Professional Documents
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The Banks annual meeting of shareholders has decided to issue new shares
18.07.2013, 12:49
Bank actively grows its capitalization: an increase of RUB 971m already took
place in March this year. On May 23, the annual meeting of the Banks
shareholders further resolved to raise funds amounting to RUB 2.5bn by issuing
new shares. We have spoken with Dmitry Leus, Chairman of Bank , about how
the Bank plans to invest the new funds and what rate of return investors may
expect.
- This is the first time you raise public capital. What type of investor do you plan to
attract?
- Dmitry Leus: The Banks business is sufficiently transparent to being accessible to a wider
audience. For the moment, the shareholders of Bank are its top management. We are also in
negotiations with a number of institutional investors.
- What is Bank s competitive advantage? What makes it attractive for potential
investors?
- Dmitry Leus: The Banks business is very transparent and easy to apprehend. Every month,
over 10 000 Russian citizens become our new clients. These are individuals and small to
medium-sized businesses. This trend is accelerated by an increased presence of points of sale
all across the Russian regions, thereby doubling our customer base. Our clients are becoming
more loyal and have recourse to more than one product over a longer service period.
Alongside an increase in productivity, we observe that the profit share stemming from our
non-interest business is rising too.
collection department which works successfully in identifying and resolving issues with late
payers. We are also speaking to the 5 largest domestic collection agencies. Accordingly, the
situation is under control.
Our consumer loans come at a rate ranging between 50 and 60% p.a. (broken down into a
minimal credit rate of 36.9% plus the credit insurance component of approximately 19%). We
tailor our credit products to market requirements and the composition of our internal credit
portfolio.
- Who is your typical client?
- Dmitry Leus: There are two categories of clients: we sell our normal loans to clients
between the age of 23 and 65. Pensioners up to the age of 80 may profit from our
Pensioners loans. I may add that we consider pensioners as our best clients. They have few
liabilities and possess a very high repayment discipline. In practice, pensioners return loans
by far more responsibly than our younger clients.
- What is the approval rate for consumer loans?
- Dmitry Leus: We approve only about 20% of all applications we receive (whereas our
competitors consider approval rates of 40% as conservative). In the beginning, an
application lands on the desk of our scoring experts who use various databases and
mathematical models in their analysis. Then the credit application is passed over to our
analytical team. Next, during the verification process (which we conduct for all credits
regardless of amounts), we ask the potential borrower to provide us with two mobile and two
land-line telephone numbers (private and work), which we call... When calling the clients
employer we also use an alternative number we usually take from the telephone directory or
any other open source.
- How do you verify pensioners?
- Dmitry Leus: The process is almost identical. We have a method which gives us access to
average pension payments per region. If we are not dealing with military pensions, average
pension payments in Russia do not exceed RUB 5000 (USD 152) per month. Obviously, we
dont call their employers, even if they are still working (unofficially). However, we do call
their neighbours and close relatives. We may also want to speak to their children about the
usefulness of a loan.
centre is very efficient. Two thirds of the 1500 credit requests we receive daily come in
through the call centre.
When a credit has been awarded our quality management department enters the scene. Their
task is not only to monitor client satisfaction, but also to identify default risk at an early stage.
Thus, we usually give new borrowers a short welcome call and ask them whether they have
taken good note of the credit agreement. In case their phone does not answer for five days, we
contact our security desk. This enables us to immediately address cases of fraud.
- How manageable is the structure of the Bank?
- Dmitry Leus: We use video surveillance systems allowing us to see what happens in any
branch of our regional network. Our specialists from quality management provide real-time
evaluation of our staffs behaviour during client meetings and the on-boarding process. A
bank is first and foremost a service provider and we are well aware that only high-quality
service deserves customer loyalty.
- Is it very important for you to have real-time access to the Banks processes?
- Dmitry Leus: Yes, I think this is important, also in view of identifying any shortcomings at
an early stage - before they become systemic. In addition, the system informs me about the
number of credits awarded in every branch [Dmitry Leus turns around the screen of his
computer where constantly changing numbers appear...].
The computer system allows us to monitor the effectiveness of the Banks newly created
regional branches on-line. For example, as at April 29, fresh loans amounting to RUB 610m
were issued. If we multiply this amount by 18.8% we get RUB 116m in gross revenues. If we
subtract from this amount costs of goods sold (approximately RUB 80m) and loan loss
reserves, we get the Banks net profits.
Bottom line, the Banks centralized system provides decision makers with an objective source
of information and may correct the regional managements actions if need be. We conduct
conference calls with the regional leadership on a daily basis...
1, a TV channel with many regional variations, but we didnt include Moscow and St.
Petersburg. When promoting credit cards we will also use TV as a medium, but we shall
mainly have recourse to the internet and social networks when promoting credit card lending.
- Will there be changes on the Banks internet site?
- Dmitry Leus: Of course. For the moment, we only sell loans via our internet site. The next
step will be to accept deposits on-line too. We also intend to link the Banks internet site to
social networks and provide on-line chat rooms with client managers. By the end of this year,
our customers will be able to communicate with their banker via Skype...
Oleg Potapov