OREANDA-NEWS. February 12, 2013. January – beginning of February – a time when the banking institutions are taking stock of the year and making plans for next year. Just how difficult was the work in 2012, if a major goal is achieved, and what result is obtained, told the deputy chairman of the Board of "MEGABANK" Alexander Shipilov, reported the press-centre of MEGABANK.

- How would you describe the work of "MEGABANK" in 2012? In your opinion, it was a difficult financial year? Were you able to perform the tasks?

- Last year did not fully meet our expectations. The external environment has had an impact on the bank's operations and adjusted our plans. Despite this, progress on the basis of 2012 figures can positively characterize the work of "MEGABANK". The growth of bank assets in the last year by 7%, while the loan portfolio grew by 16%. I think that the latter figure more displays the main result. It should be said that the level of growth of bank assets corresponds to this index of the banking system as a whole, but the growth of the loan portfolio was considerably higher than the average over the system. Asset growth "MEGABANK" in 2012 provided loans to clients of the real sector of the economy, in contrast to a similar indicator of the banking system, when the increase in assets was achieved by increasing the portfolio and reducing the level of reserves. Loan portfolio growth of 16% is a good result. Speaking in absolute terms, the loan portfolio grew by UAH 548 million and on January 1, 2013 amounted to UAH 3 billion 870 million.

- In early 2012, at a meeting of shareholders approved the bank's development strategy for 2012-2015. According to it, the bank planned to move away from the universal scheme of banking business and promote expert model. The main activities through the implementation of which is planned to achieve its performance objectives were the improvement of business processes, development and implementation of staff motivational model business areas of the bank, improving IT-technology and risk management systems, improved management reporting. Which of the planned strategic objectives were achieved in 2012?

- As for the business process units, the plan of changes is practically realized. Certain changes were made in the business processes and procedures for operations both corporate and retail destinations.
In other areas a systematic work is underway. Talk about its conclusion is wrong, because these areas are constantly improving. We will continue this work in 2013.

- You said that the increase in assets was mainly due to loans. Who are your main clients of the credit?

- This is a legal person, the clients of small and medium-sized businesses, as well as the corporate segment.

- And individuals?

- Speaking of retail loan portfolio, for the year 2012 it had been reduced by UAH 33 mln. This trend for the entire banking system, and in the last few years. In spite of this, retail lending in the bank is developing, particularly in the second half of last year "MEGABANK" brought to market a range of consumer lending.

- Why among individuals lending today is in low demand? Maybe because it's expensive?

- There are a lot of factors. There is an impact on the situation and the general state of the economy, and changes in legislation, in particular the ban on lending to individuals in foreign currency, and changes in attitudes and procedures of the lending by the banks. The cost of credit is also important. Today, due to objective reasons banks offer loans, such as mortgages or car loans at rates to levels which are unlikely to be acceptable to the majority of the Ukrainian population. In addition, the lessons of 2008 - 2009 years make people apply more balanced approach to the issue of credit.

- In your opinion, is it possible to cheaper loans for individuals in 2013?

- The credit rate is directly related to the cost of raising resources. If we find that deposit rates are reduced, it will be followed by similar dynamics rates on loans. In 2013, we can predict a decrease in the cost of resources, but it depends on many factors. Today, however, to say about this trend is early.

- With regard to credit for businesses: what kind of business most often turn to for credit resources?

- We appreciate and respect all our clients. According to the strategy, priority sectors for the bank are agriculture and industrial enterprises. Most loans were granted to customers in these sectors of the economy.

- How often in the past year applied for loans to you legal entities? How complex is the procedure for obtaining a loan?
 
- The competitive environment is such that the more correct to speak of attracting customers by the bank. Potential borrower, which would at the same time meet the requirements of the bank, must be convinced that the cooperation with the bank will be beneficial for him and comfortable. In this situation, a lot depends on us, on our activity and professionalism.

Regarding the procedure for processing the loan, it is compatible with many banks: there is a certain list of documents, which should provide a client, a procedure of business assessment and credit project. But our advantage is that we work more efficiently: solutions for credit projects are accepted, usually within 10 - 14 days. This factor is one of the most significant for the client in the selection of a partner bank.
 
- In "MEGABANK" there is such a service as microcredit? How it was in demand in the past year?

- I guess it’s quite in demand. Over the past year we have built up a portfolio of microcredit by UAH 26 mln., i.e. by 63%. In absolute amount it may seem a bit, but this type of activity has a specific target client segment (usually a small business) and does not require large amounts of credit. Average credit amount is 150 thousand UAH.

- Is there any problem with the bank with credit refund?
- With the return of loans that were issued from 2010, virtually no problems. If we speak of the bad loans, then, basically, these are the loans which have acquired that status back in 2008-2009. For each, the implementation of the activities related to the collection of arrears is performed.

- Is there a hope to get them back?
- Of course. All loans are secured by collateral, none of the borrowers is deprived of the attention, so over time, these problems will be solved.

- Many banks to return bad loans are turning to debt collection offices. In "MEGABANK" is there this practice?
- No, we do not work with debt collection offices. Format of collection, which we have developed, involves the solution of these issues by the relevant services of the bank. It should be noted that this approach demonstrates a fairly high efficiency.

- "MEGABANK" for many years actively cooperates with international financial institutions. What significant in this respect was in 2012?
- In the past, the growth of funds raised from international financial institutions, was 148 million UAH. The total amount of funding reached \\$41.5 million U.S. These funds are channeled for lending to our customers in accordance with the programs that "MEGABANK" implemented jointly with foreign partners.

Especially like to mention the fact that in 2012 we began a collaboration with new organizations. These are such esteemed structures, as Dutch bank of development  (FMO), "Green for Growth Fund" (GGF, South-Eastern Europe) and the company "ResponsAbility Social Investments AG".

- Is there a difference between loans that are issued by "MEGABANK" own funds and loans, for which funds were allocated on the lines of international partners?
- Bank credit procedures are the same for all customers. They analyzed by the other parties. Thus, the fact that cooperation and funding from foreign partners says approving the approach taken by the bank for loans.

- That is, you do not agree with them those loans that are issued?
- Decisions on granting loans are made by the credit committee of "MEGABANK". It should be said that almost all of the external funding is targeted. Agreement with the creditor may provide specific requirements for the customer or credit project that will meet the goals of the program. However, the decision on the loan is taken by the Bank.

- Are the international loans different under the terms and interest rates?
- The main advantage of loans issued in the framework of international programs is the possibility of long-term funding, which is essential for the successful implementation of investment lending projects. Not all banks have such possibilities. It is clear that the involvement of short-term funds of individuals does not allow such operations.

- As for deposits: how much this product today is in demand?
- This is a classic form of banking and constant daily work of bank employees. In this area last year was for us as a fairly successful one. Portfolio of fixed-term funds for the year 2012 increased by UAH 291 mln., or 20%, including individuals' funds increased by UAH 222 mln. The volume of fixed assets of the population as of January 1, 2013 is 1 billion 335 million UAH. This shows confidence in the bank by depositors and its reputation as a reliable financial institution.

- It turns out that individuals make more deposits than legal entities?
- Of course, this is a normal situation for the funds to be placed in a certain period. Slightly less than 80% of the portfolio of fixed customer funds are individuals. Today, all the banks are interested in this resource, including representatives of foreign banks, which previously focused primarily on funding from their parent institutions. Thus, competition in the market is very high.

- Question on bonds: did the bank post in the last year any bonds?
- В прошлом году мы не размещали облигаций. Рынок корпоративных облигаций сегодня в нашей стране не востребован. В 2013 году проводить такие операции мы также не планируем. Last year we did not put the bonds. The corporate bond market in our country today is unclaimed. In 2013, we also do not plan to conduct such operations.

- What are the main challenges facing the "MEGABANK" in 2013?
- We plan to increase our loan portfolio by 10%. Based on the general situation, it is quite ambitious, but we believe they are achievable. The main focus in this work will be financing the real sector clients in line with the strategy of the bank. Sources to attract resources remain traditional for our bank. In the domestic market, we plan to raise about UAH 370 million from individuals and about UAH 90 million – from legal entities. In addition, we will continue to cooperate with international organizations. We expect an increase in such funding at USD 16 million. We already have in this area some experience, including contact with new international partners.