NIKOIL ICB-CUSTOMER-ORIENTED ENTITY
Caspian Energy (CE): Mr. Hamaza, could you provide some detail on your bank? When was it established? How big is its 'customer ledger' and who are the biggest clients?
Vasiliy Hamaza, Chairman of the Board, Nikoil ICB: Our bank was officially introduced under NIKoil brand in Azerbaijan's market on October 19, 2002. NIKoil Bank is operating in the market as a universal bank. Our aim is to cover both retail and enterprise businesses. To achieve it the bank utilizes various technologies both devised in Azerbaijan and acquired from Uralsib Financial Corporation and from overseas partners alike.
Today we are offering our customers a broad range of services, from ordinary settlement account to complicated financial tools ‘finished' specifically for individual customer. As a result of all aforesaid we achieved to diversify our customers base and we are running towards business optimization. Thus, our customer base varies from small self-employed person to major oil company.
CE: What did ICB's gain from transforming the legal entity into a joint-stock company?
Vasiliy Hamaza: Transformation of a commercial bank into a joint-stock company is nothing else but the next stage of development in banking system of Azerbaijan. Our transformation into a joint-stock company made the bank's capital even more transparent and enabled us to quote our shares at stock exchange of Azerbaijan. Moreover, this also resulted in quality changes in bank's supervisory and management structure and brought us more new clients.
CE: Is the bank participating in mortgage crediting in current conditions of mortgage practices?
Vasiliy Hamaza: Yes, the bank is taking part in the mortgage program. This program is quite interesting for us. I would like to mention the current terms of mortgage being very attractie to customers. Proceeding from the bank's expertise, one may say the customer interest in mortgage is quite high. The mortgage credit duration increased enough to date, resulting in decrease of monthly payments and enhanced affordability of credit itself. As a result all, including consumers and builders, are benefiting from mortgage.
CE: What are the bank's primary figures compared to 2005? Could you state the bank's growth from the date of launch?
Vasiliy Hamaza: The year 2006 was a remarkable one for our bank. In 2005 our entity started active operations in financial market. The bank identified strategic objectives, ways of development, as well as ‘common points' with overall course of economic policy of Azerbaijan's government. Through the last year the Bank managed to expand its presence in the market and improve virtually all financial statements two-fold, in some items even three-fold. Furthermore, Nikoil increased its credit portfolio in almost all fields of economy, in particular those calling for considerable capital investments. Particularly, ICB launched active crediting in agriculture sector. However, one should say our colleagues are not very willing to fund projects in this field of economy as the implementation requires some kind of cautious approach and free (in a long range) resources, the so-called ‘long-term money'. I should stress that despite its dynamic crediting activities Nikoil adheres to conservative crediting policy in the market. To mitigate risks we diversified our credit portfolio in different sectors of economy and amount of granted credits. Today average amount of credit our bank grants is $30,000 to $35,000. Thus, we are strengthening our credit portfolio and mitigate risks it is generally exposed to.
The last year may be considered successful for us against the background of registered twofold growth of deposit and credit portfolio. Owing to its competent policy, NIKOIL managed to grow its credit portfolio to 52.34 million manat. By its credit portfolio last year bank passed the 50mln threshold, which was quite a significant event for us. We also accomplished this objective without losing the portfolio quality. We are very happy with the fact that the bank gained Azerbaijani people trust in a relatively short time. NIKOIL is committed to transparency and fairness in its relations with clients, which is directly reflected in annual growth of people's deposits in our bank. As of the late 2006 the bank's total deposit portfolio amounted to 35.2 million manat, of which 27 million are fixed deposits.
CE: Is the bank planning to issue its own equities and what are the expected placements? How big is the paid-off capital of the Bank?
Vasiliy Hamaza: Today the paid-off capital of the bank amounts to 8,956,256 manat. The bank deployed 4,478,128 shares at Baku Stock Exchange.
The paid-off capital and cumulative capital of the bank satisfies the requirements of the National Bank of Azerbaijan, and we are not planning to issue new shares in a short run.
In 2007 the bank intends to issue corporate bonds with IPO at Baku Stock Exchange. Thus, we are planning to involve new investors and broaden our cooperation with Baku Stock Exchange.
CE: Which local and foreign banks you maintain correspondent relation with?
Vasiliy Hamaza: Our bank is maintaining correspondent relations with virtually all banks represented in Azerbaijani market. These relations help us make efficient settlements with local banks and quite efficiently operate with short-range interbank credits. With this purpose we set interbank operation limits for each of our correspondents.
Moreover, our bank established correspondent relations with many first-class banks like Raiffeisen, Commerzbank and some Russian banks.
CE: What could you say of the plastic card market? Are there any problems in this activity? Is the Bank implementing any campaigns in this respect?
Vasiliy Hamaza: Undoubtedly, we think of plastic cards as a promising banking product. Last one or two years local banks regarded this product as a popular, but not an individual matter. This can be considered a transition to a new qualitative level. A plastic card is a multiuse payment and credit tool of long service life, which can hardly be counterfeited and, in addition, it contains cardholder's ID information that allows checking his credibility. Plastic card business is producing today more than 1.3 billion of cards. The annual worldwide turnover exceeds $3 trillion. Payment cards are received at more than 20 million of sale and service points. Nearly half a million of servicing bank subdivisions perform operations with payment cards and ATMs outnumbered 700,000.
Taking a bank payment card as a payment tool, one should state its basic advantages and merits. For client himself it is convenience in use, mitigation of money loss risk, discounts at provision of services at sale and service points, less costs of financial operations, automatic exchange, financial attractiveness such as adding interests, remote account management and so on and so forth. For enterprises it is increase of sales and attraction of new customers, reduced expenses on encashment, and enhanced safety of work with owners' signatures, prestige and some other advantages. For banks this means broadened range of services, new customers, reduced operating costs due to VR technology, collected additional commissions and, as a consequence, increased revenues and enhanced competitiveness. Unfortunately, yet for Azerbaijani consumer plastic card is not a complete payment tool but something he uses to take money from an ATM. I can say the very future of retail banking is in plastic. Regardless of some problems, plastic card market in Azerbaijan is progressing quite rapidly.
CE: What are your bank's plans for the outlook? Are you suggesting any innovations in the bank management system?
Vasiliy Hamaza: We position ourselves as a customer-oriented bank. Proceeding from this, our main advantages and priorities in the market will be speed and quality of customers servicing. To accomplish these goals NIKOIL is gradually implementing new technology in sale and service and paying big attention to growth of professional skills and competence of its personnel. So, from the last year we launched Uralsib FC's expertise and technology in our bank, however it is not easy to fully integrate all used in the Corporation as the NIKOIL's operation is based on laws of Azerbaijan and norms and regulations of the National Bank of Azerbaijan (NBA). In this respect we are tailoring these technologies to meet the requirements of Azerbaijani market with an account for effecting regulations and mentality of customer base.
Furthermore, we intend to extend our branch network in the regions of the country. Bank's branches will open up mainly in central and densely populated towns and regions of Azerbaijan. Alongside in order to support business and provide services in developing regions we will be opening subdivisions to get tied-up to adjoining "regional" branch offices. All branch offices will be offering customers the same range of banking services as provided in the head office. We are strategically oriented to spreading our business from head office to branches. The head office mission is in supervision of business-processes in sale points, development of tools, arrangement of efficient promotion, attraction of resources in foreign markets, accounting, training of personnel, selection and employment of staff, starting of new sales points and so on. The bank's business unit shall be engaged in business development and we will be doing our best to relieve them of all irrelevant load. This work determines our future. Taking the opportunity, I am inviting managers with experience in banking management, knowledge and desire to work fairly to pursue the interview for vacancies in branches or in the head office. We are very interested in competent professionals able to launch and run efficient operations in Lankaran, Barda, Yevlakh, Masallah, Samkir, Guba and other growing economic centers of Azerbaijan.