Bank targets high earners

Raiffeisenbank wants to position itself as the bank of choice for well-heeled clients this year, with the group aiming for further growth this year by targeting more affluent customers.

The bank, which posted a 42 percent increase in net profits in 2009, is confident of its strategy and expects to hire around 300 new employees over the next 18 months to service growth in the premium client base.

"Our strategy, in a nutshell, is to offer selected products and services to everybody, but focus on the upper to middle market with a comprehensive high-quality service offering," said Deputy CEO Mario Drosc. "This year, we want to develop the branch network for these clients, and we are starting our project of building a special premium banking brand. In the coming 18 months, we'd like to have around 300 new employees, and most of them will be responsible for servicing the private clientele."

The bank also expects to be in good shape on the profit front in 2010 despite expectations for a challenging year for Czech banks.

"It is definitely a difficult time for some banks," said David Marek, chief economist at Patria Finance. "I would say banks like Citibank haven't been as successful. Unlike domestic banks, Citibank and HSBC are only targeting specific segments. Raiffeisenbank has a different model; it is a universal bank with a broad scope."

Raiffeisenbank boosted net profits 42 percent to 1.99 billion Kč in 2009 - well above the 24.3 percent average growth for the five largest Czech banks. Raiffeisenbank said the good result was down to efficient risk management, thorough debt collection processes and cost control.

"We believe we are in very good shape and are ready to face 2010, as we achieved a number of growth successes last year," Drosc said. "If we repeat 2009's results, I'll be very happy."

Apart from delivering an impressive profit result, the bank also stands out for being one of the most successful foreign banks in the Czech Republic. Analysts tie its success to coming into the market with a universal banking model as opposed to a niche offering from the likes of HSBC.

"Česká spořitelna, ČSOB and Komerční banka make up about 60 percent of the Czech market, so it is quite concentrated, but there are opportunities for other banks to increase their market share by focusing on niche and specialized services," said Milan Lávička, a banking analyst at Atlantik brokerage firm.

Drosc, however, said the key to Raiffeisenbank's success has been hard work, good services and a solid understanding of the local market. Raiffeisenbank has positioned itself from the beginning to expand significantly on the Czech market, which he called one of the most important in the whole of Central and Eastern Europe.

"Although the local market is very small in terms of inhabitants, it is strong in terms of GDP per capita and banking assets," Drosc said. "So we are focusing on three strategic pillars: affluent clients, small and medium enterprises and large corporate segments to continue this dynamic growth."

He added the quality of service will be another focus this year, but the group will also look to offer new products. One such product will be an "offset mortgage," a unique product on the Czech market.

An offset mortgage is one where the borrower can reduce the interest charged on the loan by offsetting a credit balance against the mortgage debt.

"On the deposit side, we will continue to strengthen our position in premium bonds and deposits. We will also offer some new investment funds dedicated to emerging markets," he said.

Drosc added, however, that Raiffeisenbank will not look to lower fees as a way of increasing its market share. The bank wants to focus on the quality of services rather than enticing customers with lower fees.

"What we want to do is offer better conditions to our clients who are using us as a main bank, are sending their salary to us, saving money and investing with us and are taking out loans with us."

Drosc cites the group's eKonto product as an example of this. The product gives customers an option of tailored personal banking services, and loyal customers can earn benefits such as bonuses.

"We'd like to continue on that path," he said.

Gabriella Hold can be reached at
ghold@praguepost.com