Wednesday, May 5 2010 12:38
Areximbank-Gazprombank Group going to pull ahead of corporate banking
ArmInfo’s interview Vigen Barseghyan, Deputy Director General of Areximbank – Gazprombank (GPB) Group
Areximbank-GPB Group shareholders approved the development strategy for 2012 in late 2009. In this context, the bank has to settle some new tasks to significantly improve its key figures and change the positions in the banking sector as well as to expand the spectrum of services, including in the corporate market. Vigen Barseghyan, Deputy Director General of Areximbank-GPB Group dwells upon the new strategy and plans of the bank.
Mr. Barseghyan, what necessitated the new strategy? What is new in it for the bank?
Development and approval of the new development strategy meets the goals of our shareholder in the Armenian financial market. Global financial and economic crisis-caused conditions make the bank to make some corrections to its activity to properly fight the challenges and achieve its goals. The management of the bank is already focusing on settlement of the tasks to improve the customer service quality in line with high standards of Gazprom and introduce risk-management policy and bring the management quality in line with ISO standards. The new strategy of the bank unlike the previous one sets the following targets: intensive growth of the bank till 2012, increase in the resources and in all financial indicators. Such an approach will allow the bank to become a backbone bank with a developed branch network and increase positions in the market almost by all products.
Areximbank-GPB Group is known as an active provider of personal loans. However, the new strategy of the bank is focused on big corporate customers. Don’t you think that there is no much space left for activity in the corporate market and competition in that segment is rather serious?
With Russian Gazprombank entering the Armenian market, we have faced a task to attract big corporate clients. In thos context, we are going to participate in big energy projects aimed at development of the country's Fuel and Energy Complex as well as in the EBRD energy efficiency project to be launched in the country soon.
Using the opportunities of Gazprombank as a financial- industrial group also extends the horizons of cooperation of Areximbank - Gazprombank Group with the companies representing strategic branches of industry. We are actively using the capabilities of the Russian Gazprombank in target financing of big projects in Armenia to attract big corporate clients. In addition, for further development of cooperation with the corporate sector, we are going to attract enterprises as part of international credit programs to finance SMEs.
I’d like to note that our bank is one of the most active participants in the Central Bank’s program of loan refinancing to small and medium-size enterprises. The bank is among top three banks in Armenia. As a new source of funding SME, we are currently negotiating EBRD and the World Bank. Cooperation with international structures is interesting to us not only for financing but also for introduction of new technologies and a system approach to borrowers and staff training.
At present big corporate clients diversify the banking sources financing that is connected with limitation of the credit risk per borrower. Therefore, banks have no opportunity to fully satisfy the client needs. As a result, a client has to deal with several banks. This means that every banks sets own service terms, which cannot optimize the costs of banking services. It is not a secret that the share of operating costs in total cost structure of an enterprise is the largest for any corporate client.
Crucial is that amid falling interest rates in the global markets, Armenian commercial banks continue lending to their corporate clients at the same high rates and enjoy high liquidity and capitalization. Therefore, big corporate clients satisfy their capital needs in the local market partially.
The strategy of our bank accurately presents the effective interest rate management policy for customers. This means that an agreement is made with customers to calculate all the incomes (not only interests) that the bank can receive from a customer. The latter must be informed how much the banking will cost him. Customer cost optimization is a very important factor for attracting new corporate customers in conditions of the financial crisis. In addition, we serve companies’ staff on preferential terms. As regards competition, it makes bank develop constantly, improving service quality and offering new services. A health competition is in favor of every one, and first of all, of customers.
What is the limit of the loan portfolio for big customers?
There are no limitations. We are going to provide up to $100 million to legal entities on own and raised funds shortly, which will at least double the loan portfolio.
What will be the bank’s policy in the segment of retail lending in line with the new strategy?
Focusing on corporate banking does not mean suspending consumer lending. We believe that a big bank must not deviate from any type of banking and the portfolio of a health bank must be diversified. A backbone bank must be universal, fully involved in economy. A bank serving for instance 50 big clients and rejecting a wide client base cannot be considered a backbone bank. Moreover, we are well aware that over the last 11 years private clients have formed rather significant client pool loyal to the bank. At present our bank serves over 57,000 customers, including 2,5 thousand legal entities and nearly 55,000 privates.
Our bank is known to have been among leaders in the auto loan market for long years. We are going to maintain our lead positions and to launch active mortgage lending, especially that the bank’s standards allow having rather healthy portfolio and avoid dishonest clients. Besides involved in the mortgage program of KfW bank and the National Mortgage Program. We have recently joined the government program of Affordable Housing to Young Families and intend to exert maximum efforts and use our experience to implement the program. Maintaining our active involvement in auto and mortgage loan markets, we will introduce innovative salary projects and improve the existing services, including overdraft provision. We will offer our customers a number of new interesting services shortly.
Do you study any new services for enterprise funding?
Under the new strategy, we will support technological development of enterprises. In this context, we are going to launch leasing operations in the current year. We are currently studying the given segment.
It is no secret that the Armenian leasing market is not big, but there are still many big projects that we study as potential projects for our bank. In the leasing market our bank will use the experience of Gazprombank-Leasing Company, an affiliated company of our shareholder, taking into account the special factors of the local market.
Do you plan to open new branches in Armenia in the current year?
At present our bank serves 15 branches, including 9 in regions and 6 in Yerevan. The bank has already formed a branch network optimal for it. Now, it is necessary to upgrade the efficiency of the existing branches. It is very important for we are currently at the stage of intensive growth, enlargement and strengthening of positions in the market. Over the coming three years Areximbank-GPB Group will obtain a new quality, when branches will be opened simultaneously with development of all the products and expansion of the client base.
What financial indicator do you plan for late 2010 and for the upcoming two years to improve efficiency and to meet the development strategy?
Areximbank - Gazprombank Group is going to maintain its positions in the corporate banking market, attract new big corporate clients and ensure competitive ability of the bank in serving corporate customers. Under the new development strategy, we intend to increase the funds raised from clients by 50% till late 2010, and 2,5 times till late 2012. Moreover, we arte going to increase the funds raised from legal entities by 70% till late 2010, and almost threefold - till late 2012. In addition, we are going to increase general assets pf the Bank almost two times till the ned of 2010 and 3 times till late 2012. The Bank's credit portfolio will grow more than twofold in 2010, and almost fourfold - till late 2012. Increase of earning assets will allow the bank to get about $2.0 mln profits by late 2010, and to $7.5 mln - by late 2012, which implies ROA and ROE not lower than the average banking level.
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