HSBC BANK ARMENIA: HIGH QUALITY BUSINESS-CREDITS FOR OLD AND NEW CUSTOMERS
By Lilit Aslanyan

ArmInfo
04.03.2010

ArmInfo. Exclusive interview with HSBC Bank Armenia newly appointed
Chief Executive Officer Ms. Astrid Clifford

During the difficult 2009 HSBC Bank Armenia showed gains in all its
indexes. According to the official forecast the year 2010 should be
more positive. What is your 2010 forecast for GDP, financial market,
dynamics of the aggregate credit portfolio of the banking system and
HSBC Bank Armenia? Do you think we can expect to have less overdue
creditors in 2010?

We have noticed some signs of stability in the market and hope that
the economy will begin to grow again in 2010. Most forecasts are
predicting GDP growth of 1-2.5% this year, which is what we expect.

The demand for lending is still loose, however, we have noticed
some pick-up in activity during January and February and overall we
expect positive growth dynamics for the credit market during 2010 and
increasingly intensified competition. In general, we are continuing to
see some impact of the downturn on borrowers’ debt servicing ability
and it may still affect the overall portfolio of existing loans in the
banking system. However, we are comfortable with the quality of the
assets on our books and, with continued close monitoring, we expect
to end the year without impairments. For obvious reasons we were
cautious with our lending in 2009 but expect to be more active in
2010. We are eager to discuss quality business lending opportunities
with new-to-bank customers and our existing relationships.

Today Armenian mortgage market is not experiencing good times. Do you
find resuming HSBC mortgage lending from the point of demand and risk
management justified? What is the size of the mortgage portfolio of the
bank, as at today? What are the current conditions of mortgage lending?

We actually never stopped providing mortgage loans. The dram’s
devaluation last year resulted in a shortage of AMD deposits, as
a result of which we had to temporarily stop providing mortgage
loans in AMD. Mortgage lending in USD continues to be available,
for individuals and legal entities having a USD source of income.

Today our mortgage portfolio is AMD 20 million. This includes all
retail loans that are secured by property.

Our AMD mortgage lending is currently provided under the re-financing
agreement signed with the National Mortgage Fund. We are also looking
at the new Accessible Housing for Young Families scheme.

HSBC Bank Armenia has always stood out by its focus on international
services (lending to export – import businesses). Did the created
world situation affect this position to the benefit of the local
market? What is the size of lending portfolio offered to large, small
and medium companies, as at today? (Please indicate lending terms
for large businesses excluding counting small and medium enterprises).

Throughout the global economic downturn, HSBC Bank Armenia continued
to adhere to its strategy to be the leader in providing financial
solutions to companies engaged in international trade. Our worldwide
presence provides us with unique positioning and opportunities in
providing trade finance, including export and import documentary
credits, acceptances and guarantees, as well as export and import
loans. Despite the negative effect of the recent economic downturn
on the volumes of international trade (exports contracted by c. 34%
and imports by c. 25%), we have managed to increase our volumes of
our trade finance activity, and assisting internationally oriented
businesses will remain a top priority for the bank in 2010. Our
commercial lending portfolio was close to USD 108 million at the end
of January, of which c. USD 30 million was represented by exposure
to small and medium enterprises. We continue to remain competitive
in our pricing, as well as in other terms and conditions, in line
with our strategy of active growth in banking products and services
provided to the SME sector.

According to the strategic development plan what are the bank’s main
forecast parameters (indicators) for 2010? Which market segments are
a priority for the Bank in 2010?

We have planned for growth in all of our lines of business as our aim
is to provide a full range of services to both individuals and legal
entities (including small, medium and large businesses). As mentioned
above, given our international connections and expertise, one area of
focus will be on customers with international needs. On the personal
side, we would like to expand our services to the Armenian Diaspora.

On the commercial side we aim to be the leading bank for international
trade, and have a number of initiatives planned to support this. In
addition, we will look at products aimed at encouraging long term
savings, and will continue to invest in our direct banking proposition.

How do you evaluate the developments of co-financing large enterprises
together with EBRD?

We currently have a number of large-scale projects, which we consider
for co-financing under the respective agreement with EBRD. We believe
this scheme offers good opportunities to provide large scale finance
and meet the borrowing requirements of our customers.

HSBC Bank Armenia seriously invested ($2 million) in Telephone and
Internet banking services in 2009. How many clients did the bank manage
to attract through these services? How much is the local population
ready to use innovative banking technologies? Do you plan to attract
branch network extension in 2010?

Around USD 2,5 million was invested in Telephone and Internet banking
last year. Telephone banking was launched in March, and internet
banking in July, and the services had attracted 12,000 and 2,000
customers by the end of the year respectively. The high utilization
rate in this short period of time indicates to us the readiness of
the local population to use these innovative banking technologies. Of
course one of the main advantages of direct channels is that they allow
customers to transact from their homes or offices at a time convenient
to them. Our aim is always to serve our customers in the way that
best suits their requirements – whether this in the traditional branch
or via a direct channel (including ATMs of which we have the largest
network in Yerevan) – and this will drive our investment decisions.

What are the Bank’s plans in card business? Please indicate the number
of active cards issued by the Bank, as well as the number of ATMs and
POS-terminals. Do you plan to increase their number in 2010? If yes,
how much?

We currently have around 15,000 credit cards (ArCa and Mastercard)
and plan to increase this number by around 30% in 2010. The Bank
has 50 ATMs, which is the largest network in Yerevan as said before,
and around 100 POS-terminals at key merchants in Yerevan, and plan
to increase this number quite significantly. In terms of plans, we
will mainly look at implementing ArCa Link, introducing debit cards
and Chip and PIN cards by the end of the year. We also have plans
to install multi-functional ATMs which will allow customers to make
cash deposits, the late being part of our ongoing strategy to enhance
direct banking channels.