About the company: PASHA Bank is one of Azerbaijan’s leading corporate banks. Established in 2007, we offer all major financial services, including investment banking, trade financing and asset management to a range of clients, from large corporates to small and medium enterprises. The Bank works particularly closely with companies operating in the non-oil sectors of the economy, including agriculture, transportation, construction and retail, which are vital for helping Azerbaijan to diversify its economy.
Today, PASHA Bank is an international team of about 430 people representing 8 nationalities and members of our team speak a total of 14 languages. As one of Azerbaijan’s youngest but largest banks, we constantly keep abreast of financial and technological innovations. We work hard to keep ahead of market trends and adopt international experience and state-of-the-art technology to ensure that we provide the best possible service to our customers.
Caspian Energy (CE): How would you assess the outcomes of 2015? Which plans do you set for 2016, considering the approval of PASHA Bank rating at BB- by Fitch Ratings in March of this year?
Taleh Kazimov, Chairman of the Board, PASHA Bank: I am sure that 2015 turned out considerably hard and full of surprises both for the Azerbaijani market and the whole regional market. In spite of the fact that last year we witnessed an occurrence of new risks for the local market, PASHA Bank has managed to end the year with profits.
Timely assessment of the market situation and taking of risk regulation measures has been one of the major reasons for our successful completion of this year which was hard in terms of macroeconomics. We initiated a timely close dialogue with our customers to determine their current operational needs and reveal possible problems that their business could face. Thus, depending on a concrete situation, we provided our clients an additional financing, restructured credits allocated earlier, extended grace periods and provided a technical assistance. It all helped our clients and us to retain their market positions and enhance the quality of the credit portfolio respectively. Taking it all into account, international ranting agency Fitch Ratings affirmed our rating at BB-. It has been one of the nest ratings at the local bank market.
As far as financial indicators are concerned, net loan portfolio income increased by 15% without regard to the effect of the devaluation. Fee-revenue increased by 1.5 times while pre-tax income rose almost twice.
Overdue loans rate (90+ days) within the total portfolio reduced from 5.5% down to 5.2%. Operating profits of the Bank totaled 102 mln AZN (based on local accounting standards) which is 64% higher than 2014.
As far as 2016 is concerned, PASHA Bank relializes that it will not be less intense economically. We are keenly considering a possibility of starting an activity in Guba-Khachmaz region, Absheron district and Sumgayit. However, we do not plan a high loan growth. Banks focuses on strengthening its market positions and maintaining the quality of already exisiting creati portfolio.
CE: Will the Bank’s strategic vision change following the market situation?
Taleh Kazimov: New economic circumstances caused certain challenges as well as big opportunities for business development. We always have our finger on the pulse and in case of necessity can reconsider our growth policy. However, strategic vision of PASHA Bank will not change.
CE: Has the Azerbaijani economy, in your opinion, reached the bottom of the current crisis?
Taleh Kazimov: Manypeoplecall thepresent situation a crisis and it is indeed a very popular term now. However, the right way would be to call it a reality of capitalism. Azerbaijan is a part of the global economy and inherent risks of the western countries are no longer alien to us.
As far as the revival of the economy is concerned, it is initiatives, which the state actively promotes, lead to it. The bank is welcoming economic transformations taking place in the country now and believes in their success.
CE: Which sectors of Azerbaijan’s economy do you find capital intensive and prospective from the standpoint of their further development? In which of these sectors does PASHA Bank see itself engaged?
Taleh Kazimov: Any of the economic segments, representing a non-oil sector, bears an even priority for the country. In general, there are all prerequisites for its development. For instance, Azerbaijan’s geographic location turns a country into the “bridge” into the region or into a transportation hub with all favorable prospects arising from it.
As far as PASHA Bank is concerned, as early as 2007, when the Bank just appeared in the market, the management took a decision to get actively engaged in the non-oil sector. Accordingly, the most attractive for us are such spheres of economy as agriculture, production, IT-technologies, logistics, trade and service, infrastructure construction and transport sector. For instance, we suport enterpreneurs, engaged in the agriculture, by conducting business forums in regions, attracting experts, etc. We cooperate with non-bank credit organizations specialized in financing of small and medium enterpreneurs and others.
At present, we are offering a full range of services required for small and medium business representatives and corporate clients with multimillion turnovers.
Nowadays, the line of banking products, offered by PASHA Bank to its corporate clients, does not yield in anything and at times even excels products and services offered by banks with a foreign capital in quality and flexibility. As before, we pose ourselves as a regional corporate investment bank, partner of the real sector both in terms of finances and provision of business consultations.
CE: Your approach tells about certain ambitions of PASHA Bank. In this regard the question is whether you plan to hold the first debt IPO in the country?
Taleh Kazimov: As I have mentioned above, PASHA Bank has a strong international rating and the financial position of the Bank is favourable for issuing debt liabilities. However, high currency liquidity at the market and directly at PASHA Bank is the main region whe we don’t plan to conduct IPO this year. In other words, there is no particualr need to attract currencies from abroad. However, we admit such possibility in 2017.
CE: To what extent has our market matured to compete with foreign partners inside the country?
Taleh Kazimov: Nowadays there are banks operating in Azerbaijan and founded by large foreign financial organizations. We work in the same field and compete accordingly. In reply to your question, I would say that banks with the Azerbaijani capital make it quite good. I have always supported a sound competition as it is an additional incentive to develop and attract investments into the sector. This statement fairly refers to other spheres of economy as well. In addition, presence of foreign players at the local market means also appearance of technological “know-how” in the market, innovations from the standpoint of efficient corporate management and many others.
As far as PASHA Bank and our competiitve advtange are concerned, we differ with an individual approach to each client. We always keep up with the time and are a pioneer on introduction of modern products in the local market of the corporate banking. Given the increase of macroeconomic challanges in the region, direct funding is becoming a secondary product offered by credit institutions while right business consulting comes to the forefront and is one of the strongest points of PASHA Bank.
As far as international markets are concerned, we are currently represented by two subsidiaries in Turkey and Georgia. Certainly, selection of these countries for an international expansion of the Bank is not a mere coincidence: they are one of the major trade partners of Azerbaijan. As of the end of 2015, both of the banks became profitable and are growing actively. Developing a banking activity inside of the economic triangle “Azerbaijan-Turkey-Georgia”, we are aspiring to contribute to much higher increase of trade flow between the countries. We are more than confident in the successful future of the region and are ready to become one of the engines of its economic development. We plan to lend support both to Azerbaijani entrepreneurs in these countries and the local business.
Thank you for the interview
Interview made by Sabina Mammadova, Emil Mammadov