The FINANCIAL — Since the very beginning of 2011, Bank Constanta, for the first time, introduced deposits with unprecedented 17% interest upon opening which hadn’t yet been offered by any other commercial bank in Georgia.
With the introduction of such an innovative product on the Georgian market, the Bank was able to outnumber its projected attained deposits level by 456% and has collected 1.4 million GEL. Currently, in any branch of the bank, a person is able to open time, demand, children and recurring deposits.
In 2010 the Bank was joined by Netherlands based investor namely Oikocredit. The latter investor operates in up to 70 countries worldwide and owns the Shareholder Capital of 31 countries’ micro financial institutions. In essence, Oikocredit owns 13% of Bank Constanta shares.
The Bank, with a 71 million GEL portfolio serves 19,000 clients. All through 2010, Bank Constanta disbursed 83 million GEL loans which itself was 66% growth compared to the previous year’s (2009) figures. The number of the customer base also expanded by 36%.
By the end of 2010 data the Bank had finished the year with 2,4 million GEL profit by which it stood in 6th position out of 19 commercial banks whilst in terms of ROE (return on equity) and ROA (return on assets) – 3th and 4th position correspondingly.
Total financial resources attracted from international financial institutions in 2010 – 32 million Gel by Bank Constanta.
In the direction of risk management, Bank Constanta closely cooperates with international financial institutions like International Finance Corporation (IFC). The latter strategy is part of a global initiative since the financial crisis hit the world and Georgia is a part of the world economy.
Bank Constanta, officially registered as a bank in 2008, has had a longstanding presence on the Georgian financial market since 1997 as a micro-finance organization. With the strong leadership and the right strategies it has been holding a leading position on the market itself, since its founding.
Despite hardships in the very first months of its foundation, in July 2008 the Bank was able to withstand the developing crisis and continue crediting of an economy.
Currently, with March 2011 ratings, out of 19 commercial banks, Bank Constanta holds 7th position due to overall net income among banks.
Throughout its existence as a micro-finance organization, the management was able to accumulate the experience which now gives them the opportunity to be leaders of the market in the direction of micro loans.
Bank Constanta has been very active in the direction of agriculture too, as 25% of loans are by agribusinesses.
Cooperation between the Bank and “Borun AgroChemistry Ltd” will benefit customers by providing all the needed chemicals and other necessary products on instalment bases. In accordance with necessity, the Bank offers a 6 month preferential period, during which the client doesn’t pay anything till the final realization of the product.
The project is aimed at easing conditions for clients to obtain all the necessary products for better performance of their own business.
Interview with Levan Lebanidze, General Manager of Bank Constanta
Q. What is Bank Constanta’s profile and its main direction?
A. Our bank has been oriented on providing finance for small and medium size enterprises during its long history, since 1997, even from when it was formed as a micro finance organization. Micro businesses are the majority of our clients and we’re the number one bank in the line of providing the best condition loans to SMEs and we aim to develop this direction even further.
Currently we have 21 branches of the bank where more than 400 people are employed. This year we’ll add one branch in Marneuli and next year in several other places.
Q. You’re very actively crediting agribusinesses in Georgia. Do you have new products to provide to your customers?
A. Agribusinesses amount to 25% of our loans disbursed overall which clearly illustrates the importance of the product.
With the purpose of supporting our existing clients base in addition to new ones, we’ve introduced a totally new product, not offered by any other bank before, which is cooperating with “Borun AgroChemistry Ltd” which will itself be aimed at providing needed chemicals and necessary products on instalment bases to our clients with the least possible terms. In accordance with the necessity, we offer a 6 month preferential period, during which the client doesn’t pay anything till the final realization of the product.
This year we introduced plastic card use in our bank branches which wasn’t previously available.
We also plan to introduce micro deposits where people can deposit small amounts of money.
We’re always introducing new products which by itself depends on the demand on the market overall. We do analysis on new directions that need to be developed, and we’ll be having some other new, innovative offer this year too.
Q. How risky it is to give out agribusiness loans?
A. Regardless of how risky the loans are, the main thing is still the insurance of those loans. Our risk management office is in charge of overseeing the performance of the loans provided. Our bank was rated in the list of the best performing banks in Georgia due to strong risk management. Our bank’s high profitability can also be attached to that despite the war and previous year’s events.
As for the interest rates it largely depends on how risky the business is; also the amount of the loan and its terms. In general loans are given starting from 15%.
Q. Which are the most demanded products at Bank Constanta?
A. Apart from agro loans, which account for 25% of our loans, there are: Trade – amounting to 52%, the Service sector – 11%, Production – 5%.
Q. How successful was the start of this year?
A. Not only the start of this year, but also the previous year, was very successful for the Bank. We grew more than the banking sector grew at large.
Our bank assets grew by 30%, our clients’ base increased by 36%, which is also very significant. The main reason why we grew was the growing demand for the products that we provide to people.
In addition our deposits proved to have a very successful start this year which we plan to continue.
Q. What are the 2011 challenges for the banking sector this year?
A. Challenges always persist in the banking sector but the main thing is to timely identify the risks and tackle them using all necessary opportunities. We, at Bank Constanta, are always dedicated to tailor the products to our clients at their best use and location.
In addition, general economic conditions affect our operations including the most recent price hikes on consumer products as well as non-tradable goods but we’re still very positive about the economy en masse.
Q. What about interest rates, are you going to cut interest rates on loans soon?
A. Usually interest rates are adjusted to the demands of customers, thus in the long-term we are certainly going to cut interest rates. Our interest rates are also competitive compared to other players (commercial banks) on the market.
The Bank, overall, has renewed crediting the economy, hereby 2010 was a very active year in this regard.
Business loans are the main direction of Bank Constanta.
Savings in Bank Constanta: this year we’ve also started deposits at the Bank – one year deposit in USD – 10%, whilst in GEL – 17%. The Bank’s 456% more attained deposits than planned is a sign of trust among customers towards the Bank.
Q. Are you going to implement any changes in the management of the Bank?
A. We’re not planning to have any changes in our management. In fact, we’re expanding our capital base through attracting large investors like Oikocredit which is already present in 70 countries, hence has huge experience which will be valuable for us to use. Thus we’ll be able to offer more credit to people in need of it hence supporting growth of the economy.
Q. What are your expectations about the banking sector in general in 2011?
A. I think that the banking sector will be developed dynamically. The main thing is that the crisis situation from 2008 is now over and the country is now on the road of development. Overall the 2010 credit portfolio has increased.
Now we’re positive about the growth of our market by providing a wide range of banking products, and in cooperation with our donors, increasing our capital base for the forthcoming year.
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