Come the Summer

What has lead to the success of VTB in Azerbaijan?

The key to our success is in providing the best services in the present market conditions. The development of services, procedures, and technologies for banking are in their early stages in this country. Certainly, to attract new customers, offering lower interest rates is an effective way to increase business volume. The low economic efficiency of banks is disproportionate to the level of risks in operations and the level of expenses. This, in turn, leads to bigger problems rather than positive outcomes—even in the medium term. Currently, all progressive banks realize that and direct their efforts toward the improvement of client services and the optimization of procedures. Our bank has a unique opportunity to properly build its decisions and choose approaches based on the enormous experience of VTB Group’s banks in such countries as Russia, Ukraine, Belarus, Kazakhstan, and Georgia. By analyzing the best practices and knowledge of the group, we know exactly what effects our decisions and approaches have on the organization of the banking business. We understand how to build an effective IT system and a reliable risk management system. Despite the fact that we are not a large bank in Azerbaijan, we have been making very ambitious plans and working hard to achieve them. For the past 10 months the bank has increased its monthly volume of credit operations by 8.5 fold, and as a result we have gone up eight places in the bank rating list. For us, 2012 is the year of increased activity in the field of auto loans and small business. At the moment, we are actively working with well-known brand names in Azerbaijan such as Kia, Chevrolet, and Hyundai. We are steadily increasing turnover by providing credit to small business, ensuring the growth of a credit portfolio in this segment at a much higher speed than the market in general. Another priority area of our activity, which we intend to launch on a mass scale at the beginning of 2013, is a type of retail cash loan, and especially POS-credit. We are planning to open five new branches and more than 30 remote points of sales in Baku by the end of 2013. The corporate business in Azerbaijan has its own specialties. Many large business groups or holdings have a bank of their own, which generally serves the interests of the company. It is clear that to enter into such a market is a little difficult. However, we consider that VTB can become a serious player in this sphere as well. The organizational and technical capacities of VTB Group and, certainly, resource capacity, allow us to attract investment under very favorable conditions, and this gives us confidence. Despite the fact that, at the moment, VTB has a small amount of cumulative capital in Azerbaijan and can’t directly provide credit to the representatives of large Azerbaijani businesses, VTB Group actively carries on negotiations and credits with such clients from its parent bank, using VTB Azerbaijan as the reliable partner and the agent for these deals. This additional part of the business is also actively developing with the Moscow office of VTB as well as VTB Capital in London.

How would you explain your current growth trend?

We have developed our team and implemented new procedures and approaches. Such huge success can’t depend on just one person, however. Many new people from the local market, from other countries, and from our Russian retail bank VTB 24 were involved. It allowed us to establish a motivated team that could roll up their sleeves to work and achieve the results demanded.

How would you characterize the present atmosphere for banks in Azerbaijan?

The banking sector in Azerbaijan has exited the crisis. The crisis did not hit Azerbaijan as strongly as it did other countries, but a delay in the development of the banking sector afterward was inevitable. The crisis forced everyone to look critically at approaches and rules, as well as analyze risks. Some of the banks haven’t made appropriate conclusions in the field of risk management, and may step on the same rake once again. Others, after the stabilization of commodity prices, started to again pay less attention to gaps in liquidity. At the same time, the majority of banks learned to count money and to estimate the profitability of operations, having essentially intensified highly remunerative operations in the retail business. To compare with the seasons, I would characterize the current period for banks in Azerbaijan as a spring after a winter of crisis. I expect a hot summer ahead.

What benefits does the partnership with ATA Holding bring?

ATA Holding is the second-largest private holding in the country, meaning it is a serious and powerful partner. This partnership has helped us to be better known and have more weight in the Azerbaijani market at the initial stage of the project. First of all, if we had a question about the current market, or its changes, we could always receive qualified consultation from our partners. Secondly, we always receive the necessary support and help from our respected partner, which has huge contacts in the country’s business sector. Along with this, it is necessary to emphasize that our relations were very correct, and we always felt great support from ATA Holding during the development of the strategic plans of our affiliated bank, VTB Group, according to group standards.

What, in your opinion, are the most significant changes occurring from an investment perspective?

The country is in an extremely stable condition. The financial system, reserves, budgets, economic development, and national currency show enviable stability in comparison with the other countries of the former Soviet Union. There are enormous natural resources in the country. The funds earned by the country through the exploitation of oil have boosted economic development. Azerbaijan has become not only an attractive country for foreign investment, but has started to invest in diversifying its portfolio. It seems to me that this tendency of investment attractiveness will continue in the coming years.

What is your forecast for economic development in 2013?

It will be a very stable year. The funds earned mainly from the oil sector will be further invested in infrastructure projects and production. Further growth of the state oil operator SOCAR and the launch of new projects will contribute to growth. There are also positive forecasts for stability and the stabilization of the national currency. The strategic goals of VTB Azerbaijan in the upcoming three years are to become one of the top-10 banks in the country and achieve a 15% capital return rate. We believe that our business will grow 100 times bigger than it is now. According to our plans, the aim for 2013 is to ensure the maximum growth of assets and volume of operations. We are aiming for assets of AZN205 million, 325 personnel, seven branches, and 42 points of sale.

© The Business Year – December 2012