Thursday, September 9 2010 16:24
Economic growth and observable stability – real stimuli for HSBC Bank Armenia
ArmInfo. Interview with HSBC Bank Armenia CEO Astrid Clifford
As a result of the first half of 2010 HSBC Bank Armenia has managed its position in the country's banking system. What helped you to do it and what are your strategic plans?
Yes, our pre-tax profit for the first half of 2010 was AMD 2.36 billion, which is a 22% increase on the same period in 2009 if we exclude the exceptional items last year. We still have the largest market share of bank deposits and we were recognized in Euromoney’s Awards for Excellence 2010 as the “Best Bank in Armenia”.
Several factors have contributed to this: the economic growth and market stability that we have seen this year has obviously helped. The Central Bank of Armenia has continued to provide all banks with a solid regulatory environment in which to operate. We have excellent customers who are real leaders in their respective fields and very astute businessmen. We have got fantastic staff, and I really mean that, they are experienced, intelligent, motivated and hard-working. And finally I think we've known what we want to achieve this year and we've been very active in working towards that.
Our plans are to continue to be very active in supporting Armenian businesses, particularly those customers who trade internationally as we have a real opportunity to add value here. As you know we recently launched our Trade Academy, in cooperation with the SME Development National Center, which offers free seminars on the benefits and financing of international trade on regular basis. In the past 7 months we have lent over $50 million to our commercial customers, from large corporate to small enterprises. We are about to launch corporate ATM cards so that our commercial customers can withdraw funds 24 x 7 without having to visit a branch. For individuals we are offering AMD and USD mortgages (under the National Mortgage Company schemes) and credit cards, and hope to be in a position to offer AMD personal loans shortly. Technology of course is important to us and we will continue to investing in our direct banking channels. We have lots of other innovative ideas for new products and services which we hope we can launch before the end of the year, but I shouldn't say too much about those at this stage!
Do you mean you are going to realize your long-term plans to create an insurance company?
I wouldn't rule that out as a possibility in the future, but for now we would just like to be able to include insurance in the general range of products that we offer to our customers. As you know, motor insurance will shortly become compulsory and I'm sure lots of our customers would find it more convenient to be able to arrange this through us when they are conducting their other banking transactions. The same logic applies to home insurance, travel insurance etc.
Will it be a must for your customers to arrange insurance through HSBC when they apply for loans?
No, we are not going to restrict customers in this way; they will be free to choose where they obtain their insurance. We just hope to make things more convenient for them by offering a range of attractive products, which we believe will meet their requirements, at competitive prices.
Mrs. Clifford, you have said that you are planning to continue your lending activities. As a bank financing mostly business, are you planning to enlarge your consumer credit portfolio?
Our commercial lending portfolio has grown by over 50% so far this year, which is a very significant increase in a short period of time, and we will continue to actively look for good opportunities here.
On the retail side, as I said we are already offering mortgages in both USD and AMD at very competitive prices - starting from 12% currently, and credit cards. We would like to offer AMD car and personal loans, but our main problem to date has been the lack of AMD liquidity in the market - most of our deposits are still kept in foreign currency. However, we have been actively looking for solutions to this and so we hope to be able to offer AMD consumer loans shortly.
How are you doing in the field of attracting resources from the market and international structures?
We are the largest bank in Armenia in terms of deposits (103 billion AMD, as of June 2010) and this is our main source of funding. There has been a small increase in the percentage of our AMD deposits portfolio, from about 17% to 22% of total deposits, presumably because our customers feel more confident about AMD stability. We have participated in the World Bank and GAF schemes for lending to SMEs and continue to look for ways to diversify our funding sources and for ways to co-operate with international organisations such as the EBRD and IFC. As you know, the HSBC Group is one of the largest banks in the world with over $1 trillion of customer deposits, so that is also another resource we can call on if required.
How will the interest rates behave, in your opinion, considering the CB's last decision to keep the rate of refinancing at 7.25%?
Most of our lending is in USD and so the CBA rate doesn't have a direct impact. Market dollar rates seem to have dropped 2-3% so far this year, mainly due to competitive pressures as banks were over liquid at the beginning of the year. We expect dollar lending rates to fall more slowly and maybe stabilise going forward. In terms of deposit rates, the new reserve requirements coming into force are designed to encourage banks to reduce dollar rates, and increase the differential between dollar and dram rates, so we may start to see that happen. The CBA increased the refinancing rate at the beginning of the year and then held it constant as inflationary pressures reduced, but AMD interest rates have remained fairly stable throughout.
According to official statistics, Armenia's GDP is growing this year. How will it behave in your opinion?
I believe the latest forecast from the IMF was for growth of about 4% in 2010, which seems to be in line with actual growth figures so far. I would say our customers are generally cautiously optimistic about the short-medium term.
Mrs. Clifford, what novelties can your customers expect from you? As far as I know, you are going to develop special products for Diaspora Armenians. At what stage is this project?
We already have a product, called "+374" for Diaspora Armenians working in Russia, which can be opened in either country. Customers can then make free-of-charge transfers from their accounts in Russia and Armenia, and can manage these 24/7 using internet or telephone banking. We are looking into other products and services that may benefit Diaspora Armenians, but the general needs of Armenians living in Argentina, for example, may be quite different from the needs of Armenians living in France. So quite a lot of research is required if we want to come up with something useful.
We have lots of other innovative ideas for products and services which are in progress at the moment, but I really shouldn't give any details until we are closer to fruition. Our main branch is undergoing renovation at the moment and we plan to start work in our Komitas branch shortly. Our Status service, which provides all kinds of benefits to customers, including a dedicated relationship manager, platinum cards, preferential tariffs etc, is proving to be very popular and so we may need to think about opening a new branch in Yerevan, just for Status customers, next year.
In conclusion, I would like to know how it is for the only female bank CEO to work in the banking system of Armenia.
Sometimes it is strange when we attend CBA or Union of Bank meetings, I usually go with one of my deputies, Irina Selanyan, so we are the only two women amongst all the other male bankers. But I'm glad that in Armenia it really makes no difference who leads a bank - whether it is a man or a woman - what matters are the results.
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