Wednesday, March 17 2010 11:44
Every family in Armenia is a potential borrower
ArmInfo. Interview of CEO of ACRA Credit Bureau Artak Arzoyan with ArmInfo News Agency
Mr. Arzoyan, the crediting ratios of the first months of 2010 demonstrate considerable growth. What is it conditioned by? Has the crisis actually passed?
87% growth of the crediting volume in 2010 and the 17,7% growth of the issued credits was conditioned mainly by activation of business units crediting. One may also note 46% increase of the average size of one business-credit. This growth is a result of big funds attracted from foreign sources last year. This tendency may become a serious stimulus for recovery of the economic growth as the loans granted to business entities aimed at intensifying of the economy. "Such big credits will ensure the goal set by the Government and Central Bank in 2009: to feed the economy with credits, to stimulate employment, to alleviate the consequences of the crisis and to raise GDP to a new quality level.
How did these tendencies affect the ACRA credit histories’ database, where the lion’s share falls on the histories of individual persons due to the active consumer crediting till late 2008?
Actually, the major part of credit histories in our database fall on the histories of individual persons in quantitative terms – over 900,000 histories, while the histories of legal entities make up 17,000. In the histories of individual persons, “the weather has changed” by the consumer credits, the average amount of which grew by 30% up to 265,000 drams. In Jan 2010 as compared with Jan 2009 the amount of consumer credits grew by 17%, that in my view, is the result of successful anti-crisis measures. In 2009 consumer lending was low due to the banks' careful policy and the regulator's tough anti-risk requirements. This vigilance and toughness has proved its efficiency: the banks' high liquidity has helped them out of the crisis. Today, the Armenian banks are overcoming difficulties.
Mr. Mirzoyan, how much logical is growth of the average amount of the consumer credit under unstable population incomes, at least, in 2009?
Growth of the average amount has been conditioned, first, by difference of the exchange rate in January 2010, second, by liberalization of the banks’ credit policy. Moreover, the banks started issuing credits to borrowers with the minimum risk.
Evaluation of the borrower’s risk is directly connected with his credit history. How much did the requests in ACRA increase in the current conditions, including by bank branches and credit companies?
The difference in the volume of use of ACRA services is apparent. against the background of the crisis, the banks and credit companies became to resort to services of the Credit Bureau, while two years ago, the banks applied to the bank just in specific cases. Today, 22 commercial banks and the majority of the credit companies currently use ACRA services when filling each
request. Moreover, only 7 banks with a large customer base and one credit company have access to an unlimited number of credit histories on subscription fee. As for the access of branches to ACRA data, two approaches exist here from the technical viewpoint: under the first approach, the credit applications the branch receives are submitted to the head office for approval; the second approach supposes that the branches, besides the head office of a bank or credit company, also get a login and password to enter the base of ACRA credit histories. The branch employees execute the requests with great responsibility and independently make decisions on the “fortune” of the credit application. I consider the second approach more efficient that the centralized one which is peculiar mainly to the banks with a large branch network. At present, two banks with a large branch network are interested in the second model and request mechanisms from us to restrain the risks of illegal use of information. Of course, we have the relevant mechanisms which have already been offered to them.
ACRA has been developing a project of diversification of sources of acquisition of data about borrowers. What stage is the project at?
As of today, ACRA receives information on the borrower' debts only from banks and credit companies, but the expected governmental decision currently being worked out by the Central Bank will allow the Bureau to work with the state departments individually, enhance the accuracy of data association, collect complete data on borrowers' debts from various sources. From the technical point of view, we are already ready to receive the whole information. The full package of information plays an important role in assessing the credit risks as provides additional information about the solvency of borrowers.
Moreover, launch of a behavioral scoring system will become one of the opportunities of extension of information about the solvency of borrowers. In the next 3-4 months the company is planning to finalize methodology for the system. If we succeed to meet the scheduled deadline, the pilot version of the project will be available to the our customers at late 2010 - early 2011.
The bankers have repeatedly claimed of a low level of using banking services by the population. Is the ACRA statistics consonant with these statements?
As of today the company has credit information on 43% of the population. By the end of 2010 ACRA's credit reporting base will cover 46% of the Armenian population in case of further active crediting and the scheduled minimum 30% annual growth of requests of credit histories. This is a low figure as compared with the developed countries. However, in Armenia each family consists of 3-4 people, so, if, at least, one of them is a borrower, it means that each Armenian family has access to credit resources.
It is known that there is a credit registry under the Central Bank as well. How much efficient is functioning of two similar structures, and is a conflict of interests observed?
Information of the credit registry under CB is used primarily for regulation of the banking system. Naturally, requests to CB reduced with functioning of ACRA, that is consonant with CB’s policy: activate turnover of credit histories of the Credit Bureau. However, the credit registry is important from the viewpoint of filtration of information the creditors supply. Moreover, there is a practice saying the state registries should receive information for regulation, so, conflict of interests is out of question.
Finally, I would like to ask about the Bureau’s financial state, in particular, in the line of profit.
As you know, ACRA Credit Bureau started its activity in 2004, and since 2008, it has been annually ensuring current profit which is directed to cover the accumulated loss. The amount of profit in 2009 exceeded the figure of 2008 fourfold. It is shortly expected to zero the accumulated loss, in view of which we shall start paying dividends to shareholders.
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