OREANDA-NEWS. September 22, 2010. ArmInfo’s interview with the First Deputy Chairman of the Executive Board of “Unibank” CJSC  Zakar Boyajyan and Vice Chairman of the Executive Board, Director of Corporate Business Ara Avagyan, reported the press-centre of Unibank.

Unibank recently announced its intention to more rapidly develop the retail lending. How this may affect the corporate segment of its loan portfolio?

A. Avagyan: When developing a new strategy first, Unibank proclaimed for itself as a priority task ensuring a diversified loan portfolio and broad customer base. This means that despite the prerogative of intensive development of retail lending, we continue to actively work with corporate clients. That is, Unibank, diversifying its loan portfolio, will give preference to retail lending and small and medium businesses. Amount of SME loans ranges from 1 thousand US dollars  to 1 million US dollars  per borrower.

It is noteworthy that Unibank through its extensive branch network (33 branches) was able to maximize the potential in business lending and create a large portfolio due to the presence in all regions of Armenia. So, as of 1st of August 1 of the current year, the share of business loans was 63% or 45 billion drams of the total loan portfolio, totaling 71 billion drams (the ratio of loans in AMD and US dollar is 46,5% to 53,5%). And since the beginning of this year only portfolio of business loans increased by 6 billion drams.

The range of business credit is also quite diversified, but the lion's share - 48% and 30%  gets to the industrial sector and the scope of trade.

Z. Boyajyan: I would note that over time we will definitely increase the share of consumer loans in total loan portfolio by deploying substantial resources to the retail banking services through the development of new and interesting products. Even today, such a trend is noticed: every day, our portfolio of loans, granted only on plastic cards, increased by 10 million drams.

Why is the borrower who needs a business loan, selects Unibank, and what are the requirements for becoming a corporate client of Unibank?

Z. Boyajyan: Today our programs of business lending are in great demand in the market and it’s not by chance that Unibank takes first place in Armenia by the volume of lending industry. Customers may be offered various options for cooperation, taking into account the specificity of his business. We are gradually developing new specialized credits, targeted at specific groups of customers. Our main goal - to offer customers comprehensive banking services, based on long-term cooperation. It is beneficial for the client, as in this case he will be able to use the bank's loyalty program and to receive appropriate benefits. Well, in order to become a corporate client of Unibank, borrower must have an acting business for at least six months and not have a negative credit history.

What are the key sources of corporate clients financing of the bank?

Z. Boyajyan: Today Unibank gives business credits from the funds attracted from individuals (by the fixed-term deposits Unibank continues to maintain the leading position among banks in Armenia), within the framework of an international program of IFAD, as well as credit line of 20 million US dollars from the Russian Uniastrum Bank, which we used in the second quarter, based on the huge demand in the market. Thus, only for the second quarter, we approved credits for 35 million dollars, or 12 billion drams. Today also discussed the possibility of diversifying sources of funding, despite the fact that we are ready to satisfy the expected in September to huge demand of credit products.

At the moment we are negotiating with various international financial institutions to attract new resources, and the end of this year, the relevant agreements will be signed. In particular, we plan to sign a contract with the German-Armenian Fund (GAF), implementing credit programs of German bank KfW in Armenia. Expected on these contracts funds will be directed to the sphere of renewable energy and mortgage lending. In addition, negotiations are also carried with other financial institutions, and expected of them funds we are planning to use for the small and medium businesses. Thus, we are going step by step all the funds contributed to the bank as deposits of physical persons, as well as the current maturity in the field of business credit, direct for the increasing of consumer loan portfolio.

As for business loans, the potential in this area we will be met by new sources of financing through international structures. Moreover, the conditions under which these funds will be placed on the market will be significantly more attractive for borrowers. We intend to conclude a contract directly between the bank and international organizations, which significantly reduces interest rates on loans. Due to the relatively cheap attracted additional resources, we will be able to lower interest rates on loans, and at the same time, not be obliged to lower rates on deposits.

A. Avagyan: Speaking on the deployment of funds from different structures, it must be noted that Unibank deservedly became a leader among banks in the country in terms of allocation of credit resources of Russian stabilization loan: The bank realized 35% of the total credit program for RA.

You noted that you intend to participate in the mortgage program KfW, which essentially will be the second phase of the program by allocating an additional 20 million Euros in the mortgage market. Unibank is one of the leaders in mortgage lending. What caused to make decision to participate in this program?

A. Avagyan: You're right. Unibank - one of the market leaders of Armenia in terms of its mortgage portfolio, which on August 1, amounted to 11.5 billion drams (or USD30.7 million). This is because of the professional management of the bank, even years ago, speaking for the issuance of mortgage loans not only in Yerevan and nearby regions to it, but in all other cities of Armenia. Regarding the decision to participate in the mortgage program KfW, it is due to greater diversification of funding sources, because the loan portfolio - a living organism that needs constant, recharge, refill the spectrum of lending services and new products, why not, the elimination of "endangered "products, because mobility - security of the growing interest and success.

How Unibank regulates risks in corporate and retail loans? What are the expectations about the amount of the loan portfolio by the end of 2010?

Z. Boyajyan: There is a quite successfully mechanism for risk management for business and retail loans in Unibank. As you remember, in early 2008, the process of implementing the program of the bank ABN AMRO "Improving the bank's risk management processes" has been realized in Unibank which became an important step towards the implementation of relevant international standards of risk management in the bank. However, we are now considering the possibility of developing another mechanism for risk management, which is designed specifically for the consumer market, particularly for credits through plastic cards, as in this area the bank plans to take a leading position in the market.

By the end of the year the number of plastic cards issued by Unibank will reach 100.000.

A. Avagyan: As for the predictions of the loan portfolio, in the first place, we intend to pay special attention to maintaining its good quality. In general, given that most active time for crediting, especially consumer, accounts for the period from September to December, we expect to issue credits for at least another 25 billion drams, bringing loan portfolio by the end of the year to 90 billion drams.