The mortgage loan segment could stagnate this year due to an increase in the interest rate, triggered by tougher refinancing. However, Cetelem forecasts an 80% increase in the volume of released loans.
This year, the lending market will stagnate and the mortgage segment may even shrink due to rising interest rates, believes Daniel Boaje, deputy general manager of Cetelem, the consumer finance unit of BNP Paribas French group, and the biggest player on the domestic consumer finance market.
He believes the market will remain even during 2008, while the interest rate will increase due to the rising costs, both of RON, and foreign currency refinancing.
"(...) We may push interest rates for new loans higher, but we haven't made such a move so far," explains Boaje.
Cetelem largely gets refinancing from Romanian banks, as well from its parent company, BNP Paribas, according to Boaje.
Because of the rising interest rates on the market, the quality of Cetelem's portfolio has deteriorated a little.
"The share of delayed payments for over 30 days stands at 3-4%, up from 2-3% last year".
At the end of last year, Cetelem registered a loan volume worth 816 million RON (226m euros), 77% above the 2006 level.
"In terms of consumer finance, we are comparable to medium-sized banks. However, we have the advantage of being specialists: we centre on a certain segment, while banks have a universal approach".
This year, the company plans to achieve an 80% increase, which would lead to a volume of over 1.44bn RON (410m euros).
In the first quarter, Cetelem posted an increase of around 33%, states Boaje, without specifying the volume of loans.
How is the company going to boost its turnover by 80% on a stagnating market?
"From 2007, we have several new business lines. We tested personal loans last year and expect very good results this year. Other avenues for growth will be the auto loans and mortgage loans," says Boaje.
Cetelem will enter the mortgage loan market in September or October and is considering the development of its own branch network for distribution. At present, the company sells its products through partner stores, by phone and on the Internet.
As far as mortgages are concerned, Cetelem will hire another 20-30 people, which will be added to its current staff of 870.
"We see 2008 as the year when we settle what we've done so far, strengthen what goes well, and correct what doesn't (...)," says Boaje, who specifies Cetelem has a very good profitability in terms of international accounting standards.
At present, around 40% of Cetelem loans are released in stores, 25% on cards and the rest are personal and auto loans. Of personal loans, 10% are granted through an online application, C-net, which was launched in February.
Cetelem
Forecasts an 80% increase in the volume of released loans this year
At the end of last year registered a loan volume worth 816 million RON (226m euros), 77% above the 2006 level
Will enter the mortgage loan market in September or October and is considering the development of its own distribution network
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