Foot on the Ladder

What were the core reasons that led Expressbank bank to launch a rebranding exercise, and how has the institution positioned itself in the market since then?

Azernegliyyatbank, the old name of the bank, was established in 1989 as a commercial bank by various institutions belonging to the Ministry of Transport. Since then the ownership structure of the bank has changed significantly, resulting in the full privatization of the bank by 2005 and its transformation into an open joint-stock company. Azernegliyyatbank was one of the leading local banks in the early 1990s, providing, at that time, a wide range of banking services and products to its clients. The bank, however, lost its market share over that decade and rolled down to the bottom position in the ranking of local banks. The major reasons for this were the strengthening of market competition, stricter control measures, and increased minimum capital requirements set by the Central Bank of Azerbaijan (CBAR). Following several years of regress, the majority shareholders decided to sell their stakes out at the beginning of 2008. The transaction was completed in October 2008. During 2009 the bank underwent considerable reforms, including a change of organizational structure and composition of the supervisory and management board. The new management is currently concentrated on new medium-term strategic planning, HR issues, the development of new banking products, including plastic cards, swift money transfers, and so on, improving internal procedures, and upgrading IT systems & technological development. At the beginning of 2009, even in accordance with local standards, we were a tiny bank with only 50 employees, four operating branches, and nearly AZN14 million in a credit portfolio. Since then the bank has increased the number of employees to 220, and launched 11 branches all over Azerbaijan. At the same time, from scratch, we formed plastic card practices, and 50 ATMs have also been installed and more than 30,000 cards have been issued.

The bank finished 2010 increasing its assets and liabilities, as well as its capital by 4.7%. How was 2011 for the institution?

It was a very positive year for us as we succeeded to not only improve our financial position, but implement the major strategic tasks that were on the agenda. As to financial indicators, the bank has boosted its credit portfolio by AZN35 million, reaching AZN81 million as of end-2011. Net profit for the year exceeded AZN11 million, up from AZN6.3 million in 2010. With an additional capital injection of AZN10 million in 2011, Expressbank brought the amount of paid-capital to AZN66 million, while total equity exceeded AZN77 million. With this the bank has put its name on the list of the best capitalized banks in Azerbaijan.

What is Expressbank targeting in terms of loans for its clients for 2012?

In 2008 we started as a corporate bank serving several large state and private entities. This certainly provided us with start-up momentum. The bank can still be considered as a corporate one, although the management is very much focused on the diversification of its customer base in general, and on increasing its retail clientele in particular. According to our medium-term business strategy, we aim for 50% retail clients and 50% corporate clients. The main targets for 2012 are to continue regional expansion, and see our credit portfolio increase by 30%, share capital reach AZN90 million, and net profits exceed AZN15 million.

How has Expressbank elaborated its risk management policies, and how have they evolved over the years?

CBAR is doing a good job in terms of pushing the banks toward strengthening their risk management practices. Nevertheless, there are a lot of things yet to be done in this area. One of the main challenges is that historically the banks in Azerbaijan were focused on credit risks only. So, with operations expanding quickly in all directions, it’s one of our priorities to improve all related risk management procedures and ensure those are practically operative. In order to add momentum to the process, we decided to additionally secure a controlling function through the application of cross-checking actions, whereby risks are simultaneously cross-monitored by several respective sub-divisions of the bank. So far that has brought us very positive results.

Since Expressbank recently received the MChip cards and ATM MChip certification from MasterCard, how are you looking to increase the penetration and usage of credit cards among your customers?

We started with Visa two years ago, and now we have done so with MasterCard. It is a quite hard segment in the sector, but we are seeing constant development, something which is very positive. Expressbank sees major potential in this segment, but one that is always linked to the retail side of our operations. The development of both retail banking and plastic cards will go hand in hand in the future. During 2012 our institution will develop important plans in this regard, such as the creation of our own processing center.

© The Business Year – January 2012