Regional Roots

How would you describe PASHA Bank’s performance in 2013?

Overall, 2013 represented a new phase of institution-building for PASHA Bank, following the initial process that took place at the time of our foundation in 2007. We accomplished numerous “firsts” during 2013, such as the first club loan, which we implemented in collaboration with a group of international financial intuitions. We have received high ratings from international rating agencies; in fact, the highest among Azerbaijani private banks with 100% local capital. In 2013, we also expanded our operations and appeal to the market. For the first time in our history, we started appealing directly to international institutional investors invited on road shows held abroad, which helped promote PASHA Bank as a gateway to Azerbaijan for financial institutions and investors. We are one of the most active banks in the securities market in Azerbaijan, and we trade government securities and are involved in a number of bond issues. We have issued bonds for several financial institutions and leasing companies. In terms of results, we ended the year with a profit, although slightly behind the budgeted figure we had planned for ourselves. The overall dynamics of the YoY growth have been positive. We are the only financial institution in Azerbaijan that makes its forecasts public—this reflects the level of confidence and transparency to which we adhere.

What services does the new SME Business Center provide to enhance the SME experience at PASHA Bank?

Investments in the SME sector are an integral part of our growth strategy. We want the SMEs of today to grow into the large corporates of tomorrow. In 2011, we started developing this strategy and building a relevant client base. In 2012 and 2013, we conducted a number of SME campaigns and, starting from 2013, we began building up a portfolio of small clients. In order to ensure that we are close to our SME clients, we opened our first Business Banking Center in 2013, which renders services to small companies that employ about 10-15 people and have an annual turnover of between AZN200,000 and AZN2 million. We plan to open more centers in 2014 in the belief that SMEs will play an important role in our future business. PASHA Bank offers its clients an internet banking platform to render banking easier and more accessible. In fact, the bank has developed a whole range of innovative banking products, while offering other value-added services that will contribute to the financial and institutional growth of SMEs. Although we are not a retail bank, we are prepared to look after our SMEs both in terms of their business and personal financial needs.

What updates are being planned for PASHA Bank’s internet platform?

Thanks to the internet banking platform that we launched two years ago, the volume of our transactions has increased and many of our corporate clients have embraced this service. Our branches remain busy, and the platform is still small compared to some European or North American banks; however, this simply represents a growth opportunity for us. Over half of our highly active corporate clients have adopted internet banking within the past 18 months. We are now planning a second update to our platform to make it even more tailored to customers’ needs. Obviously though, direct banking solutions will remain important for corporate clients. In 2014, we will be implementing both MIS and CRM systems. We are also working on our treasury management system with one of the world’s top IT solutions companies. In 2014, we will be introducing Phase II of our credit management model. We have made substantial investments in IT in order to increase service standards and operational efficiency. Technology saves clients’ time, which is an important asset. However, as a bank that values relationships with customers, we are keen to strike the right balance between technology and personalized attention.

What does the bank’s corporate social responsibility (CSR) platform consist of?

As a company that has adopted corporate governance principles, we recognize the community as one of our stakeholders; therefore, we keep it in our books, minds, and hearts. One of our CSR mandates fosters economic development by investing in human capital and financial education. Therefore, our CSR is mostly aimed at educational programs. We identify talented young students and send them to prestigious business schools abroad. We have also established a PASHA Bank scholarship for the students of economic universities; therefore they can have sufficient resources to work on their education, buy the books they need, and have fewer financial worries so that they concentrate more on their studies. PASHA Bank also supports business case study competitions between young economists aged between 18 and 22 years old, which helps to foster a culture of entrepreneurship. In tandem with the British Council, the bank has been organizing financial journalism courses for Azerbaijani journalists. Experienced specialists from the Thomson Reuters Foundation teach Azerbaijani journalists how to read economic data and write financial news. It is possible to earn money responsibly, and we believe we have struck the right balance in doing just that. Going forward, we believe that approach will support our ambition to grow returns on our social investments as well. It is a long-term plan, and this is exactly why we are doing this—we are not here for short-term profit.

How has the Georgian subsidiary of PASHA Bank performed to date, and what new markets are you looking at?

It is actually doing better than we had budgeted for, and we celebrated its first anniversary on January 17, 2014. I believe that Georgia will be an important, integral part of our regional operations. We are a regional bank with an aspiration to become a financial gateway on the “regional triangle” between Baku, Tbilisi, and Istanbul. The Azerbaijani banking system is very young, and hardly any bank, except for the International Bank of Azerbaijan, has expanded into international markets. Going forward, on the back of our regional international ambitions, we will be proud in the future to have developed further international operations to announce.

How can banking sector penetration be increased?

Azerbaijan’s relatively low banking penetration rate constitutes in itself an opportunity for growth. The potential for the market is huge, and we believe we can grow significantly in Azerbaijan. Things are changing fast and, over the past 10 years, we have seen huge growth in savings as Azerbaijanis have become more educated about, and trusting of, the banking system.

What are your aspirations for PASHA Bank in 2014?

Our aspirations are in step with national goals because as a responsible corporate citizen, we respect our roots. At the same time, we have roots in Georgia and expect to take root in Turkey as well. Our ambition is to become a regional bank capable of diversifying its client and asset base across the region, and benefiting from regional growth and international trade. We want to increase our market share in all our markets, but particularly in Azerbaijan, which will be helped by the new strategy for 2015-2017.