Finland’s S-Bank Seeks to Win Mortgage-Market Share on Merger

S-Bank Oy, Finland’s third-biggest bank by customers, plans to multiply its market share in home loans after acquiring the operations this year, according to Chief Executive Officer Pekka Ylihurula.

“Our market share will multiply in mortgages,” Ylihurula said in an interview at the company’s Helsinki headquarters yesterday. “We want to be the leader in consumer loans, third-largest in salary accounts and third-largest in funds.”

S-Bank, owned by the S-Group cooperative, is making an entry into Finland’s 86 billion-euro ($115 billion) home-loan market by merging with LaehiTapiola Bank Oy. The June deal allows the bank to add mortgage and insurance products to its portfolio from the start of next year. In May, it acquired asset manager FIM Group Oyj to be able to offer access to investment funds to its 2.6 million customers.

S-Bank’s share of mortgages will multiply by 2020, Ylihurula said. LaehiTapiola currently has 1.6 percent of the market for Finnish home loans compared with market leader OP-Pohjola Group with a 37 percent share, according to the Federation of Finnish Financial Services.

S-Bank benefits from the extensive retail network of its parent cooperative S-Group, similar to the banking branches of Cheshunt, U.K.-based retailer Tesco Plc and ICA Gruppen AB from Solna, Sweden. S-Group has 128 gas stations and 878 grocery stores across the country with a 46 percent share of the Finnish retail trade.

“We must be innovative and see what kind of opportunities open when banks close branches in small towns,” Ylihurula said. Still, “cashiers can’t sell milk with mortgages in the future either.”

Profit Jumps

S-Bank’s first-half net income grew more than fourfold to 14.5 million euros from 3.3 million euros a year earlier, it said in a statement today. The company has set “ambitious” targets for expansion by 2020, including more than doubling its fund capital, Ylihurula said. S-Bank is well-placed to inspire more Finns to invest their extra cash instead of making deposits in bank accounts, he said.

“We genuinely believe that we’ll be the agent that drives people’s capitalism in Finland,” Ylihurula said. “It’s clear that this bank will grow significantly.”

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