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BSTDB intends to increase financing of Armenia’s real sector

 Wednesday 09 November 2016
Ugur Delikanli
Photo: From personal archive

Ugur Delikanli


Banks.am talked to The Black Sea Trade and Development Bank President Ihsan Ugur Delikanli.

- Mr. Delikanli, how do you see the BSTDB’s portfolio development in Armenia so far?  Is there anything you would like to change?

- We are reasonably satisfied with the portfolio in Armenia. Over our 2011-14 strategy period we achieved great progress in expanding our portfolio. We achieved more than double our target of Board approvals, and new commitments amounted to EUR 63mln, well in excess of our original projections.

This momentum has continued into our current four year strategy period 2015-18. In less than one and one half years of the current term we have achieved over half the target, with Board approvals reaching EUR 42mln and new commitments EUR 32mln.
Despite these successes, we would like to find new operations with a greater regional cooperation element.

We also intend to emphasize the so-called “real” sectors of the economy more, since our exposure to financial institutions is rather large. This is understandable, as the small size of most Armenian firms makes it difficult to work with directly and we need to provide SME financing through intermediaries.

We are determined to increase our involvement directly with manufacturing firms as well as those in areas such as energy, telecommunications and transport which can help expand the quality and capacity of infrastructure, and also improve links with other countries.

- What are your targets and plans in Armenia for the coming years?  What are the BSTDB’s strategy and business priorities in Armenia?

- Our stated target for the 2015-18 period is for commitments ranging from EUR 51mln to EUR 76mln. We are well on our way to achieving these targets, and if possible we will be happy to exceed them, particularly for real sector operations in which we can mobilize co-financing from other external sources for the benefit of Armenian firms and the economy more generally.
As for our priorities in Armenia, In line with Armenia’s developmental priorities and BSTDB’s operating mandate, we intend to support banks and firms active in Armenia that are looking to invest or expand activities.

We are particularly keen to finance operations that help foster regional cooperation. To this end we are keen to participate in small or medium scale projects that help develop infrastructure links with other member countries of BSTDB.

Given the broad based needs to achieve growth and greater diversity, we will consider any bankable operation with emphasis on those which promote export capacity and generate new employment.

- What are the key achievements and accomplishments of BSTDB in recent times? What is the Bank's vision and strategy for the years to come?

- Despite periods of intermittent political tension between some of our constituent countries, BSTDB has not only achieved to remain their common economic and financial discourse ground but has also managed to keep political considerations and disputes away from its Board room.
BSTDB has demonstrated a sound financial position and stable profitability. We have substantially improved the portfolio quality, with only two non-performing loans, comprising 1.2% of the outstanding loan portfolio, as at the end of 2015, by the measures taken in the last two years.

We are proud to remain the best-rated financial institution in the Black Sea region and one of the highest-rated in the Central and Eastern Europe.

As a result of strong efforts in the last two years we have improved sector distribution for our lending. We now have an increased share in real sector projects as opposed to financial institutions. The above newly introduced products enabled us to consistently achieve portfolio growth rate as 15 % in 2015 that have exceeded our forecasts.

We are mainly focusing on supporting SME development in our member countries. Strategy for the period of 2015-2018 puts special emphasis on supporting “real” sector operations, such as manufacturing, energy, public utilities and other non-financial services, which currently represent over 50% of the portfolio. We intend to focus more on the public sector operations with high development impact, including public private partnership (PPPs), as well.

Siranush Simonyan talked to Ugur Delikanli

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