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DOM.RF is a state development institution in the housing sector. It is at once a bank, the operator of mortgage support programmes, the guarantor that troubled residential buildings get completed and the manager of federal land plots intended for development. Its shares trade on the Moscow Exchange under the ticker DOMRF.
This combination of functions is rare, and it has to be understood piece by piece. The banking part works like an ordinary bank: it issues mortgages and lends to developers, earning an interest margin.
The second part is the operator role. The company administers state mortgage programmes, issues mortgage-backed securities and buys mortgage notes from banks. This mechanism is called securitisation: a bank hands over a portfolio of mortgages, gets its money back and issues new loans, while the risk and the income on the portfolio pass to the buyers of the securities.
The third part is not financial at all: bringing federal land into use and completing projects abandoned by developers that went bankrupt. This is work carried out on the state's instruction, and it cannot be judged by banking logic.
Mortgages for households and project finance for developers.
Buying mortgage notes from banks and issuing securities backed by them.
Administration of subsidised mortgage programmes.
Bringing federal land plots into housing construction.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
The company issues mortgages and lends to developers, administers state mortgage programmes, issues mortgage-backed securities, brings federal land into development and completes troubled residential buildings.
A state organisation created to solve a problem that the market does not solve on its own: here, to make housing more affordable. That is why it has both commercial functions and instructions from the state, which cannot be judged by profit.
A bank hands over a portfolio of mortgages it has issued and receives money for it, and securities are issued on the basis of that portfolio. The bank frees up capital and issues new loans, while the income and the risk on the old ones pass to the holders of the securities.