TBY talks to Hüseyin Özkaya, CEO of Odeabank, on its first year in operation, the SME sector, and major goals for 2017.

Hüseyin Özkaya
Born on June 14, 1962 in Tarsus, Hüseyin Özkaya is a graduate of Tarsus American High School (1980). After receiving his undergraduate degree in Management Engineering from the Istanbul Technical University in 1985, he completed an MBA at the University of Wisconsin (1987). His banking career commenced in 1989-1990 as Assistant Manager of Impexbank A.Ş., continuing as the Corporate Banking Marketing/Sales Manager of Midland Bank A.Ş. in 1991-1994, where he also assumed responsibilities at the bank’s syndication and product development units. In 1994, he worked at HSBC Bank Plc London as the Fixed Income Products Sales Manager; subsequently, from 1995 to 2010, he served as the Deputy GM in charge of corporate, commercial, and investment banking and Board Member of HSBC Bank A.Ş. He was the General Manager and Chairman of the Management Committee at the Russian subsidiary of HSBC Bank—HSBC Bank RR—between 2010 and 2012. Since 2012, he has been the General Manager and Board Member of Odeabank A.Ş.

Last year was the first full year for Odeabank in Turkey. How did it go?

As you know, we launched in October 2012. In the last three months of the year, we actually achieved all our first-year plans. In essence, we were quite ready for the challenges 2013 brought in terms of infrastructure. For 2013, I think we have achieved what we wanted and we are happy with the results in all aspects. I think the first challenge was to expand in corporate and commercial banking, while the retail banking side would be developing physically in branches. And all the infrastructure for mobile banking, direct banking, and internet banking also needed to be completed because there were certain stages and levels to that. Of course, we made some offerings like credit cards. We launched a credit card brand, called Bank'O Card Axess, in October. Before that, we had our own unbranded card, which was basically a Bank'O Card without a loyalty program. It was a good start for us and we learned from it. In the first six months, we reached 150,000 cards. We want to grow, but we want to also do it wisely. An example of that would be 2013, when we had TL16 billion in assets, TL11 billion in loans, and TL13 billion in deposits, which makes us probably the top bank in terms of a favorable loan-to-deposit ratio. Basically, 2013 was a year in which we exceeded our expectations. We entered the retail market strongly, and we continue to capitalize our corporate and commercial banking.

What is Odeabank's strategy when catering to Turkey's vibrant SME sector?

We help SME businesses, which is a sector worth billions. It is as big as our retail-banking portfolio. Actually, we see this as one of our biggest potential growth areas, and we want to develop more in this area on a much more structured basis as we have done with retail. In retail, we cover 200,000 customers, and in commercial we have 10,000 customers. But the second phase that we are now working on is SMEs. There are about 2 million SMEs in Turkey, and they represent strong potential for us. It would not be wise for us to be involved in the retail and commercial areas, but not the SME sector, especially when we already have the necessary infrastructure for it.

How is Odeabank's current progress going toward its 2017 goals?

We believe that in order to be sustainable and not marginalized in the banking system, you need to reach a certain size in terms of financials, physical size, and customer numbers to make this profitable for shareholders. At Odeabank, everything is done with satisfied customers and shareholders in mind. We now seem to have a flow of satisfied customers and we also want to make our shareholders happy. We believe that this would require at least the doubling of our asset size to $15 billion to $20 billion, while we're currently at $8 billion. As I always tell my colleagues, there are two basic pillars of success. One of them is a committed shareholder who is willing to contribute capital, and the other is the quality of the people and the teamwork they are doing. That is our real success. We have got the best people on our team and this is not coming from me, but from our customers. We have the luxury and talent to put these best practices into one system. There are actually few countries in the world other than Turkey that would allow you to grow your assets to $8 billion in one-and-a-half years with 1,200 people, 42 branches, and 200,000 customers. There is potential here. In that respect, if there are a few more banks to come, they would be welcome. We like competition. We have been in competition with other banks, and they are still doing fine, just like us. From a banking perspective, and from a financial services and market dynamics perspective, the system is healthy.