Tell us about the results of FUIB's work in the corporate business segment for the first half of the year. How strong is competition in the market now?
Competition is always strong. In Ukraine there are many banks, even too many. Those banks that are removed from the market, except for a few, did not have a significant market share. Out of 180 banks, about 50 did real business earlier, which accounted for about 90% of the assets and liabilities of the banking system. All other banks had different goals depending on the owner. In the developing economy, competition is in the lending segment - who is better and who gives more loans. Since the last year, the main competition has passed into the sphere of attracting money from clients and retaining it. FUIB participated in this competition quite successfully in terms of attracting new clients. Over the first 6 months of this year, we have attracted more than 2 thousand new clients who are legal entities. Deposit portfolio in the segment of small and medium sized business has grown by 620 million hryvnia since the beginning of the year. In terms of asset liquidity we are among the top five largest banks. The loan portfolio of corporate clients has decreased by 2-3% since the beginning of the year. This happened due to the repayment of earlier loans. Despite the fact that our country's economy stands, it did not begin to demand less money. We lend, but not in the amounts that would be desirable.
What happens to resource-free lending this year? Have it intensified strongly?
In the developed economy, resource-free instruments, such as bills of exchange and letters of credit, are in demand and are always used. But the peculiarity of Ukraine is that clients and banks are actively using them only in the absence of growth of real lending. Over the past 5 years, FUIB has been consistently among the top 5 leaders in terms of documentary operations. All the accumulated experience allows us to effectively support the development of clients' business under the conditions of limited funds for resource lending.
Does FUIB give loans now?
Yes, we have new loans, but there are few of them and they can not cover the amounts of loans repaid by clients. That is why there is no growth in the total portfolio.
Which segments of the economy do you prefer to lend to, and which are the most interesting ones?
Speaking about lending, there is little money in the banking system and banks do not want to take very high risks for a single counterparty. That is, banks are reluctant to give one big loan to a single company. Today in most cases small and medium sized businesses can count on loans. Even more likely it is in case of medium sized business. In such companies, the need for money is smaller and the financial condition usually allows banks to take additional risks, so this segment still attracts banks at the moment. Two of the most interesting segments have not changed over the past few years. Agriculture is still a sector that is the least exposed to crises and fairly profitable. According to various estimates, FUIB is among the top five banks that lent the highest amount of money to agricultural industry. Trade also remains interesting for lending.
Since the beginning of this year you got two thousand new clients who are legal entities. What products do these clients usually buy?
Basically, clients use settlement account services, cash desk, currency exchange operations, payroll programs, deposits, documentary operations. The whole range. Demand for lending decreased mainly due to its high cost and cautiousness of companies about investing in equipment and development of business under the conditions of unstable macroeconomic environment.
Are among the new clients mainly SMB, or there are large companies?
There are clients from all segments. Speaking about large business, there are just a few companies, since there are basically a few of them in Ukraine. We have shown good increase in terms of medium sized business. About 20-25 medium-sized companies come to us every month. In a large segment, it is about 2-3 companies a month. Although more medium-sized clients come to us, we still have a large share of bank penetration of large business.
Did it ever happen that clients asked for some nonstandard service package?
All our business is nonstandard. Corporate business in itself is very nonstandard. Every client needs something of his own. It happens that a new company with a large number of branches comes to us, and their treasurers want to see on-line, where their money is and how much is available. Or a holding company comes to us and wants to control payments, which are higher than a certain amount, with a third signature. There are quite a lot of such requests. We are ready for any desires and constantly improve our capabilities.
What must the government do, so that the banks start actively lending to the economy?
It is clear that everything comes down to the development of economy. It lives not only due to bank loans but also due to investment money. During the last 10 years, our economy, unfortunately, was living on borrowed funds. When you live on credit for a long time, you become unstable under any turbulence of environment: whether it is a competitive struggle or macroeconomic changes. The majority of Ukrainian companies are overloaded with credits. For the development of economy, the state must provide stability: stability in the ATO zone, as well as economic stability. Investors need to believe that one can invest money in the country. Any investment does not pay off in a year. Basically it takes 3, 5 or 10 years depending on the economic sector. There should be stability in the legislation. For example, tax legislation should not change radically over about ten years. It is important that the judicial system is transparent and fair. If there is stability, there will be an investor. The population also needs stability. As soon as people begin to understand that the economy has stabilized, savings that were withdrawn from banks will come back into the system. It will also give the first impulse for lending.
The National Bank predicts that starting with the 4th quarter, people will begin to return deposits to banks. Do you believe in it?
We hope for it together. The population cannot be forced to return money on deposits. As experience shows, as soon as the stabilization comes in people's minds, they will bring a lot of money into banks in a month or two. I am very glad when members of the government and the NBU talk about the stabilization of economy in the country, stabilization in reforms and stabilization of the military situation.
The population reacts strongly to military events. But does it react to different sorts of economic news? By the end of the month Ukraine may declare technical default on Eurobonds. Will there be reaction to this on the part of the population?
The reaction of the population will depend on the reaction of politicians, and on how it will be presented through the press. From my point of view, technical default does not affect the economy in the short-term and has a strong effect in the long-term. The country that is in a state of default is cut off from the inflow of foreign money for about five years. When declaring technical default, Ukraine will be able to attract funds only from the IMF and perhaps from the EBRD. I am against any kind of defaults, since the country at this stage needs to attract a lot of investments.
Source: Ukrainian News
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