Saturday, August 11 2012 14:43
Converse Bank is going to expand provision of agricultural loans despite "bare" security
ArmInfo. Converse Bank is going to gradually increase the portfolio of agricultural loans, even taking into account the diversification of risks, Chairman of Board of Converse Bank Tigran Davtyan told ArmInfo's correspondent.
According to him, at the moment the Bank is provided agricultural loans both under international projects and at its own expense. "The only difference is that the interest rate of our resources is somewhat higher, as our borrowing funds are much expensive. I'd say that in terms of non- performing loans the agrarian sector is in a good state and the share of loan default is small", Davtyan said.
He said that when providing the loan, the Bank receives only formal "bare" collateral; therefore it is very hard and unprofitable to work in the agricultural sphere. "The demand for agricultural loans in the country is not big, the number of credit-worthy customers is not big either", he said. "However, in order to successfully work with the agrarian sector, the Bank needs to work out its own approach and its own methods. For instance, there are specialists in the regional centers, who display a professional approach to the assessment of agrarian risks, perfectly mastering both the local situation and the local information. Let me explain. First of all, these are the agrarian specialists, whose work radically differs from the work of an ordinary credit officer. There one should know the whole specificity of the rural life, as well as the specificity of seasonality and yield productivity, etc.", the banker said.
He pointed out that at present the customers take loans mostly for development and beautification of the home grounds, as well as for construction of greenhouse facilities, and there is also a small demand for loans for acquisition of pets. When replying to ArmInfo's remark that cattle breeding should be an important for the consumers of credit resources given the profit from the invested capital, Davtyan said the banks lack a large-scale approach. "The creation of large cattle farms is not an easy job and here, I think, the state protective mechanisms are needed", he said and added that this concerns not only cattle breeding. "Agribusiness should be a priority for our country", he said. "The population of the planet is growing; therefore, the market of agricultural products is constantly expanding. All this should be taken into account when introducing the tools regulating and stimulating growth", Davtyan said.
He thinks that there is no one in Armenia to regulate the market through both the availability of state reserves and price caps. "We have repeatedly been speaking about the necessity to launch the mechanism of donation for the production of the products traditionally grown in a certain territory. For instance, the Ararat Valley is good for horticultural crops. And the state was going to subsidize them there. But if you are going to sow wheat there, the state will provide no support here, and you will have to assume all risks and even pay a value-added tax", Davtyan said.
According to the Ranking of Armenian Banks by the Agency of Rating Marketing Information, as of 1 July 2012 the lending of Converse Bank totaled 60.4 bln AMD (12.5% growth for Q2 2012, 11.7% growth for I half of 2012). In the credit portfolio, 2.3% and 1.4 bln AMD fall on agricultural products (12.1% decline over I half of 2012). The total capital of the Bank grew by 4.1% over I half of 2012, and by 3.4% over Q2 2012, having totaled 17.2 bln AMD by late June. The assets of the Bank amounted to 95.4 bln AMD (7.7% growth over Q2 2012 and 30.7% decline over I half of 2012).
To note, Converse Bank CJSC is a member of Eurnekian Group. The holder of 95% of shares of Converse Bank is Advanced Global Investments LLC (headed by Eduardo Eurnekian), and the other 5% belong to the Mother See of Holy Etchmiadzin.
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