Arsen Bazikyan: We care about the health of our leasing portfolio

ACBA Leasing has registered gains at the close of 2008, thanks to inner financial planning of our company. ACBA Leasing has been working at a profit during 3 years.

In 2008 the company has registered an income of AMD 221million and AMD 82 million in the first quarter of 2008. I can't deny the influence of world financial crisis on our economy, specifically, on the number of applications filed by potential lessees.

Still the influence of world crisis upon RA economy was not that drastic as, basically, only the real sector is being funded in Armenia, and the deals have nothing to do with stock market where the crisis was felt most.

Specifically, ACBA Leasing is funding small and medium sized business, and according to our inner regulations, a rather conservative approach is practiced, that is, diversification of risks, linked to financing of different sectors. Thus the crisis has had a minor impact on ACBA Leasing activities. We might have temporary difficulties, but not debts that could pose any problems to us.

The have no priority spheres, we finance all the spheres of economy. There are certain internal guidelines, which we have formulated and our activities will be directed fulfill them. Since the beginning of our activities we outlined a segment of juridical and physical persons. We mainly work with small and medium business, and we keep to our policy not to finance very big projects, since at the moment we consider them to be very risky.

We take care of health of our leasing portfolio. Therefore we see as a priority particularly that market segment, which require renovation of fixed assets and with a range of leasing sets and providers.

In my opinion, financing of innovative projects, agriculture, processing enterprises, as well as internal transportation and spheres with a great number of entrepreneurs will be profitable this year.

In 2008 a great amount of deals was observed in the service industry, which is very broad and includes medicine, services of tourism and transport companies, Internet service providers, distributors, etc. The sphere of industrial production was financed most of all.

Since 2008 there have been very interesting projects, which were financed for the first time. These projects relate to new for Armenia small hydro electro stations, equipment was purchased for them.

Being the first company in the field, ACBA Leasing has a predominant role on the market. I believe, the company's primary advantage is its work-style, i.e. everyday monitoring of acting portfolio and organization of events aimed at attracting potential lessees. Besides, our founder is Credit Agricole, a French network of banks. Acba Credit has 36 branch offices with a wide range of customers benefiting from leasing services in all regions, i.e. availability of products is very important both in Yerevan and any other part of the country (leasing services in Yerevan are provided by the bank's central office whereas in the regions, they are provided by branch offices). Another advantage is that our personnel has received trainings in France, Russia and many other leasing companies, so they have enough experience. Another attractive factor about our product is that we provide the entire package of services, including negotiations with supplier, transportation, customs clearance etc. Besides, there are certain internal principles which, if followed, may lead to the realization of ambitious projects.

The first thing to say is that demand does not meet 50% of supply, so our primary task is to raise awareness among potential clients. In comparison with other financial instruments, leasing companies need more time to give their clients full information, because this product contains a lot of nuances. It is important for clients to know that this is not a credit. This is a project for which the client should be prepared. That means marketing in leasing companies is more important in comparison with other financial products, and we work in that direction, i.e. elaboration of strategy and internal guidelines.

In December 2008, an agreement was signed with EBRD for a total sum of USD 8 million. We have already received the first tranche in the amount of USD 4 million and distributed it an interest rate of 85-90%. Within 10-15 days, we expect the second tranche in the same amount. The claim has been submitted, and I think the sum will be distributed within a short period. Our leasing company is trying to diversify its activities, and under the auspices of ACBA Credit Agricole Bank we'll manage to attract different resources and collaborate with them. At the same time, we want ACBA Leasing to be an independent organization; hence we try to diversify both our portfolio and resources.

Taking into account the international leasing practice, leasing in demand now even more than other products, since it requires piecemeal but not direct financing. Launching a long-term project, the client knows that the crisis will not last eternally and he will not have debts. In developed countries, leasing is preferred, since it offers a large number of advantages. In Armenia, legislation needed amendments. Otherwise, we wouldn't be able to function. ACBA Leasing has developed a package of legislative amendments which simplify the process of leasing operations. Thanks to ACBA Bank, IFC and other companies' assistance, we secured the essential changes to make leasing more attractive for clients. In conclusion, I would like to call on clients of banks and credit organizations not to lump the blame on crisis in case of any failure. There are cases which have nothing to do with the crisis, such as wrong business planning. We should all work hard and overcome hardships.