Branka Damjanovic, member of the Executive Board at the AIK bank - Enlargement and bank number decrease in Serbia will continue
AIK bank has extremely well-secured portfolio with the first-class mortgages which significantly increases the security of payment collection when it comes to problematic placements which in our bank go with the market trend, member of the Executive Board at the AIK bank, Branka Damjanovic says in her interview for eKapija.
The bank will put an accent on funding SMEs especially those with growing
perspective such as agricultural and food production, processing industry with
export market, innovative service and similar.
eKapija: What are your expectation before the week of savings? Having in
mind low interest rates, is this way of savings remunerative at all and whether statistics shows citizens turn to
alternative savings ways?
- Savings in banks definitely is more remunerative than keeping funds at home.
It is true that interest rate decrease trend has been in progress. Total
savings in banks is on the increase but at slower pace than it used to be in
the previous years. Reality is that there is few savings alternatives in banks.
eKapija: How will you place deposits
and where is today, at all, profitable to place banking capital?
- Our bank’s placement structure is diverse and the objective is to at the same
time provide the best combination of yield, maturity and diversification so
that the risk would be mild. We will place in credits for citizens, small
companies and state-owned securities.
eKapija: What are business results in the first nine months this year?
- In 2013, the bank generated total profit of
RSD 1,23 billion, which lead to strengthening of capital adequacy and
value for shareholders and it also strengthened basis for further business development.
High capital adequacy and stability of deposit basis contributed to the fact that in the first six months this year the bank generates profit before taxation of RSD 1,04 billion with preserving values for shareholders and clients on the other hand. Increasing trend has continued in the second half of the year in the second half of the year.
eKapija: Problematic loans is inevitable issue. How many of them there are in AIK bank?
- In the banking sector, the fifth of total placements are problematic loans.
Apart from the level of problematic placements, it is very important to mention
the level of mortgage security. has extremely well-secured portfolio with the
first-class mortgages which significantly increases the security of payment
collection when it comes to problematic placements which in the bank go with
the market trend.
eKapija: When we are speaking of the economic situation, how do you an
option that banks decerase NLPs which increased over the past years and to help
real sector start growing again?
- Essentially, NLPs growing trend can be halted with the economy recovery. This
year unfortunately, this is unlikely to happen. However, the level of NLPs in
the balance sheets of banks started decreasing since some banks started selling
these placements to specialized entities which deal with solving problematic
cases and further payment collection,
eKapija: Do you see the opportunity for recovery of citizens’ and companies
‘demands in times when NPLs are on the increase, when illiquidity is prevailing
and when the unemployment rate is 25%?
- All entities are somehow in the consolidation process so thus credit
activities have been on decrease first of all since business halts investments.
A mild growth is visible in placements for physical entities so we expect the trend will continue until the
crisis ends. The basic strategic decision of AIK bank in the upcoming period in the segment of operations with citizens small
businesses are directed to increase of the presence of a bank in funding small
companies with a flexible approach so that availability of funding would
increase for a portion of a small business with a growing perspective such as
agriculture and food production, processing industry, innovative services, etc.
and integration of local chain of values.
eKapija: A few years ago, NBS already conducted stress tests and then the banks did relatively well. To what extent did the situation deteriorate and how realistic are data that the average capital adequacy is 17,3%?
- Data are official. It is true that banking sector in Serbia is highly capitalized due to regulatory request from the previous period which were very rigorous when it comes to that issue. It Is good since the banks met with crisis with sufficient space to absorb new losses based on poor payment collection. Despite these facts, banks are still highly capitalized. In AIK bank, capital adequacy totals 39% and this indicator is what sets our bank aside.
eKapija: The World Bank estimations in 2006 show that by 2012 Serbia should have had only seven to eight banks, i.e. to see enlargement in the banking market (WB shows one bank goes on a million of people). Why enlargement did not happen at Serbian banking market and do you expect some changes here?
- Consolidation happened to some extent and during the past two years a few
banks stopped working through shutting down or merging with a bigger bank and
there are still plenty of banks compared to economy size and the number of
citizens and it is obvious that enlargement and bank number decrease will
continue.
Jelena Djelic
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