Housing banks take heart from lack of homes

Housing banks in Romania seem to be feeling the pressure of the current crisis a little bit less than other financial players. Even though these are hard times for everyone, these banks posted positive results in the first half of the year and are also making promising noises for the end of 2009. Raiffeisen Banca pentru Locuinte (RBL) and BCR Banca pentru Locuinte (BCR BpL) currently carve up the market. Since January RBL has signed almost 20,000 saving-borrowing contracts (in which the state provides a subsidy once the borrower saves a certain sum) worth more than EUR 50 million. And the perspectives are also optimistic. “From our previous experience we may say that the second half of the year will be just as good as the first,” said RBL representatives. The other major player on the housing bank scene is BCR BpL which finished its first operational year (July 2008-June 2009) with over 91,000 contracts worth almost RON 2 billion (about EUR 470 million). What's more, the bank expects to sign 40,000 further contracts in the second half of this year. This means that the lender will have contracts worth in excess of RON 2.8 billion on its books by the end of 2009. On top of that it will launch lending activity in the second half of this year, offering two types of loan intended to reduce the waiting period necessary to access a savings-borrowing product. Housing banks' outlook for 2009Housing banks are finally starting to reap what they have sown, so at first glance it might look like 2009 is going to be a promising year for them. “This year will be probably the first one when we make a profit,” said RBL representatives. They added: “However, the authorities have increased the benchmark for savings-borrowing products from15 to 25 percent. It's a good sign that savings and homes are important elements of economic policy, even through the total sums are not substantial.” Moreover, the legal procedures for the RBL-HVB Banca pentru Locuinte merger will be completed by the end of this year, along with the National Bank of Romania authorization. The lender posted about RON 4.5 million in profit in the first semester and by the end of this year will reach break-even point (including the legal costs of the merger). Elsewhere, Carmen Schuster, executive vice-president of BCR Banca pentru Locuinte, said recently that the bank expects to be in profit in 2011, after three years of activity on the market. According to BCR BpL representatives, the lender is leading the newly signed savings-borrowing contract market. “Our financial results surpassed our shareholders' expectations. We have invested substantially both in IT systems and the business launch – marketing, sales and human resources,” added Schuster.Housing banks in Romania offer very simple products, so borrowers are shielded from interest rate and currency risks. The investments are relatively safe and customers have no exposure on external markets. “Savings-borrowing products will become better known and more popular, especially now that the state has increased the prime from 15 to 25 percent of savings, up to EUR 250 a year. Moreover, Romanians' consumption has shifted from loans to savings products lately. It is still too early to draw conclusions, but there are signs that demand for RBL's longer-term products is increasing,” reported Raiffeisen Banca pentru Locuinte representatives. A recent study conducted by BCR BpL found that 37 percent of bank customers like both the fixed and reduced interest rates for savings-borrowing products they access after the saving period, and the reduced rate of credit payments. As with any market, newcomers would sharpen up competition and provide a wide range of products to potential clients. RBL representatives agree: “An increasing number of housing banks would be very favorable for the market and help to spread word of the importance of savings-borrowing products, which are not well known in Romania yet.” Although these products enjoy scant awareness among Romanians, housing banks have an important advantage: they can benefit from the high potential of both new and old homes. According to the official data, in the EU-25 zone the average number of people in a household is 2.4, while in Romania the figure is 2.6. To reach the EU average, Romania needs to build over 725,000 homes, assuming none of the current ones go out of use.
anda.dragan@business-review.ro