Baku, Azerbaijan, Jan.15
by Ilaha Khalilova - Trend:
Bank VTB (Azerbaijan) plans to actively participate in syndicates, together with local shareholder Ata Holding, to give loans to large customers the bank's chairman of board, Alexander Eremin told Trend on Monday.
"At present, VTB Group's Moscow and London offices, have a greater risk acceptance limit for a borrower than VTB Bank in Azerbaijan, and are cooperating with large clients in Azerbaijan," Eremin said. "VTB Bank in Azerbaijan plans to give loans to these customers from its own balance sheet in terms of further capital increase."
"This will significantly strengthen VTB's presence in the Azerbaijani market," he said.
VTB Bank in Azerbaijan could deliver a maximum loan of up to three million manat with capital of 15 million manat in 2012. The bank customers will be able to have access to the loans of up to nine million manat now with capital exceeding 50 million manat. The loan portfolio exceeded 192 million manat by late 2013. For comparison, it hit about 40 million manat as of 2011.
About 33 percent of the loan portfolio goes to corporate business.
"Last year we got the first net profit worth 2.196 million manat," he said. "2014 must be a profitable year according to the plans. This year, the bank's profit is expected to hit 8-10 million manat. This depends on several major transactions expected in the nearest future. This may be an extraordinary bonus for us."
The bank's profit will be directed to a further increase of capital.
Perhaps, a subordinated loan will not be required by late 2014 if the shareholders decide to keep the profit in the bank.
The bank can use the funds raised in the local market to expand the lending transactions. VTB Group can help with liquidity in case of any difficulties.
"We draw everything possible on the rates, allowing keeping the margin at four-five percent on the local market," he said. "This means that we are ready to fully draw physical entities' deposits for retail business lending, except for car loans, and deposits of insurance companies for lending to small and medium business and car loans. We can also attract funding from deposits of legal entities, which is cheaper as opposed to physical entities' deposits."
"The bank is interested in the domestic interbank market to place the excess liquidity," he said. "Moreover, the funds are raised from Russian banks."
"Today, we can draw the cheapest resources from the parent company, which has a high liquidity," he said. "This is profitable for VTB and us as it is impossible to find cheaper money."
"Today the most funding of the Azerbaijani subsidiary is connected with VTB Group, but the plans are that we will keep 20-25 percent for funding from third party's sources," he said. "If the loans drop in price in foreign markets, then we will choose them."
"At present, VTB Bank in Azerbaijan draws resources from its parent company at a more comfortable rate than local banks from international financial organizations," he added.
He considers the current market situation very acceptable. This allows keeping the margin at the level of five percent.
Today, the portfolio of external borrowing of VTB Bank in Azerbaijan from the parent bank is 102 million manat.
Shareholders of VTB Bank in Azerbaijan are VTB Bank (51 percent) and AtaHolding (49 percent). The VTB Bank in Azerbaijan was established on the basis of AF Bank, acquired by VTB Group (Russia) in 2008.
VTB Group ranks second in all major indices in the Russian banking market. VTB Bank has the highest rating of Moody `s Investors Service, Standard & Poor` s and Fitch international rating agencies for Russian banks.
The official exchange rate is 0.7844 AZN/USD on Jan. 15.
Translated by NH
Edited by CN