“The government is taking all necessary measures to stabilize the economy”
In many countries of the world, an unstable situation has recently been observed due to the spread of the COVID-19 virus. The financial and banking sector, like many sectors of the economy, is going through difficult times. Chairman of the Board of Kapital Bank Rovshan Allahverdiyev spoke about the current situation in the banking sector of Azerbaijan, the steps that were taken and plans for the future.
- Mr. Allahverdiyev, economic growth has slowed down worldwide. Energy and stock markets stagnated under the influence of the pandemic and in many countries of the world there is an economic and financial crisis. These processes have an impact on the economy of Azerbaijan. What measures do you think should be taken now?
-As you know, on March 19, 2020, by decree of the head of state, a special Working Group was created to prepare relevant proposals to reduce the negative impact of the coronavirus pandemic on the national economy, macroeconomic stability, employment issues, as well as on business entities. Despite the fact that only about 2 weeks have passed since the establishment of the Group, certain urgent measures have already been taken to resolve the situation. The government tries to maintain flexibility regarding future steps to maintain employment, maintain the financial and banking sector, and restore economic growth. The Minister of Economics and the head of the Working Group, Mr. Mikail Jabbarov stated this in his speech.
Currently, 10 programs have been prepared to provide state support. They cover 4 large sectors and 20 business lines. These fields of activity were sorted and the most affected areas were identified among them. The most noteworthy is, that the government allocated 2.5 billion manat for the implementation of the programs. I want to note, that in terms of the size of the economy (3 percent of GDP), such a large amount of state support was allocated neither in our region nor among the CIS countries.
In addition, the fact that the government will pay part of the wages of employees in areas affected by the pandemic, deserves special mention. Over 292 thousand taxpayers will receive financial assistance, tax preferences and privileges for bank loans are also provided for them. And, most importantly, entrepreneurs who conduct their business transparently will receive special support. Mortgage loan issues will not be left without attention.
Kapital Bank is also known as one of the largest employers not only of the country's banking industry, but also of the private sector as a whole. We currently have about 3,500 employees. Separately, I want to emphasize, that the bank has not provided any staff reductions or salary cuts. One of the important points is, that the Working Group has prepared a special program to support the financial situation of the population, providing for the allocation of funds for social packages, such as unemployment benefits, social assistance and others. Within this program, steps will be implemented to cover the tuition fee of students from families belonging to socially vulnerable groups of the population, as well as the introduction of preferential limits on utilities. All of this tells us that the country cares about each of its citizens.
All the taken measures once again prove, that our government comprehensively analyzes the occasions, predicts possible negative processes and takes all the necessary decisions to eliminate them.
- The prohibitions under the special quarantine regime are being toughened every day and affect the daily social and economic life of people. What is the current situation in the banking sector?
- It is obvious, that the banking sector, like all other sectors of economy, must work in difficult conditions and take certain steps to support customers. As you know, in our country all the necessary measures are being taken to minimize visits to crowded places. Taking into account the instructions of the president of the country and the recommendations of the Central Bank, currently the bank branches continue to serve customers on a full-time basis, following all precautions. Commercial banks are doing everything possible to facilitate the operations of customers in this difficult time and satisfy their needs. If a couple of months ago, banks were “fighting” to attract new customers, now they are working to support existing customers, provide entrepreneurs with discounts and incentives, all measures have been taken to reduce the number of physical appeals of customers to the bank. I especially want to note here, that among Kapital Bank's clients there are many pensioners. Of course, we could not forget them. Currently, customers over the age of 65, who receive a retirement card for the first time, cards are delivered to the address of residence. In addition, expired pension cards of current customers of the above mentioned age category are extended for the next 3 months.
- Kapital Bank is one of the largest banks in the country. You differ from other banks both in terms of volume of the loan portfolio and in terms of scale. So, what steps do you plan to take in this situation?
- Kapital Bank, with 115 branches is represented in all regions of the country and it is a bank with the widest service network. Along with consumer loans, the bank is actively issuing mortgage and business loans, as well as loans for small and medium-sized entrepreneurs. As of April 1, 2020, our portfolio of consumer loans reached 1.4 billion manat, the volume of loans granted to legal entities - 640 million manat, and the mortgage portfolio is 57 million manat. One of the most affected areas is micro and small business. Within state support program, much attention has been paid to this area. Half a billion manat has been allocated for the implementation of the support program for the credit guarantee on new bank loans issued to business entities operating in areas affected by the pandemic. In addition, half of the percentages on these loans, more precisely 7.5% from 15%, will be subsidized from the state budget. We, as a systemically major bank, support such measures and are also ready to provide benefits to our customers, both entrepreneurs and legal entities.
It should be noted, that one of the main areas supported by the government in recent years, especially in the current conditions, is mortgage lending. This area is also one of the strategic priorities for Kapital Bank. So, almost half of the 10 million manat allocated at the beginning of the year to our bank by the Mortgage and Credit Guarantee Fund was used. In addition, the current strategic period provides for the bank to provide commercial mortgages in the amount of 100 million manat. In this regard, cooperation agreements with some partner companies have already been signed.
It should be also emphasized that, guided by the recommendations of the head of state Ilham Aliyev to improve the living conditions of citizens in the regions, the bank developed a socially-oriented mortgage product to meet the demand of residents of the regions for housing. Realization of this product will start in the near future. I want to add, that according to the action plan prepared by the Working Group, additional funds will be allocated to provide financial support to the mechanism of mortgage and credit guarantees. We are also ready to take the necessary steps in this regard.