AZERBAIJAN - Finance
Michael Hoffmann has developed his career in banking in European and CIS markets. He became CEO of AccessBank in Azerbaijan in 2012. Prior to this, he spent seven years with the EBRD as head of the bank’s regional operations in the Volga Federal District of Russia and as a Senior Banker with EBRD’s Moscow-based corporate finance team. He began his career at HSH Nordbank in Germany. He holds an Executive MBA from the University of Chicago.
The bank has a very clear strategy. From day one, we have been focusing on micro- and small-business financing, and we continue to pursue this mandate and develop in this market niche. Today, we are the number one bank in terms of financing businesses of this size. Meanwhile, we have a strong exposure to medium-sized corporates as well as a fair amount of exposure to the retail market. The main reason for our success is that we have a clear strategic focus, which is to educate our staff at a very high standard. We take on to take on young talent, often directly from university, and educate and train them internally. We have an excellent motivation system, and I firmly believe that the market recognizes AccessBank as an institution with exceptional staff.
We have a very strong presence in the regions, with a network of 34 branches that is constantly expanding. We will open a further four branches in 1Q2013. Later in 2013 it is the plan to continue opening branches in the regions where we are not yet present. After a recent meeting with the branch managers of the bank, it became obvious that in most of the regions of Azerbaijan we are the largest bank. This is because we have placed a very clear focus on the agricultural sector, and AccessBank became the first bank in the country to launch a special loan product for clients in this sector. By being the first mover in this market, we have also become number one in terms of financing small-scale farms in the regions.
The background of the rebranding was that the bank was a part of a network called Access Holding. In 2008, the holding started to brand all seven of these banks. Currently, there are five in Africa, as well as one each in Azerbaijan and Tajikistan. They were given the name AccessBank. At that point in time, it was not connected to a change in business.
In 2006, our loan portfolio was $17 million, in 2008 it had reached $119 million, and in 2010 it grew to over $300 million. Today, we are at $500 million. We have witnessed an amazing and impressive growth trend, which is still ongoing because there is strong demand in the country. This progress speaks in favor of the staff at the bank. If this landmark growth has been achieved at a consistently very low portfolio risk rate, it means that overdue loans have been, at a maximum, just 1% of the loan portfolio. This is an extraordinary figure for this market, which sees an average overdue loans figure of around 5% or 6%. We even had excellent portfolio quality during the financial crisis in 2008 and 2009, when there were problems in the banking market. If you ask why this is an example of portfolio quality, it is because we have the right technology to analyze risk. AccessBank has a lot of experience in this area. We have efficient systems to maintain the good portfolio quality.
We are engaged in a plethora of social initiatives. We have a partnership with the Association of Football Federations of Azerbaijan (AFFA), and we regularly sponsor tournaments for school children, both boys and girls, and a number of summer camps. The program is organized by our employees and bankers, who understand that being part of the local community contributes to local development. The bank also has a history of sponsoring sporting facilities at schools so that children are educated in sports and physical education. Furthermore, AccessBank held an event in collaboration with the artists of the Philharmonic Orchestra here in Baku. We brought children from an orphanage to meet celebrities that are participating in a program to support the development of the children as they continue to grow. In addition to this, there are a number of ongoing social initiatives that the bank is involved in.
The banking sector is currently developing very dynamically. Many banks have experienced impressive growth rates. This was true in 2011 and continues to be the case in 2012. The penetration rate in the country in terms of financial services is clearly increasing and leading to this development. Still, the average penetration figures for financial services are below not only Western European standards, but also in comparison to neighboring former Soviet countries. In that regard, we still expect growth to continue with immense dynamism.
We are already seeing the effects of this new requirement. It has definitely motivated local banks to achieve strong growth in order catch up with their balance sheets and improve toward the level they need to be at in order to be among those fulfilling the threshold in 2014.
If we look at the prognosis for the price of energy over the next years, Azerbaijan is well placed. The country still enjoys huge oil reserves, and the gas fields are being prepared for production in a couple of years. With this background, we can expect a very bright future in Azerbaijan. Furthermore, the agricultural sector is well placed for growth.
AccessBank will pursue its mandate to provide financing to the micro- and small-business sector in this country. This is a role we will play in the local market, and we strive to continue developing dynamically to develop with our clients.
© The Business Year – January 2013
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