The FINANCIAL -- As of 31st of March, 2017, İşbank Georgia’s assets size was around USD 128 mln, having increased by 42% compared with the same period of the previous year. The main part of the assets are the loan portfolio (61% of total assets) with an amount of USD 78 mln, increased by 26% compared with the same period of the previous year, according to Ozan Gür, CEO of İşbank.
“We have been operating in Georgia as a subsidiary company of the world’s biggest Turkish bank, İşbank, according to the Banker’s Top 1000 Banks list. It is one of the biggest groups in the financial sector, with a total size of assets around USD 89 bln as of 31st of December, 2016. At the beginning stage, our company started operating as a branch in 2012 and was transformed into the Bank (JSC İşbank Georgia) as of 1st of August, 2015.
As of 31st of March, 2017, İşbank Georgia’s assets structure has been mainly denominated in USD, with a dollarization rate of 86%. The majority of funding is from the parent company, USD 58 mln (45% of total funding). Total equity capital is around USD 13 mln and regulatory capital - USD 29 mln.
Q. Which segment has changed compared to previously, and in what ways?
A. The Bank was concentrated on the corporate segment at the beginning stage, but we are increasing our activity in the SME segment too. As of 31st of March, 2017, the Corporate and SME segments’ shares in the loan portfolio are 92% and 4%, respectively. We plan to increase the SME segment’s share to 10%-15% in the near future.
Q. How has the GEL devaluation affected İşbank Georgia?
A. The GEL devaluation didn’t have any significant impact on our financial position. As for effect on loan portfolio quality, in general currency devaluation is an additional stress for borrowers who have loans in a currency different to their income. As the retail segment’s share of our loan portfolio is very small, and most of the individual borrowers are non-residents, living in Georgia and their income being mainly in a foreign currency, hasn’t affected the quality of the loan portfolio either.
Q. How has the so-called Larization plan affected İşbank?
A. The individual borrowers’ share is very small and out of them, we have only had several customers who have met the criteria of the Larization project. As a result, this didn’t have any effect on İşbank Georgia.
Q. How do you evaluate the efficiency of economic Larization?
A. The overall dollarization rate of the Georgian banking sector is around 65%, which is still high and creates additional currency risks for the banks, as well as for the borrowers, mainly for individuals. Therefore, such kinds of promotions are very important and, I guess, will have a huge positive effect in the future.
Q. As the Georgian PM says, access to long term resources denominated in GEL is a cornerstone of reform. But is it attractive for Turkish investors?
A. Availability of resources denominated in GEL is very important for any kind of business whether it be local production, in the service sector, or any kind of import, as long as the company’s income from sales of goods or services are in GEL. In this case the exception would be mainly business-related to export operations. At the moment, unfortunately, Georgia’s import balance is negative; therefore most of the businesses operating in Georgia are very sensitive towards acquiring financing in a foreign currency. The same would apply regardless of the nationality of the investor.
Q. What are the current trends in the loan and deposit segment?
A. Due to GEL exchange rate volatility, GEL resource demand has increased. As a result, GEL-denominated deposit rates have increased slightly. On the other hand, foreign currency interest rates of both (USD and EUR) deposits and loans are significantly lower due to less demand. This trend will continue unless the exchange rate shows less volatility and more stability.
İşbank’s current borrowers mostly consist of Healthcare, Real Estate Management and Development sectors but we embrace such sectors as Oil Products, Energy, Consumer Products, Consumer Services, Telecommunications etc.
Q. What is the share of corporate banking at İşbank Georgia and how is it developing?
A. As previously mentioned in figures, most of our current loan portfolio consists of corporate clients. According to our future development strategy, we plan to be mostly active in this segment.
Q. Tell us about personal banking and finance at İşbank. How competitive are the services provided to individuals by İşbank in terms of service fees?
A. Currently we are concentrating on cooperation with legal entities and their salary projects only, therefore we are not promoting the personal banking direction. According to our strategy we do not plan to enter that segment due to the existing competition in the retail banking sector.
Q. What are the novelties in online banking offered by İşbank? In Turkey İşbank has started to provide a money transfer service via Apple’s iMessage. Will this be available for Georgian customers?
A. We are constantly working to improve our distance banking service products as according to our vision this is the future concept of banking. People are very tense at the moment, therefore online banking services and their functionalities have to improve and widen in order to become more sophisticated to match the time. Currently our internet-banking and mobile banking platforms are in the functionality development process ready to be launched by the end of 2017. The novelty of transfer service through iMessage offered by İşbank in Turkey is not yet available locally but we will be trying to implement this service locally as soon as possible.
Q. What are the main challenges encountered by İşbank in the business?
A. From our perspective, the main challenge for us is that by the time we entered the business in Georgia, this sector was quite developed and companies had already started to choose their banks. Our mission is to raise awareness about us as one of the largest Turkish banks in the world which can be trusted in the same way as any other serious local actors. On top of this, we have significant strengths compared to other market players. This includes pricing on financing trade operations related to Turkey and European countries, and we plan to be active on financing this direction.
Q. Are you going to develop İşbank’s retail banking?
A. For the time being we are not planning activity in retail business at least until the end of next year due to the existing saturation of the largest Georgian banks and our newly started and comparatively modest presence with only two branches (Tbilisi and Batumi). However, I am sure this can change over time.
Q. Tell us a little about banking in Turkey. What are the differences?
A. The banking sector in Turkey is very strong due to the strict regulations that effectuated after the big banking crises in 2001. There are 53 banks in Turkey (34 deposit banks, 13 development and investment banks, 6 participation banks). The total asset size of the sector is nearly USD 800 billion.
Despite the global economic crisis and the Eurozone crisis, the high capital adequacy ratio of Turkish banks allowed them to achieve strong financial statements. The Banks provide their customers with every type of banking instruments and day by day we can see that digitalization in the sector is improving.
Q. Where do you see İşbank in the next 10 years?
A. Within the next 10 years I see İşbank Georgia being a solid market player in the Georgian banking sector and being one of the first choice banks adjusted to perfectly fit businesses operating locally.