LOW PURCHASING POWER HINDERS THE DEVELOPMENT OF SMALL BUSINESS
Susane Deker, Chairperson of the Management Board and Executive Director of ProCredit Bank, to the BANKER weeklyMs. Deker, many banks began launching credits to the small business, which was not a priority in their policies so far. Is ProCredit Bank's managerial team troubled by that competition?- In the transitional period to market economy one of the main reasons for banks to direct their attention to big corporate clients is that for 15 years there was no small business, formed as a group. Banks preferred big clients, with whose turnover they could make considerable profits.Until ProCredit Bank came onto the market, the other financial institutions' programmes for crediting small-scale business was financed by the European Bank for Reconstruction and Development (EBRD), but it was not a priority in their policies. When our competitors saw that ProCredit Bank makes good business with small-sized companies, which are in a sector believed to be highly hazardous, they also turned their attention to that market. Small business is in fact a stable sector, which develops and generates profits, but only if it has the necessary financing and is offered a variety of bank services. How much is ProCredit Bank's profit for 2002?- We reported a profit of EUR197,000, but this was only for the 15 months since the bank was established. Since beginning operations in October 2001, the bank has extended 8,500 credits worth more than EUR51MN.What is the growth of allowed loans?- In February we released 870 credits to micro-, small-, and medium-sized business, and in March we allocated 1,100 credits. Most of these loans are long-term. We have set the task to double by the year-end the amount of credits we extend within a month. This will become possible with the expansion of the bank's branch network. How do you evaluate the risk?- We carry out analyses, and we visit the place where the client makes business - the shop, the enterprise, or the office - and together with him we examine the accounting documents and the goods in stock, and we are aware how he has generated profit in the last three or six months. After that we make a forecast for the future. ProCredit Bank has at its disposal a solid system and procedures for risk management, which have proved their efficiency. Have you got statistics about how many clients have been refused loans?- They are not many. This is due to the fact that the bank has not set a minimum threshhold for crediting. If a small company wants to get a loan of BGN20,000, we carry out out evaluation and decide for example that we may start by allocating a credit of BGN10,000. When the businessman starts utilizing it we hold a meeting with him again and decide what amount of loan we could extend afterwards.You have probably made an analysis about the most demanded credits - for investments or for turnover capital. What is the average amount of loans?- Dynamo credits are up to BGN10,000 and are the most preferred. Credits for turnover capital exceed those for investments because the need of current assets is permanent, while investments in the purchase of new equipment or a new building are not made each week. The average amount of such loans is EUR5,000.Does ProCredit Bank offer new bank products?- The most recent products that we launched in the beginning of March are the consumer and mortgage crediting. Last month was a trial period for them and it turned out that the interest towards them is within the entire branch network.We also made something unique on the bank market, regarding the working hours. The bank's branches in Sofia, Plovdiv and Varna open at 08.30 hrs. and close at 19.30 hrs. Clients' reaction is very positive because they can come and use the bank's services before they go to work or after the end of their working day. We welcome many businessmen whose opinion is that the new working hours are extremely covenient.ProCredit Bank has so far used five credit lines from various sources. Do you rely on them alone in order to ensure a long-term financial resource?- Our aim is to attract long-term credit lines from international financial institutions, and also to finance our credit activities by money attracted from the domestic market. There is an upward tendency both in the number of clients that receive credits and in the number of clients with deposits in our bank.