Trust and Credibility
Along with professionalism and strong money base, these are the factors enabling Ukrgasbank to be one of the best banks in our country.Along with professionalism and strong money base, these are the factors enabling Ukrgasbank to be one of the best banks in our country.
In one way or another, Ukrainians use banking services in increasing frequency. How is the banking services market developing, and what are the changes to be faced by bankers? Our correspondent is discussing this with Sergey Naumenko, Deputy Chairman of the Board of Ukrgasbank.
Lending Matters
— Sergey Gennadiyevich, to begin with, please, let us have the outline of your bank.
— This is the 14th year Ukrgasbank has been operating. For this period, the Bank has turned out to a large financial institution. For the recent 3 years, we have been among 20 largest Ukrainian banks («major banks» according to the NBU classification). Ukrgasbank assets are over UAH 2.5 billion, including, without limitation, individuals’ funds (over UAH 1 billion).
The Bank has developed an extensive network of 150 points of sale covering nearly all regional centers and large cities of Ukraine. By the end of this year, we are planning to expand the network to 200 points of sale. The sales network expansion is the key condition for strengthening of the Bank’s current positions in the Ukrainian market.
— What is your forecast of the interest rate trends?
— Certainly, the rates will be dropping, if everything remains relatively stable in the country. At the same time, I would not envisage any dramatic rates reduction. We have rather expensive resource market, business is hiking in its development, and money is in demand. My forecast: not more than 2% of reduction that is proportional to loan and deposit rates.
Mass foreign capital inflow is observed in the banking system: nearly 30% of the Ukrainian banking system will be controlled from abroad. Money is unlikely to cheapen fast. The thing is, foreign investors spent a lot of money purchasing Ukrainian banks, and they expect high profitability of this business in Ukraine. In addition, the banks purchased in Ukraine or established by foreign financial institutions are still at the stage of development or restructuring, so I presume that we will not see any dramatic changes of the situation in a year or two.
— Does Ukrgasbank intend to attract foreign investors?
— Our shareholders declared the search for a strategic investor. The investor is likely to be a foreigner, and probably not. No specific plans were announced.
— Referring to your rate reduction forecast, should we expect the growth in demand for residence, and consequently, residence deficit growth?
— In principle, the cheaper the loan, the lower the prices. However, before the rates go down, loans remain very expensive; the level of rates in Ukrainian banks differs from the European level, and, consequently, from the world level. Except cheap capital, which should come to the country, and internal capital, which should flow in domestic economy, government refinancing of such programs is required. In fact, neither the National Bank, nor any other government authority provides such refinancing. For instance, the Youth Fund is in fact a drop in the ocean, which does not solve the problem. Certainly, lending contributes to development of all other branches of economy, including the construction branch among others. This was clearly shown by car sales growth (according to statistics, nearly 30% of cars are now sold on credit). This is the growth impossible to be achieved without lending.
On Mortgage Lending and Incentives
— Have you had any new programs for individuals in recent years?
— Deposits are the main instruments of long-term cooperation with individuals, thus we pay considerable attention to them. Ukrgasbank (NBU Licence # 123 as of 19.11.2001) is ranked 14th in the country in terms of deposit portfolio. This high rank shows that we have developed this type of activity just in time, offering good competitive rates among the banks of our category.
This year, the bank is intending to increase fourfold the amount of loans to be extended to individuals (consumer lending, residence lending, car lending etc.). For example, comparing with other banks operating in this segment, since the beginning of the year, we have set the longest residence lending term: 25 years. This is rather attractive for borrowers.
We believe that we have good loyalty procedures and application consideration time frames, that we are flexible about property evaluation. I would like to emphasize that except residence loans we also promote lending secured by residence, thus accustoming people to realize that they may always get money from the bank (for example, for business development), if they own any real estate. Real estate is a good asset, and banks are always ready to grant loans secured by real estate.
This year we put an emphasis on retail operations, considerably increasing the lending portfolio for individuals. The mortgage lending procedure (residence lending) is the utmost convenient and accessible with us. We consider that mortgage lending is the most prospective area, the same as car lending.
We are cooperating with the Youth Construction Fund, where loans for young people are concerned, with formation of the rate attractive for clients. Certainly, the Fund serving this program is not able to process the flow coming from the banks now. Loans for young people mean that clients receive partial compensation from the state. However, interest rates in this case are different and depend on area, family structure etc.
— Do you provide any incentives to permanent depositors?
— Yes, we provide various loyalty and incentive programs for depositors. For 3-4 years, we have carried out numerous special events for them, we have given presents. Every winter, for example, 100 trip tickets to Egypt are put to lottery in the framework of the special event called «No More Winter!» In summer, our clients are rewarded trips to Europe: the UkrGasBank team is formed (11 people), and they go either to football, or to any other sport event. Now, for example, we have put to lottery a ticket to «Formula-1».
50-60% of re-deposits is the stability indicator the Bank takes pride in. This means that upon expiry of the deposit term and performance of obligations, the depositor re-establishes the contractual relations with the Bank, and does not leave it. Such trust and credibility also add to our goodwill.
Utmost Attention to Every Client
— Which are interest rates on loans today?
— About 12% of per annum in foreign currency and 16% of in UAH. On lending for young people, the rate is about 8% of per annum (everything depends on area and other parameters).
We have competitive interest rates. If we have high deposit rates, then we should offer the same rates on loans. We cannot say that our money is cheap, but the rates closely follow the current market trends.
— Do you manage to re-orient the work with consideration of the «card boom»?
— We are among leaders in the payment card market; we work with all card products of VISA and Master Card international payment systems, any and all systems existing in the world (elite platinum to ordinary debit cards). Naturally, we also service payroll, pension deposits etc.
— Who are your main clients?
— We are not dividing our clients into those who bring more profit or less. We pay utmost attention to each depositor. We are more oriented towards the requirements of middle and small business, other business entities. So we master and expand those products and services, which we offer to small business. We serve large corporate customers, for example, such significant national enterprises as EUROCAR (producer of Skoda and Volkswagen in Ukraine), Mironovskiy Khleboprodukt (Nasha Ryaba trade mark) supplying over 40% of chicken to the Ukrainian market.
Our nearest intentions include micro-lending expansion for small business and business entities.
We Put Money to Work
— Rumor has it, some banks require no earnings certificate granting a loan. Isn’t it dangerous?
— Banks never do it! They have no right to! Opening of any account, even a deposit account, implies availability of passport and identification code. When a client is granted a loan, the client should show their solvency. There are 3 general lending principles: urgency, collectibility, and security. Pledge is a security, and clients should show their solvency. Consequently, earnings certificates are compulsory. Individuals take loans without earnings certificates by non-bank financial institutions granting such loans at their own risk. Such institutions may operate, for example, in shops selling household appliances. Though, they take high interest, thus insuring against risks.
— Which arguments would you provide in favor of your Bank for any individual to come and place money in?
— Individuals believed us a long time ago. People, who made deposits with UkrGasBank, receive good profit, their money works instead of depreciating under the pillow.
Advantages of our Bank include competitive rates, shares, reliability checked for years, extensive network, convenient schedule of territorial units, availability of additional deposit-related programs (for example, free card for receiving interest). By the way, we offer such service as loans secured by deposits. This means that any client, who placed a deposit with us, may open a credit line. For example, during the period of deposit, money may be urgently required for purchases or anything else. Our client always has a loan extended to him at the rate of up to 90% of deposit. That is why the client is able to use their money if required, without terminating the deposit, losing interest and conditions.
In one way or another, Ukrainians use banking services in increasing frequency. How is the banking services market developing, and what are the changes to be faced by bankers? Our correspondent is discussing this with Sergey Naumenko, Deputy Chairman of the Board of Ukrgasbank.
Lending Matters
— Sergey Gennadiyevich, to begin with, please, let us have the outline of your bank.
— This is the 14th year Ukrgasbank has been operating. For this period, the Bank has turned out to a large financial institution. For the recent 3 years, we have been among 20 largest Ukrainian banks («major banks» according to the NBU classification). Ukrgasbank assets are over UAH 2.5 billion, including, without limitation, individuals’ funds (over UAH 1 billion).
The Bank has developed an extensive network of 150 points of sale covering nearly all regional centers and large cities of Ukraine. By the end of this year, we are planning to expand the network to 200 points of sale. The sales network expansion is the key condition for strengthening of the Bank’s current positions in the Ukrainian market.
— What is your forecast of the interest rate trends?
— Certainly, the rates will be dropping, if everything remains relatively stable in the country. At the same time, I would not envisage any dramatic rates reduction. We have rather expensive resource market, business is hiking in its development, and money is in demand. My forecast: not more than 2% of reduction that is proportional to loan and deposit rates.
Mass foreign capital inflow is observed in the banking system: nearly 30% of the Ukrainian banking system will be controlled from abroad. Money is unlikely to cheapen fast. The thing is, foreign investors spent a lot of money purchasing Ukrainian banks, and they expect high profitability of this business in Ukraine. In addition, the banks purchased in Ukraine or established by foreign financial institutions are still at the stage of development or restructuring, so I presume that we will not see any dramatic changes of the situation in a year or two.
— Does Ukrgasbank intend to attract foreign investors?
— Our shareholders declared the search for a strategic investor. The investor is likely to be a foreigner, and probably not. No specific plans were announced.
— Referring to your rate reduction forecast, should we expect the growth in demand for residence, and consequently, residence deficit growth?
— In principle, the cheaper the loan, the lower the prices. However, before the rates go down, loans remain very expensive; the level of rates in Ukrainian banks differs from the European level, and, consequently, from the world level. Except cheap capital, which should come to the country, and internal capital, which should flow in domestic economy, government refinancing of such programs is required. In fact, neither the National Bank, nor any other government authority provides such refinancing. For instance, the Youth Fund is in fact a drop in the ocean, which does not solve the problem. Certainly, lending contributes to development of all other branches of economy, including the construction branch among others. This was clearly shown by car sales growth (according to statistics, nearly 30% of cars are now sold on credit). This is the growth impossible to be achieved without lending.
On Mortgage Lending and Incentives
— Have you had any new programs for individuals in recent years?
— Deposits are the main instruments of long-term cooperation with individuals, thus we pay considerable attention to them. Ukrgasbank (NBU Licence # 123 as of 19.11.2001) is ranked 14th in the country in terms of deposit portfolio. This high rank shows that we have developed this type of activity just in time, offering good competitive rates among the banks of our category.
This year, the bank is intending to increase fourfold the amount of loans to be extended to individuals (consumer lending, residence lending, car lending etc.). For example, comparing with other banks operating in this segment, since the beginning of the year, we have set the longest residence lending term: 25 years. This is rather attractive for borrowers.
We believe that we have good loyalty procedures and application consideration time frames, that we are flexible about property evaluation. I would like to emphasize that except residence loans we also promote lending secured by residence, thus accustoming people to realize that they may always get money from the bank (for example, for business development), if they own any real estate. Real estate is a good asset, and banks are always ready to grant loans secured by real estate.
This year we put an emphasis on retail operations, considerably increasing the lending portfolio for individuals. The mortgage lending procedure (residence lending) is the utmost convenient and accessible with us. We consider that mortgage lending is the most prospective area, the same as car lending.
We are cooperating with the Youth Construction Fund, where loans for young people are concerned, with formation of the rate attractive for clients. Certainly, the Fund serving this program is not able to process the flow coming from the banks now. Loans for young people mean that clients receive partial compensation from the state. However, interest rates in this case are different and depend on area, family structure etc.
— Do you provide any incentives to permanent depositors?
— Yes, we provide various loyalty and incentive programs for depositors. For 3-4 years, we have carried out numerous special events for them, we have given presents. Every winter, for example, 100 trip tickets to Egypt are put to lottery in the framework of the special event called «No More Winter!» In summer, our clients are rewarded trips to Europe: the UkrGasBank team is formed (11 people), and they go either to football, or to any other sport event. Now, for example, we have put to lottery a ticket to «Formula-1».
50-60% of re-deposits is the stability indicator the Bank takes pride in. This means that upon expiry of the deposit term and performance of obligations, the depositor re-establishes the contractual relations with the Bank, and does not leave it. Such trust and credibility also add to our goodwill.
Utmost Attention to Every Client
— Which are interest rates on loans today?
— About 12% of per annum in foreign currency and 16% of in UAH. On lending for young people, the rate is about 8% of per annum (everything depends on area and other parameters).
We have competitive interest rates. If we have high deposit rates, then we should offer the same rates on loans. We cannot say that our money is cheap, but the rates closely follow the current market trends.
— Do you manage to re-orient the work with consideration of the «card boom»?
— We are among leaders in the payment card market; we work with all card products of VISA and Master Card international payment systems, any and all systems existing in the world (elite platinum to ordinary debit cards). Naturally, we also service payroll, pension deposits etc.
— Who are your main clients?
— We are not dividing our clients into those who bring more profit or less. We pay utmost attention to each depositor. We are more oriented towards the requirements of middle and small business, other business entities. So we master and expand those products and services, which we offer to small business. We serve large corporate customers, for example, such significant national enterprises as EUROCAR (producer of Skoda and Volkswagen in Ukraine), Mironovskiy Khleboprodukt (Nasha Ryaba trade mark) supplying over 40% of chicken to the Ukrainian market.
Our nearest intentions include micro-lending expansion for small business and business entities.
We Put Money to Work
— Rumor has it, some banks require no earnings certificate granting a loan. Isn’t it dangerous?
— Banks never do it! They have no right to! Opening of any account, even a deposit account, implies availability of passport and identification code. When a client is granted a loan, the client should show their solvency. There are 3 general lending principles: urgency, collectibility, and security. Pledge is a security, and clients should show their solvency. Consequently, earnings certificates are compulsory. Individuals take loans without earnings certificates by non-bank financial institutions granting such loans at their own risk. Such institutions may operate, for example, in shops selling household appliances. Though, they take high interest, thus insuring against risks.
— Which arguments would you provide in favor of your Bank for any individual to come and place money in?
— Individuals believed us a long time ago. People, who made deposits with UkrGasBank, receive good profit, their money works instead of depreciating under the pillow.
Advantages of our Bank include competitive rates, shares, reliability checked for years, extensive network, convenient schedule of territorial units, availability of additional deposit-related programs (for example, free card for receiving interest). By the way, we offer such service as loans secured by deposits. This means that any client, who placed a deposit with us, may open a credit line. For example, during the period of deposit, money may be urgently required for purchases or anything else. Our client always has a loan extended to him at the rate of up to 90% of deposit. That is why the client is able to use their money if required, without terminating the deposit, losing interest and conditions.
28.10.2006