Some Kazakhstani banks are strengthening their debt recovery efforts during the crisis, maximally imposing various penalties, while others, on the contrary, are trying to retain good clients who are temporarily in a difficult situation by offering mutually beneficial solutions.
Nurbank, which takes pride in its long-term relationships with its clients—many of which have lasted for over 20 years—belongs to the latter category.
Eldar Sarsenov, CEO of JSC "Nurbank", discusses how the bank builds its strategy in challenging times with Forbes.kz.
F: Eldar Rashitovich, on November 30, 2015, Nurbank's board of directors appointed you as CEO. You are not new to the Kazakh banking market, having been Nurbank's managing director for three years. Tell us about how you entered the banking field.
- I spent a considerable amount of time working in the USA, where I also received my education. I worked and studied in the States for a total of 7 years, earning a Bachelor’s degree in Management and Marketing from Suffolk University (Boston) and an MBA in Corporate Finance from Northeastern University (Boston). Prior to my time in America, I worked in Kazakhstan as the Deputy Director of Sales and Marketing at Helios, starting as a regular intern.
To complete my education program, I needed to intern for six months in a large company. I was invited to engage in sales of Swiss watches TAG Heuer (part of the multinational corporation LVMH Moët Hennessy — Louis Vuitton) on the American and Canadian markets through partnership programs. We worked with approximately 600 partners across the USA and Canada (around 300 stores), with our headquarters located in New Jersey. I remember managing to increase sales volume by 40% and was offered a contract extension for another six months. After completing the contract in 2012, I decided to return to Kazakhstan.
F: Why did you leave the USA, given your bright start right after graduation?
- It might sound trivial, but I strongly felt the pull of home. I love Kazakhstan, love my parents, and am an Almaty native through and through. Comparing life in the USA to life in Kazakhstan is like comparing work in a ‘blue chip’ company to a startup. While working in an American company, you can perfectly plan your life for the next 15 years, but it’s monotonous. Life and work in Kazakhstan are constantly dynamic, requiring unconventional decisions and keeping you on the move.
F: Where did you work after returning from the States?
- As the managing director at Nurbank, I oversaw internet banking, the card business, marketing, personnel, advertising, and service quality.
F: Nurbank has changed over the past three years. What do you believe are the main competitive advantages of the bank in Kazakhstan today?
- Our strength lies in competitive retail rates. Additionally, I believe the most valuable asset is our loyalty towards our customers.
F: Almost every bank boasts loyalty nowadays—these are such times... Do you overlook payment delays?
- No, we do not. Everyone can face problems, including issues with loan repayment. We have special credit committees at the head office that evaluate such situations individually. We rarely impose the full range of permitted fines and penalties; we always accommodate by offering holidays, deferred payments, and more. If a client meets us halfway, we strive to simplify the rules.
F: What can we expect from Nurbank in the New Year, what are you currently working on?
- In 2016, we will focus significantly on retail: finalizing card products, enhancing our remote services, and expanding our terminal network—200 self-service terminals have already been purchased and installed. This direction in our work will solidify the bank's position and meet client needs.
F: Do you think this is enough to weather the crisis?
- We cannot prevent external impacts, but we can prepare as best as possible. If the bank and the client prepare well, the crisis effects will be minimal.
Let me give an example. In 2013-14, I headed the Nurbank credit committee responsible for retail and SMEs. I noticed that after the February devaluation, the 'tone' of credit applications changed significantly. Previously, they were mainly for car purchases, celebrations, and consumer loans without specified purposes. Starting in early 2014, clients began taking targeted loans for education, purchasing land plots, and apartment renovations, indicating a financial literacy among the population not seen in the 1990s or early 2000s.
In the end, we achieve synergy: a responsible bank and a responsible borrower together can better withstand crisis years.
F: Many banks today are talking about cost reductions. Are you among them?
- Of course, we are cutting back, reviewing internal processes. Despite this, we must not allow salary reductions for our employees in 2016. We cut costs where it is most painless: reducing some ineffective training programs, courses, and other outdated programs.
F: It is believed that in a crisis you not only economize but also invest significantly, such as in developing bank IT directions. Incidentally, this is frequently discussed today, including by your direct competitors.
- Modernizing software, IT infrastructure, and hardware is our strategic direction. For example, we are implementing a new solution that will seriously modernize our retail loan application gateway, expand the ATM fleet, and optimize some back-office operations. I won't disclose details—the project is under implementation—but we will announce it in the near future.
F: Some Kazakh bankers are skeptical about making even modest profits in 2016, yet still discuss investing in business development. Do you foresee a profit this year?
- Naturally, we strive for profit, but honestly, I'm skeptical that the figures will be outstanding. And, as mentioned, we are investing: in process optimization, IT solutions, and improving service quality for our clients. Nurbank is already changing in three directions at once.
F: Are you expecting state assistance in 2016?
- We work well under the state programs. For instance, in 2014-2015 we received 18 billion tenge from the National Fund of Kazakhstan within the programs for supporting and developing entrepreneurship, earmarked for lending to small and medium enterprises—10 billion tenge for SMEs and another 8 billion tenge for financing large enterprises. As of now, nearly 98% of the state funds for SMEs have been used, and funding for large businesses is ongoing. Currently, we are negotiating with the Asian Development Bank to participate in the micro, small, and medium entrepreneurship development program. Concerning retail, Nurbank received 1.6 billion tenge in 2015 from the Problem Loan Fund for refinancing mortgage loans. We are also successfully mastering these funds. Presently, about 200 mortgage loans have been refinanced under the government program, allowing for interest rate reductions to 3% annually and converting foreign currency loans to tenge.
Frankly, during my years in America, I did not see such comprehensive government support for the entire banking system. While there was assistance for specific banks to prevent system-wide collapse, agriculture received help for farmers, but that’s traditional. Therefore, I am confident that the result of this support and all these investments will be the restoration of the strength of the Kazakh banking system.
Source: Forbes.kz