BPH TFI, mutual fund subsidiary of Bank BPH, plans to increase its market share to 10% from 6.2% at the end of year 2005 (AUM reached PLN 3.8bn vs. total market of PLN 61.3bn). Currently, Bank BPH owns 50.15% shares in the company, while the rest of it is held by BA-CA. Moreover, BPH TFI estimates market growth at a pace of 30-40% this year, compared with 61% growth in 2005.
While we currently estimate 25% growth of the mutual fund market, this will clearly be influenced by the bottom-up strategies of individual banks in the sector, to the extent that they cross-sell and push distribution of such alternative savings products through their distribution network (cannibalising their base of traditional deposits). Whilst growth in the segment may therefore exceed our estimates, and Bank BPH appears well placed to gain market share (from a low base), clearly not every bank will be able to meet their market share targets.
Whilst BPH TFI currently has presented the most optimistic outlook in the sector both with respect to market growth and its individual performance, suggesting that it be assessed with a degree of scepticism, we would nonetheless expect investors to welcome such an ambitious target. Mutual fund performance has been a key driver of fee income in the banking sector so we may see a slightly positive trading impact from the announcement today.