воскресенье, 8 ноября 2015 г.
-
Dmitry Leus,
what is your assessment of the current state of the Russian economy? Is
the banking sector feeling the stagnation announced by certain analysts?
-
Dmitry Leus:
To give assessments and predictions is an ungrateful task.
The Russian and worldwide economy are such that no one can hope to grasp the full picture and make plausible forecasts.
Today, even senior analysts equipped
with the most refined methods of forecasting struggle at making straightforward
statements. I will therefore not engage in forecasts and
complex theories. However, I am prepared to share some
simple thoughts on the current market situation.
In my view, at
the present moment, both a crisis and a sudden breakdown are equally unlikely. I rather expect a situation of slow stagnation requiring some time for adaptation. The banking sector, the regulator, and
private enterprises will need to renew their focus on their
core activities. In such circumstances, it is necessary for market
participants to adjust their behavior in order to work effectively and survive.
We must keep in mind that the
popularity of any bank’s core products is in many ways a function of the
general market situation. How to explain otherwise the fact that in the recent
years almost all financial institutions rushed into consumer credits? Banks are
only prepared to take risks if they are rewarded by profits. If, however, costs
of funds are high, banks need to play by different rules in order to develop in
a sustainable way.
Thus,
as long as costs of funds were low, actively increased its mortgage loan
portfolio. At the same time, we heavily invested into our IT infrastructure,
created a professional management team, and opened up new branches in strategic
locations. However, we were obliged to adjust our expansion plans in the
aftermath of the 2008 financial crisis. For a short while, we had recourse to
various refinancing options, but quickly realized that our profit margin in
this particular segment was too small. Like many other financial market
players, we finally had to adapt our strategy to the new environment. Hence,
our attention switched to new lending products with smaller margins but higher
volumes, and to repayment schedules ranging between 2 and 3 years.
Currently, we plan to slowly return
to mortgage lending, albeit on a much smaller scale than before.
- Could we say that Bank, like most
of its competitors, is currently mainly active in the segment of consumer
loans?
-
Dmitry Leus:
This is correct, but we are not inactive elsewhere, and plan to
expand our presence in other sectors too. Consumer loans constitute a
significant part of our current portfolio, but we also plan to address the
capital needs of small and mid-size businesses (SMB) and to provide corporate
loans.
As
you may know, we have recently signed our first contract with SME Bank (The
Russian Bank for Small and Medium Enterprises Support) – a subsidiary of
Vnesheconombank (VEB). Funds will be used for corporate lending, mainly through
our regional offices. This will undoubtedly have a positive impact on the
development of Russia’s regional economy. Bank has the intention of continuing
its co-operation with SME Bank and signing additional contracts over RUB 3bn.
Overall,
we have been providing loans to SME Bank for quite some time. For example, in
the past we offered a product called “The Millionaire”, whereby individual
entrepreneurs were eligible to receive credits amounting to RUB 1 million if they
met certain criteria. Accordingly, we have accumulated experience in valuing
small businesses and have even developed our own approach when lending to
entrepreneurs. This is a practice we can always return to, even when times are
difficult.
It
is my deep conviction that banks need to be diversified, even if some of my
Russian colleagues may disagree. In today’s market environment, only effective
diversification is able to successfully mitigate certain regulatory risks.
However, as long as there is a popular consensus that higher than normal profit
margins can only be reached at the price of higher risks, even a profitable
bank may face the risk of a regulatory crackdown if it concentrates its assets
in high-margin product lines.
