14 june, 2018

Interview given to the news agency Infotag by Serghei CEBOTARI, the CEO of Moldova Agroindbank (MAIB), in which he speaks about the general situation on the market, growing lending and hopes pinned on "financial investors" who are expected to soon buy 41.09% of MAIB's shares.

PART 1: MAIB will follow in the footsteps of its customers which develop and extend their operations abroad.

Infotag: Mr Cebotari, is the number of new loans offered by MAIB growing, staying at the same level as last year or declining?

The results of the first quarter of 2018 show that MAIB increased all its main indicators compared with the same period last year, including the volume of loans. I will go further than that and say that we have managed to increase the market share of all major indicators.

Infotag: Despite this growth, don't you have the impression that banks' once very high efficiency will go down in the future?

You are right. The growth will slow down in the future and shareholders will have to put up with the fact that the bank cannot achieve astonishing results year on year, in particular when it comes to profit growth.

Endless growth is not possible because the results depend, to a large extend, on the market situation which is not always favourable. There will be years when profit will remain at the level of the previous years or, if the best happens, it will only slightly increase.

To make the process smoother and less visible for shareholders, the bank would like to try its hand in foreign markets given the fact that the Moldovan market is very small and limited by a number of restrictions. Our development strategy provides for opening business abroad and turning MAIB into a regional financial group.

Infotag: When does MAIB plan to make the first step in this direction?

Our team believes that MAIB is ready for such a development. Having set the target, we now have a vision how to achieve it. But most importantly, our financial situation is good enough to allow MAIB to extend abroad. I hope that the new investors, who are expected to buy 41.09% of MAIB's shares in the near future, will support our plans and approve the opening of MAIB branches abroad.

By solving this task, we will follow in the footsteps of our customers which develop and extend their operations abroad. We should be next to them in this process, providing them with all the necessary support and assistance. We are confident that we will be able to compete with other banks on foreign markets when it comes to prices, commissions, rates and range of products. Yet, there may be some legislative and regulatory issues that will have to be solved. But we will closely cooperate with the National Bank of Moldova and the central banks of the countries where MAIB plans to open branches.

Infotag: Does the status of a "regional financial group" mean that MAIB plans to be listed on regional stock exchanges?

The information that we have about investors interested in acquiring 41.09% of our shares allows us to confidently say that MAIB shares will be listed on European stock exchanges. My feeling is that this will happen very soon because, thanks to its qualitative assets, MAIB is ready to take concrete steps in this direction.

Infotag: What kinds of feelings do MAIB managers have about foreign investors expected to enter the bank in the near future?

If you try to suggest that we are afraid of the new investors, then you are wrong. Yes, we have feelings and this is something normal. But we feel no fear. Over the years I have worked with different shareholders and our team has always focused on the key task - successful implementation of the bank's long-term development strategy. Whether shareholders are residents or non-residents is of no importance to us. We understand that our key tasks will remain the same - to continue to run the bank efficiently and develop it sustainably. Yes, MAIB will be seen differently after its shares are purchased by transparent and reputable shareholders. Our bank will get access to foreign funding, something we have been deprived of over the past few years.

Infotag: MAIB's executive team has managed to keep the bank's quality standards very high despite the difficulties of the past years. How was it possible?

S.C.: Despite corporate governance difficulties over the past five years, despite the introduction of tighter regulations and the 2014-2015 large-scale bank fraud, MAIB has proved that qualitative management brings results. This makes a big difference between MAIB and other banks.

Judge for yourself, we have managed to preserve the leading position on the market, having significantly improved such indicators as assets, capital, loans, deposits, clients and profit. But I would say that our biggest achievement is quality improvement.

MAIB is a successful model of the banking business, adjusted to the local market, although maybe it is not 100% perfect. Other banks align to us. This places on us an even greater responsibility when it comes to qualitative and efficient management. That is why decisions taken by our team should outpace ongoing processes on the market, focusing the attention of the bank's staff on the most important issues, avoiding everything less important for customers.

PART 2: MAIB has a high quality of the lending and good risk management.

Infotag: Have you ever felt that shareholders are proud of their bank?

I am not afraid to say that today MAIB is a model of the best and most efficient investment in our country. MAIB has always been interesting to investors. Today it is an attractive asset, no doubt about this.

Infotag: What policy does MAIB follow regarding deposits as money becomes cheaper?

We have always attracted deposits following deep analysis of the situation on the market. In late May, the bank cut again the interests on deposits, bringing them in line with the interests on loans. By doing so, we pursue two goals: to increase our loan portfolio and reduce the short-term liquidity. Today, "excess liquidity" at MAIB makes up some 3 billion lei or about one third of liquidity in the banking system.

Infotag: Today money becomes cheaper and easier to borrow, yet the demand for loans is not growing. What is your explanation?

The growing lending volumes were influenced by factors atypical for the real sector of the economy and classical lending. In the case of medium and long-term lending, some banks refinanced customers, which, as a rule, does not lead to loan reimbursement. The situation has radically changed after the National Bank tightened requirements. You will agree that it is abnormal for a bank to issue five-year loans and, during the first three years, allow the customer to pay only the interest. This, as well as many other reasons, have contributed to the "lending boom" that we now see.

In addition, the demand for loans in the real sector of the economy is on decline.

Infotag: The fact that MAIB has managed to avoid a significant decline in the loan portfolio means that the volume of such loans was not very high in your bank, doesn't it?

We have always had a very serious approach to the lending quality. Today about 40% of loans have a maturity term of up to 12 months, which speaks about high quality of the lending and good risk management. Thanks to this approach, MAIB has managed to reduce the volume of bad loans. As of 31 December 2017, they totalled 11.58% compared with 18.38% in the banking system. In the first quarter of 2018, the share of these loans dropped to 10.37%.

Infotag: Is the volume of "bad loans" somehow influenced by the National Bank's much tougher regulations?

Undoubtedly, the National Bank today has a much tougher stance when it comes to how banks analyze risks. This is correct and important from the point of view of improving banks' quality. But I would not agree that the volume of bad loans is higher because of the central banks' tougher requirements. The situation should be viewed as a whole, including by the clients of the bank who have got accustomed to such a loan policy over the past 20 years.

I can tell you that many of our clients have not always been happy with our recommendations to capitalize their businesses. But today they are pleased to have security airbags that would allow them to better cope with possible financial crises. And although the pieces of advice we gave them 10-15 years ago often deprived them of dividends, now they feel much more confident on the market.

Infotag: So many of your customers are grateful to MAIB for having obliged them to improve their financial situation, aren't they?

Yes, we have such examples. I remember how some corporate clients reacted to such advice years ago. But gradually they started to realize how important capitalization was. Like doctors who, before announcing the diagnosis, should know almost everything about the physical condition of their patients, banks should know very well the businesses of their clients. This will allow banks to help their customers and avoid unpleasant losses for both sides.

Infotag: Thank you for the interview.

Comments [ 1 ] Add Comment

  1. 2018.06.15 10:17 Richard
    MAIB is the best bank in Moldova!

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