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Interview with Mr. Diomidis Nikoletopoulos, CEO of Stopanska banka AD - Skopje, Kapital June 2014


70 years of innovativness and leadership on the banking sector


Journalist: Biljana Zdravkovska Stojcevska, Kapital business magazine, Editor in Chief


Kapital: You closed the previous year with a significant growth of income and profit, the financial statements from this year show that the growing trend continues. To what do we owe these results?

DN: As known, Stopanska Bank has managed to deliver profitable results in all recent years and especially, 2013 was a very successful year in terms of profitability as it was increased by 25 % compared to 2012. This trend continues, the outlook for the whole 2014 is more than positive and already in the first quarter, SB announced profits of Euro 7 millions, an amount of profit that is the highest ever, I think not only for our bank but for the whole banking sector in the country. There is no any secret recipe in achieving these results; behind these profits there is a big amount of effort and hard work that has been done for years in order to develop both credit and deposit sizeable and well-structured portfolios, systematic effort to upgrade our services and products, prudent, careful and thorough examination of all new credit requests and at the same time close monitoring of the existing credits as well as effective management of the problematic cases. In addition, the rationalization of the funding cost, the constant support of its operations with new systems and modern technology, the effective cost control and the most important, the loyalty and valuable contribution of  its management team and the personnel are main pillars of the successful operation of the Bank all these years.

Kapital: Are the prognoses for improved business climate this year coming true and how is Stopanska Banka influencing this?

DN:There is no doubt that the improvement of the business climate is and must be a continuous , sustained and targeted effort by all factors of the State and the Economy. We, as a big bank, believe that we have the responsibility to contribute to it primarily because it is in our interests and the interests of the business and society, the majority of which are our customers. There have been several attempts in this direction by the state authorities, there are a lot to be done, but it takes time to get tangible results. From our side though,  it is obvious to the business community and households that the Bank is very active in approaching the clients, receiving, analyzing and approving a large number of requests for new credits, fresh money that supports their needs and  through these disbursement, we are contributing significantly to improve the business climate and most importantly,  to create the conditions for better prospects in the near future .

Kapital: During 2013 you showed 6% growth in lending. How much have the changes in the mandatory reserves and the method of auction of treasury bills (implemented at the end of 2013) influenced the lending activity of SB in the first half of 2014? What is the expected credit growth for the entire 2014?

DNStopanska Banka in 2013 realized 6.1% growth in lending, which is in line with the banking sector achievement. The primary goal of any bank is to secure balanced growth between the funding sources and the lending activities subject to acceptable level of risk appetite. The Central Bank over the last years undertook several measures in the liquidity & mandatory reserve instruments that were in favor of further expanding the lending activities, which were welcomed by the banking sector. The change in the manner of the auction of the Central Bank bills did not significantly affected the lending activities of Stopanska since this change puts limits to the maximum amount of bills issued by the Central Bank that any bank might invest in and it is based on the “potential liquidity” that Stopanska Banka anyhow disposed even prior the change. Regarding the credit growth of 2014, I would say, not only based on the data for the first five months, but mainly on the trend that has already been shaped, that the overall growth will be higher than the initially estimated one. I am quite optimistic that this year, the whole banking sector will be more active and as Stopanska, we are going to have a very successful year regarding the further development of the loan portfolios, supporting our clients on a  long term basis. 


Kapital: What interests our readers most is the lending growth of the business segment – it still falls behind retail lending among all banks. What is the dynamic of corporate lending with Stopanska Banka in this past couple of months?

DN:The corporate portfolios of the banking sector covers 60% of the overall lending in the country, however, in some cases, banks provide more easily lending facilities to individuals than business and there are obvious (and not) reasons why this is happening.  For example, is easier and simpler to approve a housing loan provided that the main criteria exist (available income, acceptable debt to income ratio, adequate value of the mortgage to cover to facility) since you are able to diversify your risk, to develop a secured portfolio and to build a long term relationship with the customers. Definitely, the criteria for approving loans to corporations are different and a lot of other parameters should be taken into account in order to approve or not a credit request.  However, Stopanska Banka is geared to strengthen further the business lending to the level of course that businesses are able to understand the necessary preconditions of doing this. To this respect, one of our main priorities is to “educate” the owners and the management of the corporations how really good ideas and good perspectives can be “translated” into acceptable business plans, plans that the credit committees of the banks can accept and implement as requested. 


Kapital: What is the structure of this segment, which industries dominate in the corporate lending?

DNStopanska Banka as one of the leader banks of the country supports all industries of the economy, covering both working capital needs and investments. The main drivers of our lending activity refer to generating: higher competitiveness in both foreign and local market, products with added value, sustainable business growth and new job positions. In this respect, the country’s GDP growth will be accelerated, the servicing of the loans will be executed without problems and new basis of retail lending will be created. 


Kapital: Does Stopanska Banka usually enter into project financing of business, that is to say, how many project financing subjects do you have per year?

DNStopanska Banka is present in all viable projects. For project financing a precise analysis / methodology is followed for enabling the accurate transformation of the idea or feasibility study to reality. During the process, both lender and borrower/investor should be in agreement about all key parameters for materializing the project (Purpose, expected benefits, amounts, duration, sources of repayment etc.) Within this approach that secures both the applicability and the viability of the project, SB finances more than 30-40 investments / projects on annual basis.   


Kapital:  What is happening with the NPLs, is there a trend in reduction there?

DNFirst of all, we have to say that despite all the challenges and difficulties that the real sector of the economy faced as a consequence of the crisis in the last several years, average NPL ratio of the banking sector remained at a manageable level. That is not the case with many other countries that experienced much higher NPL ratios than 11%-12% that we have here. Moreover, the overall provision coverage in the country is very high (almost 100%) and by far the highest compared with the neighboring countries and this proves that the domestic banking sector is safe and stable, having the capacity to absorb any potential losses from NPL portfolio. Of course, that level of provision coverage is costly and in order to boost the lending activity further, which is one of our main priorities, we will continue with our efforts not to allow further generation of new NPL’s, maximization of the recovery of the existing NPL portfolio and to adequately balance the cost for provisions in line with the domestic regulations and international standards.  Regarding the trend of NPL’s, during the first quarter of 2013, the banking sector recorded decrease of NPL ratio by 0.4 percentage points coming to the level of 11,1%. Whether this trend will continue or not, at this moment is difficult to predict with reasonable certainty, but at least we can say that there are indicators that this year we will not see the deterioration of NPL ratio, like it was in 2013.  

Kapital: Is Stopanska Banka planning new, innovative products in the near future?

DNStopanska Banka has managed to lead the banking segment with innovative banking services during its 70 years of existence and I can say that we remain devoted and even compelled by our legacy to continue innovating and improving our services for the benefit of our stakeholders. We marked the beginning of our 70th anniversary with the opening of the “i-bank store”, the bank of the future, where we embrace the concept that in the future most of the banking services will be available off site, on line and 24/7. Also, we demonstrate that the future will be more focused on sustainability and the importance of preserving our environment, something we, as a responsible corporate entity, have to work on harder and at the same time stimulate our surroundings with it.As far as products and services innovations go, Stopanska banka has recently revealed that it is the first among a very wide region of 200 countries to implement the VCAS 3D Secure platform that enables currently the safest way of online payments using Stopanska banka both VISA and MasterCard payment cards. The Bank received a certificate by VISA, recognizing its effort and we expect the clients to be satisfied with our efforts as well, as they were solely focused on the security of the clients in an ever-growing online world. We have also implemented several new features to our top sellers such as the consumer loan which is available for disbursement within 30min from application (a feature unique on the market especially for a bank of our size). We are improving the features of the mobile application, our e-banking platform constantly expanding their usage and benefits for our clients.We can also announce innovation in the telesales and web sales of our retail products which will open new channels for our clients and improve the overall experience. On top of that, in our effort to create a package of added values especially for our payroll clients we are in the process of establishing an option for these clients to arrange a meeting with a banking officer to consult on matters of lending and depositing at a branch of their preference and a time that best suits them. What we have just recently announced is the celebration of our 70th anniversary which will bring novelties in many areas and of course will involve all the nation in a generous humanitarian action. I feel proud to say that all of our innovative services, the constant improvement in our accessibility and increased activity on the field has resulted in the cooperation with majority of retail and corporate clients on the market. We remain in tune with their needs, their expectations and their aspirations and besides that, we mustn’t forget that one of our core advantages is the full support and knowledge of NBG the biggest SEE Group.

Kapital: Do you think that the domestic banking market with its 16 players is too saturated for its size? Are there options for mergers and/or acquisitions in the future?

DNIt is a fact that the number of the existing banks, in relation to the size of the economy, is big and logically there are thoughts and opinions that is a matter of time this number to be reduced. There are some objective criteria and a “critical mass" that determine the viability of any corporation, including banks, for example the size and the possibility to have economies of scale, any specialization in specific markets, the potential profitability, etc. However, only the shareholders and the managements of the banks should know whether it is possible to achieve the necessary growth and hence profitability in order their bank to be considered as potentially viable and in the meantime, to proceed with the necessary investments or to cover any losses , expecting to recover them through  the future profitability. In any case, a prerequisite for concluding any acquisitions or merger and by that to rationalize the number of the operative banks, is the existence of the necessary appetite from potential investors to enter into the market and to offer a price that corresponds to the future prospects of the banks under question and of course the prospects of the economy in general.