million.

With a market share of 32.0%, Sberbank is the largest retail lender in Russia

The Bank continued its involvement in the state programme to develop agriculture. More than 57,000 smallholder loans for over RUB 10 billion were granted in 2011. Smallholders were permitted to borrow up to RUB 1 million per year, whereas previously this limit had applied to total debt. In addition, the timeframe in which a report on intended use of the loan must be submitted was extended from 45 to 90 days.

Improving the lending process

In 2011, consumer loans, car loans and major mortgage lending programmes were provided through our Loan Factory platform, which was designed to increase the efficiency of lending process and enhance service quality without impairing the quality of loan portfolio. Loan Factory technology was successfully rolled out at all territorial banks. In 2011, 6.4 million loan applications were submitted (3 million in 2010) and over 4 million loans for RUB 690 billion were extended through the Loan Factory platform (2 million loans for around RUB 290 billion in 2010).

The Banker magazine ranked our Loan Factory project as “highly rated” in the Innovation in Risk Management Technology category of its 2011 Banking Technology Awards. The project was also recognised as the largest project presented in the contest.

Retail lending in the regions

With a market share of 32.0%*, Sberbank is the largest retail lender in Russia. We offer our retail lending products in all regions of Russia. Our market share varies by region depending on different economic factors. As of 31 December 2011, Sberbank accounted for 19.2% of the Moscow market** and 45.2% of the market in the area served by Zapadno- Uralsky Bank***, which represent, respectively, our minimum and maximum shares in the retail lending segment. As of 31 December 2010, the smallest and largest market share was recorded in the same territories (16.9% in Moscow and 46.4% in the area served by Zapadno-Uralsky Bank).

* This data is calculated as of 31 December 2011 for Sberbank as a whole.
** This data includes the aggregate share of Sberbank’s territorial banks and the Central Office in the Moscow market.
*** Zapadno-Uralsky Bank operates in the Perm Territory, Komi Republic and the Republic of Udmurtia. This data includes the aggregate operations of Sberbank’s territorial banks and the Central Office in the territory.

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