BTA Bank Executive Director Nur Bakbergenov’s Exclusive Interview with ARKA News Agency

ARKA – How would you assess BTA Bank’s performance in Armenia in 2011?

Bakbergenov – It was a good year for us. The bank has built up its loan portfolio by 13.2% over the year (by 11.8% in the fourth quarter alone). This makes up 52% of assets. As a result, the bank’s assets grew 14% (about 10% in the 4th Q alone) to AMD 9.4 billion or $24.4 million.

ARKA – How much things in Kazakhstan’s BTA Bank will impact BTA Bank’s activity in Armenia?

Bakbergenov – Restructuring of the bank is a necessary step to be taken to strengthen the bank’s financial standing and restore its positions at the market. Government support is a key factor in terms of long-term prospects. In any case, BTA Bank Armenia continues its stable work and keeps providing the full range of its services to clients.

ARKA – What are your objectives in 2012? Which businesses does the bank singls out as most profitable?

Bakbergenov – We are concentrating our efforts on small and medium entrepreneurship and on services for individuals. We consider SME market as a whole, including individual entrepreneurs and startup companies with a three-month record. Loans extended to such entities must be secured by immovable property. The large number of participants makes the SME segments sustainable.

When downturn forces some entities to withdraw from the market, the remaining players get stronger. The major difficulty in lending money to SME is underreporting. Nevertheless, our bank, in searching information about clients, finds ways for extending loans even in complicated cases using practices of other companies in this area and other markets.

We are committed to the policy of openness in our relations with clients – every client can communicate with any manager, and problems will be solved in the real time regime. The bank, on its side, requires openness from its clients.

ARKA – What competitive advantages does the bank intend to use for developing its activity in the country?

Bakbergenov – Our key advantage is our intellectual resources and free access to BTA Group banks’ technologies. We are ready to consider new ideas and business plans as well as to develop businesses of our clients and their partners in the Commonwealth of Independent States and to accompany deals in the entire CIS territory.

We are growing along with our clients’ businesses. The growing requirements of clients to banking services, the strengthening competition and adaptation to the changing environment prompt the necessity to shape intellectual capacity. The existence of intellectual capacity determines banks’ competitive advantages and enables them to develop effective market strategies.

ARKA – BTA Bank in Armenia spoke in 2011 about its intention to enlarge its loan portfolio in the next three years to $50 million. How much the bank has accomplished in putting this plan into reality?

Bakbergenov – We hope we’ll completely carry out these plans ahead of schedule. In 2011, we enlarged our lending to transport and communications, trade, public catering and services sectors.

Thanks to that, the bank built up its loan portfolio by 13.2% in 2011 to AMD 4.8 billion.

ARKA – To which segments the bank gives priority in lending money? What is the share of delinquent borrowers in the bank’s portfolio?

Bakbergenov – Delinquent loans imply on the one hand facilitation of the process including out-of-court sale of collaterals, openness and information accessibility. On the other hand a borrower has to be more accurate in assessing his or her capabilities. Today delinquent loans account for 3.5 percent in our overall loan portfolio. We keep the situation under control.

ARKA – What is your bank’s client attraction strategy? What are the shares of individuals and legal entities in the bank’s customer base?

Bakbergenov – We apply individual approach to our clients. This gives us competitive advantage and strengthens our long-term partnership. To cater for our clients’ all needs we display special approach to each of them. Our employees do whatever necessary to enhance their confidence in the bank. The number of clients doubled recently – 35% of the bank’s clients are legal entities and 65% are individuals and individual entrepreneurs.

ARKA – What can you say about interest rates dynamics in Armenia in the nearest future?

Bakbergenov – I don’t think something can significantly change in the nearest future. Interest rates on loans may go down. We also project increase in interest rates in dram deposits.

ARKA – Threat of a double-dip crisis is looming large today. Does your risk management system sniff formal symptoms of a new crisis? If yes, what are these symptoms?

Bakbergenov – Humans always hope for the best. It is this hope that recovers the economy very fast – fresh financial resources stream into vacated niches. Crises constitute an inevitable part of any process. Crises are not in the economy – they are in heads. Whatever model we use in risk management, it is important to target risk management for the future. Risk management should also be in tune with the company’s strategy. -0-