Alfa Bank bets on mortgages to grow

MOSCOW, Mar 17 (Reuters): Alfa Bank aims to boost mortgage lending due to tough competition with state banks to win new corporate business in a slow growing economy, the chief financial officer said.

Alfa Bank, Russia's top private lender, is co-owned by Russian billionaires, including Mikhail Fridman and German Khan, former owners of oil firm TNK-BP that is now part of Rosneft.

"Given the macroeconomic environment ... we do not expect major growth in corporate lending in coming years, as Alfa Bank is already working with almost all the biggest companies in the country," Chief Financial Officer Alexey Chukhlov told Reuters.

Alfa is also Russia's fifth biggest bank overall by assets which is standing at about three trillion roubles ($46 billion).

Its corporate loan book grew 1.4 per cent in 2018 but retail lending, including mortgages, climbed 37.7 per cent. In retail, Alfa has focussed on lending to Russia's middle class and has a strong position in the credit card market.

Alfa started offering mortgage loans in 2017 and was among the top 10 biggest home loan lenders last year in a market dominated by top state banks Sberbank and VTB .

Alfa, which aims to be in the top six home-loan providers in 2019, faces stiff competition in the market, in which state development bank VEB also plans to expand. Alfa aims to cut costs and speed up approvals by making its operations paper-free.

Alfa bought a mortgage loan portfolio at the end of 2017, Chukhlov said, without giving the value or naming the seller. He said the bank was ready for further deals in future.

The bank raised 10 billion roubles ($153 million) in January via a Eurobond issue, priced at 9.35 per cent, saying it would use the funds to expand its loan portfolio.

Alfa, whose mortgage loan rates start from 10 per cent, has said it might issue more rouble Eurobonds this year.

Chukhlov said Alfa would have more funds available to lend if talks between banks and the central bank allowed the institutions to use domestic credit ratings to calculate provisions rather than international ratings.

Using domestic ratings to assess risk would require lower provisioning against lending.