Thursday, May 6 2010 17:18
Byblos Bank Armenia moves abreast with demand for banking services
ArmInfo. Interview of Hayk Stepanyan, Head of Finance and Administration Department at Byblos Bank Armenia, with ArmInfo news agency
How would you characterize the first quarter of 2010 for the bank?
In general, the year 2010 has started quite successfully as compared with the last quarter of 2009, having demonstrated growth both in retail and corporate business due to certain activation of Armenian economy. Over Q1 2010 our bank managed to attract several big corporate clients. As a result, over Q1 the bank assets grew almost by 30%, having amounted to 22 bln AMD, and the credit portfolio grew by 25% to 15 bln AMD. We are going to continue this course throughout the year and hereby ensure twofold growth of credit portfolio, as well as to gain profit and increase the number of our branches. In addition to our own funds, international structures’ resources will also be directed to achievement of our goals. We are currently negotiating with international structures and expect concluding new loan agreements over the first half year of 2010. Under each programme, we expect attracting 10 mln USD to finance mostly small and medium business.
Byblos Bank Armenia was the first in Armenia to decide using a synthetic loan from the European Bank for Reconstruction and Development (EBRD). Have you already received the funds?
In March 2010 we signed 10 mln USD loan agreement with the EBRD. For the first time in the EBRD financial history in Armenia, the agreement includes a component of the local national currency. The EBRD credit programme aimed at crediting private enterprises includes a synthetic loan in AMD equivalent to 5 mln USD, which will be invested in local business and financing of the working capital.
Another 5 mln USD will be directed to co-financing of bigger loans of our bank. This is very important experience for Armenia, which may be applied in the future as well, particularly, when crediting small and medium enterprises. We expect to receive the synthetic loan in May. The synthetic loan to be provided in one tranche in the national currency will help us reduce the currency risks, increase the periods of crediting in AMD and expand the portfolio of AMD loans.
Hedging of currency risks by the EBRD may considerably raise the value of money. How much efficiently may they be placed in the Armenian market? And what level are the bank interest rates at present?
It is no secret that at present AMD resources in the market are much more expensive than foreign exchange resources that the banking sector receives from international structures and assumes all the risks. In case of the synthetic loan, the currency risks are laid on a special hedge fund selected by the EBRD, however, one cannot say that the value of this money to be received by the borrowers in AMD may considerably differ from the average market value. Certainly, there will be some difference, but this loan is profitable for borrowers by many parameters, especially, by the redemption period (the loan is provided for 3.5 years). Today Armenia has the segment of enterprises, which are ready to use these funds. At present our bank has average market rates; in particular, the rates range from 14% to 18% depending on the loan type. AMD deposits are placed at 8% per annum, and foreign exchange deposits – at 7% per annum.
The bank was going to activate sources of non-interest incomes. What steps are currently being taken in this direction?
The bank clientele is growing day by day due to our card services ensuring non-interest incomes. I’d like to mention that at present we are actively working with foreign individuals from the countries where our shareholder Byblos Bank SAL is represented. These are both Arab and European countries. We are working with these clients mostly to attract deposits to Armenia. As of 1 April 2010, the portfolio of deposits at Byblos Bank Armenia amounted to 6.6 bln AMD (5.2 bln AMD of them being time deposits), this index having grown by 150% as compared with the same period of 2009. However, we will also shortly launch products worked out for our foreign clients.
The International Finance Corporation (IFC) has entered the capital of Byblos Bank SAL. How will this affect Byblos Bank Armenia in terms of its participation in IFC programmes?
The IFC’s entry into the capital of Byblos Bank SAL demonstrates large international structures’ interest in our shareholder. It is early to speak of the influence of this fact on the activity of Byblos Bank Armenia, but we do not rule out direct cooperation with the IFC in the future.
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