Chairman of International Bank of Azerbaijan Gives Interview
OREANDA-NEWS. December 06, 2013. Since independence the International Bank of Azerbaijan (IBA) has grown and expanded its services to become the country’s leading national development bank. IBA’s chairman Jahangir Hajiyev took the time to respond to The Report Company’s questions about the bank’s transformation over recent years, its rise to regional and international prominence and opportunities for the UK’s financial institutions in Azerbaijan’s growing financial sector.
The Report Company: You joined the bank in 1995 and became chairman in 2001. What have been the key milestones and achievements during that time?
Jahangir Hajiyev: Having gone through a difficult process of development, the International Bank of Azerbaijan has been transformed from a narrowly-focused branch of the USSR’s VneshEconomBank into a national development bank. It is the only former state-owned bank in the country that has managed to maintain a leading market position and it has earned client trust through reliability, stability and high standards of service. Today, the bank is recognised as the backbone of the country's banking sector. Having gained a foothold as one of the largest and reliable brand financial holdings in the Caucasian region, IBA holds a dominant position in all segments of the country's financial and banking market. Its affiliated structures also dominate in such spheres as insurance and credit card processing.
IBA represents Azerbaijan on the international scene and, as the national development bank, it exerts a stabilising influence upon the Azerbaijani economy as a whole. From our position at the second level of the country's banking system, we, properly speaking, are the main bearer of the monetary policy developed at its first level - the Central Bank of Azerbaijan.
Over the past 12 years, the bank's assets have grown by 25 times, the loan portfolio by 30 times, customer deposits by 58 times and the share capital by 148 times. The bank’s loss for 2000 amounted to 4.2 million AZN, while for 2012 its profit was 43.4 million, despite the fact that the bank’s reserves increased by 24 times and reached 727 million AZN.
TRC: In 2007, the International Bank of Azerbaijan became the World Economic Forum’s first Global Growth Company (GGC) from the Caucasus and Caspian region. Moody’s Investors Service in May this year upgraded the bank’s outlook to “Stable” across a number of ratings, while EMEA Finance magazine named the bank “Best Local Bank”. What has been the strategy leading to this international prominence and success under your leadership?
JH: The key points are that the IBA is the recognised leader of Azerbaijan’s banking system and serves as a basis of stability. Its presence in all banking service sectors makes it a viable alternative to any other bank and ensures the stable operation of the national banking system under any conditions.
The IBA provides a comprehensive range of services to corporate and individual customers in accordance with international standards. Our main priority is the long-term interests of our customers. The oil, gas and energy sector, as well as the transport and construction sectors, account for the majority of our corporate clients.
The IBA is a reliable bank with a high degree of operational efficiency. We value our business reputation; we provide full transparency, open information flows, rigorous fulfilment of our duties to our customers and high profitability. Through contributing to the formation and development of a new national economy based on market principles, the IBA has focused on the development of its national business. In addition, the IBA is a socially responsible institution. It actively participates in the implementation of social programs and gives support to medical, scientific, educational and cultural institutions.
The IBA is characterised by dynamism, innovation and a strong corporate spirit. The bank innovates, improves, reacts promptly to market changes, establishes new contacts and business relations and strives to ensure high quality in all of its activities. The IBA actively promotes the country’s integration into the world community, systematically expanding its presence abroad and enjoys international banking ratings.
TRC: How important are corporate links with the UK to IBA?
JH: The UK has played a leading role in the volume of investments in Azerbaijan's economy for a long time. The International Bank of Azerbaijan, as the country’s leading bank, also aims to enhance corporate relations between the two countries, through organisations such as the Middle East Association (MEA), TheCityUK and Asia House, with which we signed an agreement which grants “Champion Supporter” status to the IBA. The IBA co-founded the Britain-Azerbaijan Business Council which aims to increase business cooperation between the UK and Azerbaijan and enhance the trade and investment links between the two countries.
TRC: The UK is currently positioning itself as a global gateway for Islamic finance, through UKIFS. What opportunities are there for collaboration between the two countries in this growing sector?
JH: Islamic banking is a promising industry - and not only for the Azerbaijani market, because its growth outpaces that of the traditional banking system. Over the last five years alone, cumulative Islamic assets have enjoyed an average annual growth of 25 percent and by the end of the year 2013 will total nearly USD1.6 trillion. The IBA is looking at the possibility of branching out regionally. Azerbaijan will be used as a testing market for the implementation of a fully-fledged Islamic banking model in the CIS countries. Thereafter, the UK and Azerbaijan together can create a solid platform to develop Islamic banking in the CIS countries. Sharia-compliant financing from the UK can enter Azerbaijan and the CIS market through the IBA.
TRC: What international activity and partnerships does the IBA have?
JH: The IBA is the main generator of reforms in the financial and credit segment of the economy. It takes dominant positions in the implementation of new, world-class banking products and services, most of which are now developed in the domestic market thanks to the IBA’s innovations. In addition to establishing the first processing centre in Azerbaijan, the IBA provides assistance to many Azeri banks in becoming part of international payment systems. Along with its extensive service network all over the republic, the bank has international reach. It has foreign representations in London, Frankfurt, Luxembourg, New York, Dubai, subsidiary banks IBA-Moscow and International Bank of Azerbaijan - Georgia, as well as several other subsidiary structures: International Insurance Company and AzeriCard Processing Company and Joint Leasing Company. The IBA is gradually expanding its operations abroad and in the world’s financial markets, establishing foreign correspondent relations and links with international financial institutions, and assisting in the integration of the country in the world community and the attraction of foreign investment to the republic.
TRC: What objectives would you like to achieve during your time at IBA?
JH: The IBA, a large, dynamic financial and credit institution, has entered the 21st century with hopes for success. I am confident the bank will further reinforce its reputation, serving as an example of a civilised, reliable and professional organisation and justifying its image as a strategically important part of the national economy. All of these qualities, together with the bank’s experience and energy, will be purposefully applied for the benefit and prosperity of Azerbaijan.