The global financial crisis resulted in suspension, and in some cases, significant reduction of SME funding program. How is the situation today?
The banks usually toughen the loaning conditions, including those related to SME entities during the acute phase of the economic crisis, to reduce the risks linked with the deterioration of the portfolio quality, lack of their own liquidity, responsibility for the investors, etc. We went through this a couple of years ago, and it was a forced move back then. Currently the situation has changed, and the SME loaning has started to develop again. SME funding is a priority target for our bank since the small and medium enterprises are the backbone of the economy in any country. Over the past two years, our bank's credit portfolio on SME has increased from AMD 3,8 mln to AMD 7,4 mln.
Your bank is actively participating in the Armenian Central Bank's refinancing program and cooperates with various international organizations in this area. Would you sum up the results of the current year?
In 2012, we signed a $10mln contract with the Eurasian Development Bank (EDB). When signing the agreement, the EDB management voiced confidence in prospects of cooperation with Areximbank-Gazprombank Group and made no mistake: the bank fulfilled and even overfulfilled its commitments in 6 months; 17 loans are provided. I'd like to note that our cooperation with EBD is not limited to this contract only. In 2013, ABD plans to open a credit line for Areximbank for the development of trade funding, as well as funding for energy efficiency projects loaning. I believe we will go for expansion of the loan limit, and towards involvement of our bank into new programs linked with the strategy of EBD.
Which areas were funded?
The fields were traditional ones, namely the transport, construction, trade and public services. We are happy to record approximately 10% growth in production crediting. This is good, because the ultimate goal of the SME loan program is to support the producers and revive the production industry, including the export-oriented enterprises. Currently our bank provides loans to the mining industry, cattle-breeding, agricultural production, etc. The situation has become quite interesting recently; the bank's clients mostly engaged in trade are starting to diversify their businesses by investing credit funds in production. For instance, people who used to trade vegetables now build their own greenhouses or bake bread in their own bakeries. We always welcome such clients and are ready to provide comprehensive support to them.
World Bank is another serious partner we actively cooperate with in the sphere of SME funding. In late November 2011, we provided 94 credits within the WB refinancing program amounting to AMD 1.11 bln in total, while a total of 159 loans worth AMD 1.57 bln were provided during the same period in 2012. We have almost 50% growth here, as you see.
Our bank has significantly developed over the past 2-3 years, first of all with regard to the capitalization level. We have a very sound credit portfolio now. At the same time, we manage to maintain the overdue loans and reserves at a lower level against the average banking figures. This is yet another key indicator of our work quality.
What are the activities the bank plans to implement in 2013?
In addition to joint programs with EBD and WB, we plan to sign a 1bln AMD agreement with IFAD to refinance agricultural sector. By late 2013, we plan to have SME credit portfolio worth AMD 10 bln.