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Daimler Financial Services launches bank in Russia

Muamer Hodzic November 1, 2007

logthumbnail11 Daimler Financial Services launches bank in Russia
With the establishment of its own bank, Daimler Financial Services, the financial services provider of Daimler AG, will be moving into the fast-growing vehicle and consumer credit markets in Russia. DaimlerChrysler Bank Rus, which will be renamed Mercedes-Benz Bank Rus upon approval by Russia’s central bank, will offer car loans for private and commercial customers in the country. The new bank will officially open in Moscow on November 7, 2007.

Daimler Financial Services’ entry into the car loan business will round out the company’s product portfolio in Russia. “The establishment of the new bank will make us the first foreign automaker to have its own bank and its own leasing company in Russia,” said Daimler Financial Services CEO Jürgen Walker during a press conference in Berlin. “As a result, we will now be able to offer the complete range of financial services from a single source. We plan to grow dynamically in Russia: Over the medium term we’re looking to achieve a contract volume of €400 million. At the end of 2006, we had a portfolio of €35 million.”

logthumbnail11 Daimler Financial Services launches bank in Russia
Russia, currently the world’s eighth-largest car market, is expected to record over two million registrations of new passenger cars by the end of this year, just like in France. According to studies the Russian car market will catch up with Germany by 2015, when new registrations will surpass the three million mark. The consumer credit market is growing even more rapidly than the automotive market in Russia; 40 percent of all new vehicles are already being financed in the country today, and this figure is expected to reach 50 percent in a few years.

The establishment of a bank in Russia marks the continuation of the expansion of Daimler Financial Services’ activities in Europe. The company already operates banks in Germany and Poland, and also opened DaimlerChrysler Bank Greece in Athens in January 2007. The bank in Greece was established using the company’s existing Polish banking license. Daimler Financial Services has also launched fleet management operations in Austria and Portugal, and introduced new insurance products in Poland, Sweden and Hungary.

Daimler Financial Services has realigned its operations in North America following the transfer of its majority interest in Chrysler’s financial services activities in the region. The North American business has been incorporated into a new company with the brands Mercedes-Benz Financial and Truck Financial. Daimler Financial Services nevertheless remains the exclusive provider of financial services for Chrysler, Jeep and Dodge vehicles outside the NAFTA region.

Contract volume at Daimler Financial Services rose to €57.6 billion in the third quarter of 2007 (Q3 2006: €56.0 billion). Adjusted for exchange rate effects, contract volume increased by eight percent. The share of the total portfolio accounted for by the Europe, Africa and Asia/Pacific region totaled 58 percent, or €33.4 billion, in the third quarter of 2007, which was five percent higher than in the third quarter of 2006. Contract volume in the Americas region amounted to €20.3 billion (Q3 2006: €19.8 billion). Adjusted for exchange rate effects, the portfolio rose 13 percent. EBIT at the end of the third quarter totaled €521 million, which was lower than the €660 million recorded in the prior year. The decline was primarily due to expenses associated with the establishment of a new financial services business following the separation from Chrysler in North America. Daimler Financial Services continues to target a return on equity of more than 14 percent for full-year 2007. Walker is confident about the future: “Even without Chrysler, our leasing and financing contract volume of €58 billion and 2.2 million vehicles is around three times higher than ten years ago. Daimler Financial Services will continue its global growth in the future.”

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