According to HN Daily, domestic banks plan to increase number of branches by some 100 this year and continue to extend their network in the future (no details concerning pace and horizon has been revealed). According to statistic surveys, an average number of branches per 1m of inhabitants is 180, while in Germany it is almost three times more and in Spain almost five times more. According to an article 1/4 of people still prefer services over the counter over e-banking and accessibility of branches is one of most important criteria when choosing the bank.
Our view:
According to earlier statements KB plans to open 20 to 25 new branches in 2007 (the planned branches are expected to be smaller with 2-3 counters for basic banking services), while Ceska Sporitelna and Raiffeisen International target 10 local offices each and former HVB Bank planned to add some 40 offices. Recently BRE Bank has also announced the introduction of the mBanka (internet bank) at the Czech and Slovak market. Overall, we see the news on planned branch expansion as a sign of increasing competition at the Czech banking market, but it does not come as a surprise. We do not expect any trading impact as of today.