The FINANCIAL -- VTB Bank experienced significant growth in 2011 as its total assets
increased by 27 percent and reached GEL 429 million . The Bank has grown
in both corporate and retail segments.
“The credit portfolio increased by 31 percent and amounted to GEL 304 million ” said Archil Kontselidze, General Director of VTB Bank. “Personal loans increased by 47 percent, including mortgage loans by 241 percent. Small business loans grew by 37 percent, and agribusiness – by 111 percent, while corporate business loans grew by 26 percent.”
The operating profit of VTB has grown by 53 percent and exceeded GEL 19 million. The net profit of the Bank made GEL 10.2 million. ROA amounted to 2.7 percent and ROE – 15.6 percent in 2010.
“A change in strategy had a very positive effect on the Bank’s development,” explained Kontselidze. “Whereas our main focus was on corporate development before, now we are actively expanding in retail banking and small and medium businesses too. We started expanding the network in this areas and added several important products including mortgages, auto loans, and small and medium business loans. All of these resulted in significant financial growth. The second reason for such growth was bringing in a large amount of foreign finances at low interest rates. Security is another factor determining our fast growth. International ratings agency Fitch ratings has given us a BB mark, which is the highest rating in Georgia. Quite a large amount of money is coming in because of the security we represent. We are really very proud of this.”
Q. Which product was the most demanded in 2011?
A. We had important growth in retail sector last year. Our leading new products were mortgage and auto loans. Mortgage loans were in big demand. We have introduces a very versatile and flexible mortgage products range, offering one of the most competitive rates. I would like to point out two types of mortgage loans, introduce by VTB Bank, which are unique for the Georgian market. Our Universal Mortgage bears no obligation to use proceeds of the loan to buy or repair property. Money can be used for any purpose. This product is very convenient for our clients and therefore sold quite well during 2011. Our Express Mortgage is a loan that can get approved in a day. Proof of income isn’t necessary, and customer can apply for it right at the real estate dealer or developer. This very simple and comfortable product was quite demanded too.
Our second most popular product is our auto loan – the service we’ve launched in 2011 and achieved significant growth in a very short period of time. We are now one of the leaders in this segment. VTB has two types of auto loans. Our customers have the possibility to get an auto loan from us in twenty minutes at certain car dealerships and collect their new car in as little as an hour. As well as being so conveniently fast, our loans are provided at fairly low interest rates. Our Used Auto Loan covers both new and used cars on sale at auto markets. The procedures are as simple: loans get approved in 20 minutes and customers can take the cars within an hour.
We have a special branch which is conveniently located at Rustavi Auto Market which works solely for auto loans.
Small and Medium business financing was another business line where VTB Georgia had experienced significant growth in 2011. I would like to especially note our special offer titled 12/12/12, launched in spring of 2011, whereby we gave out loans with a 12 percent interest rate in any currency.
Q. What are your forecasts in terms of interest rates for 2012?
2011 saw a significant fall in interest rates in the first half of the year, followed by a slight increase in the second half, as result of a Euro crisis. We see that rates will stabilize within 2012.
Q. Micro finance organizations offer micro and small loans with quite low interest rates. Does this influence your business?
A. I don’t think that rates offered MFO-s are competitive with those offered by us. Certainly, they cannot compete with banks on a corporate or even medium business levels. MFO-s are very active on high risk coletorised lending to individuals, but we have no intention to enter this market. Another segment of micro finance organisation activities is micro and agro financing. We think that financing ability and technologies provided by banks gives us strong competitive edge in those fields, as well. For example, VTB has branches in Marneuli and Telavi which are oriented on agricultural loans and we have no real competition there at all.
Q. What was the deposit portfolio in 2011? Please compare it with 2010.
A. Although we had a growth in deposits, we had put most of our emphasis on attracting financing from foreign financial institutions. As a result our efforts, and aided by our high rating and the fact that we are a part of a strong international financial group, foreign bank loan portfolio has increased by 78%.
Nevertheless, I would especially like to mention the new product VTB Bank offered its customers in 2011 – Social Deposit “Iavnana” (Lullaby). This product allowed those wishing to becoming charity providers and contribute, along with the Bank, into the aid to vulnerable families. It should be mentioned that this project was extremely successful and we are glad to see that so many people shared our aspiration to providing assistance.
Q. What is the share of foreign deposits in the total amounts deposited in VTB ? How active is your Bank in attracting them?
A. VTB network is widespread and covers many countries. Therefore, the Bank mainly concentrates its strategies on the individual countries, where it is represented. But still, we have had some deposits from countries, in which VTB has no branches. After the crisis especially, we saw deposit inflows from some South European states. This caused some changes, but they are unable to affect the general situation with deposits. In any case, we are not active in this direction and this won’t become a strategy of VTB Georgia. The VTB network is so extensive throughout the world that I don’t see the need for it.
Q. What is the ratio between deposits and loans in GEL and foreign currency? Is the trend changing?
A. Several years ago, more than 90 percent of deposits were in USD. This is changing now. The economic growth of Georgia, its improving international ratings and quite effective politics of National Bank of Georgia have resulted in a strong and popular national currency. 45 percent of deposits were in GEL as of the end of 2011. This is quite a good indicator for us. We see that this ratio will be improving further.
Q. What would you personally advise - to have one’s savings in GEL, USD or EUR?
A. If the choice is between USD and GEL, I’d advise GEL since lari is very stable, but provides higher interest rates. And if the choice is between EUR, USD and GEL, then I’d advise GEL or USD. Although it all depends on your plans and spending behaviour.
Q. What novelties is VTB Bank planning for 2012?
A. The plan is to broaden the network in the country, which we’ve already started implementing. VTB opened a new branch in Vake few days ago. We’ll open branches in all the districts of Tbilisi , as well as in the regions of Georgia in 2012-2013. The network will be oriented on the highest service quality. VTB will be offering some innovative products to its clients. One of these will be a ‘team card’. We are developing several projects in the agricultural sector and we will add some branches oriented towards this segment too.
As for the business sector, in 2012, in the first place we will offer them significantly simplified and lower cost trading operations. The main trading partners of Georgia are: Turkey, Ukraine , Azerbaijan, Kazakhstan, Armenia and China. VTB Group is represented in all of these countries except for Turkey. This allows us offering the simplified transactions and competitive prices to Georgian companies.
As of December 2011 VTB Georgia has 14 branches in total in Georgia, with 6 in Tbilisi and 8 in the regions. The number of ATMs is 58 - 23 in Tbilisi and 35 in the regions. VTB employs up to 700 persons in the country.