— Who exactly in the agricultural sector does FUIB prefer to lend to - large agricultural holdings or SMEs?
— The portfolio of the bank has been changing recently. If earlier we worked only with large businesses, now we are gradually increasing the SME lending portfolio every year.
The share of loans to small and medium-sized businesses in our bank now amounts to about 30%. As for large agricultural holdings, most often loans are given to them in international banks which are as large. The Ukrainian market will not help them with this.
Even if we put all Ukrainian banks together, the capital will not be large enough to give the necessary loan amounts, for instance to the MKHP (Myronivskyi Khliboprodukt). In the portfolio of FUIB, the share of SMEs already predominates over the share of large companies. SMEs are our main strategic clients.
— What is the dynamics of the loan portfolio for agrarians in your bank for January - September 2017?
— During this period, the bank increased the financing of primary agricultural producers by more than 500 million UAH, which allowed us to increase the agricultural loan and bill portfolio up to almost 2 billion UAH. The agricultural sector is a God-given industry in Ukraine, and it remains one of the priorities in the development of our bank.
— Are there any factors hampering the development of lending to agrarians?
— There are three segments in the agricultural business. Medium-sized business is the most successful and the easiest in terms of development. From my point of view, there are no problems in this segment at all.
The only difficulty inherent in Ukraine is connected with the high cost of credit resources. Inflation and the general economic situation as a whole account for this. It will be possible to solve this problem only when inflation is reduced to 4-5%.
The state, in turn, partially reduces the existing interest rates, allocating funds for their compensation - and this is a positive thing. In addition, there are specialized partner programs, when part of the interest rate is reduced at the expense of the suppliers of machinery, seeds or fertilizers.
There are problems in two other segments of the Ukrainian agricultural business as well - these are small and large enterprises. Small businesses with a land bank of up to 1 thousand hectares suffer from a lack of a land reform. They have virtually no collateral, and consequently, no access to credit funds.
As for large agricultural holdings, many of them are already debt-laden and are not in the best financial form. They have taken out investment loans earlier, hoping to increase profitability. When the margin decreased, access to credit resources became limited.
— Does FUIB develop partner programs for clients from the agricultural sector?
— We are actively developing in the direction of partner programs. FUIB has recently signed a cooperation agreement with the government of the Republic of Belarus, which envisages a compensation of a part of the interest rate for customers who purchase Belarusian machinery on credit.
The program now allows a final recipient in our bank to take out a loan at 10% per annum in hryvnia without hidden fees. For comparison: without the program a buyer can receive machinery at 17-18% per annum.
Such a practice is beneficial to all parties. For the suppliers of machinery this means an increase in sales of products, banks, in turn, attract more clients due to lower rates. In addition, we actively organize partner programs with Ukrainian suppliers of fertilizers and seeds.
— For what purposes does agricultural business needs money most often: is it for the replenishment of working capital, for a sowing campaign, for the purchase of machinery, or for other purposes?
— The agricultural business is in itself quite simple, that is why there are two main types of loan for it. The first one is a loan for sowing works (for the purchase of seeds, fertilizers, fuel).
These loans are most often repaid immediately after harvest. The second big cluster of loans is the loans for machinery. This product becomes popular when the crop is already harvested. Such loans are "longer", they are intended for three to five years.
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