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Richest Polish Banker Bets on Mortgages for 10% Growth
Leszek Czarnecki, the Polish banking billionaire who owns Getin Holding SA (GTN), says rising demand for mortgages and corporate banking services will keep his group’s annual asset growth over 10 percent in coming years.
Getin, Poland’s best-performing financial stock this year, is considering more takeovers to spur growth after buying banks from Allianz SE (ALV) and Ally Financial Inc. in 2010 as foreign investors sold assets amid the global credit crisis, Czarnecki said in an interview in his Warsaw office. Its biggest competitors are units of UniCredit SpA (UCG), Commerzbank AG (CBK) and ING Groep NV (INGA) as well as Poland’s PKO Bank Polski SA.
“Most of the Polish banking sector is owned by huge global players, whose appetite for growth, new portfolio and new credit was reduced significantly,” Czarnecki said. “This is actually our window for growth” either by acquisitions or by expanding current operations.
Shares of Getin, which owns Getin Noble Bank SA, insurer Europa SA and financial-services broker Open Finance SA, fell 0.5 percent to 14.82 zloty at 12:21 p.m. in Warsaw, trimming this year’s gain to 30 percent to value the group at $3.8 billion. Czarnecki owns 56 percent of Getin, whose assets more than doubled in the last three years to 47 billion zloty.
“After the 2009 slowdown we have a rebound, and this year and 2012 should be really good” for the banking industry, Marcin Materna, an analyst at Bank Millennium SA, said by telephone. “Revenue and fees keep rising, and Getin has the fastest growth pace in the sector.”
Profits Surge
In Poland, the largest central European country and the only economy to avoid recession in 2009, banking profits surged 41 percent in 2010 from a year earlier. Gross domestic product is expected to grow by about 4 percent this year and next, according to government estimates, compared with forecasts for the euro region of 1.6 percent this year and 1.8 percent in 2012, according to the International Monetary Fund.
The projections for growth in central and eastern Europe are of 3.7 percent this year and 4 percent in 2012.
“My feeling is really very positive, at least for the next three to five years,” said Czarnecki, 48, the third-wealthiest Pole after Jan Kulczyk, who owns brewing, automotive and infrastructure assets and Zygmunt Solorz-Zak, a media investor, according to the local edition of Forbes. “I strongly believe that we will reach double-digit growth while the whole Polish banking sector may grow about five or eight percent” a year.
Ukraine, Belarus, Russia
Getin was the second-largest mortgage lender in Poland last year and started Idea Bank SA, a lender for small and medium- sized enterprises. It’s also expanding banks in neighboring Ukraine, Belarus and Russia.
“In consumer finance, I would expect double-digit growth as the level of retail loans in Poland is far below that in developed countries,” said Czarnecki. “Corporate banking will probably be the most rapidly growing segment in Poland, in all kinds of forms, including credits, leasing, factoring and corporate finance.”
Polish banks awarded 48.6 billion zloty in home loans last year, up 26 percent from a year earlier, according to data on the banking association’s website. The industry group expects this year mortgages will be close to the 2010 level.
Czarnecki, who holds the world’s record for the longest passage in cave-diving, in 2001 sold Europejski Fundusz Leasingowy SA, Poland’s first leasing company, to Credit Agricole SA (ACA) for 412 million euros and a 25 percent stake in the French bank’s Polish unit, and reinvested the money into the Getin group.
Underwater Engineering
The leasing company was founded in 1991 after Czarnecki sold the underwater engineering company he started five years earlier.
Czarnecki, a graduate in sanitation engineering who holds a Ph.D. in economics has no plans to sell his stake in Getin even as valuations are more than twice the European average. Banks listed on the Warsaw Stock Exchange on average trade at 2 times book value, compared with the 0.9 times average for banks in the Bloomberg Europe Banks and Financial Services Index. Getin trades at 2.4 times book value, Bloomberg data showed.
“We have no plans to sell Getin but on the other hand I must say I’m a very pragmatic man,” Czarnecki said. “We’re in no talks and no one has approached us to buy the group.”
Poland is also one of the few markets where bank assets are for sale as some Western lenders pull out to repair balance sheets or comply with European Union conditions for state aid.
Basel Requirements
Because western banks will also need to prepare for higher capital requirements under the Basel III regulations, Czarnecki expects fewer foreign investors to bid for Polish financial assets than a decade ago.
“Nevertheless, some players will still seek to expand in Europe and will come to Poland,” he said.
Banco Santander SA (SAN) of Spain in March completed a 4 billion- euro ($5.8 billion) purchase of Poland’s Bank Zachodni WBK SA (BZW) from Allied Irish Banks Plc, and Raiffeisen Bank International AG (RBI) of Austria in February agreed to buy EFG Eurobank Ergasias SA’s Polish business in a 490 million-euro transaction that will allow it to almost double assets in the country.
“Poland is a European Union member, expands quite rapidly and is a very interesting market for everybody,” Czarnecki said. “I believe that a few more players will still want to throw their weight around in Europe and will come to Poland.”
For Related News and Information:
To contact the reporters on this story: Pawel Kozlowski in Warsaw at pkozlowski@bloomberg.net; Marta Waldoch in Warsaw at mwaldoch@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
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