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"We want to build the best retail branch network in the country"
Mikhail Nadel, AUB |
AsiaUniversalBank, Kyrgyzstan’s largest financial institution, is looking to up the ante in the central Asian republic’s increasingly competitive banking marketplace, with a big expansion of its retail banking operations. Designed to take advantage of the increasing bankability of the country’s population of about 5 million, the move will involve AUB increasing its branch network from four to about 100 by the end of next year, with the bank’s headcount set to soar from 300 to 800.
Founded in 1997, AUB has established itself as the clear market leader in a country that lacks the vast mineral wealth of its neighbours but is nevertheless beginning to see the benefits of its strategic position on the east-west transit route between China and western Europe. At present it controls about 20% of total banking assets in Kyrgyzstan. As a result of its leading role in trade finance, AUB has already established representative offices in Kazakhstan, Ukraine and Latvia and is looking to set up shop in China soon.
Although incomes in Kyrgyzstan are relatively low by global standards – a secondary school teacher typically earns the equivalent of just $100 a month – GDP has risen by roughly 4.5% a year for the past five years, so real incomes are rising, increasing the scope for a wider range of retail banking services. The bank expects to attract a significant inflow of deposits, simultaneously generating a sustainable form of income from a growing portfolio of retail mortgages and loans. "We want to build the best retail branch network in the country," says Mikhail Nadel, AUB’s chairman. He adds that as well as establishing new branches, the bank is signing agreements with the big supermarket, electronics and furniture chains in the country as part of a plan to become the first major provider in Kyrgyzstan of consumer loans for the purchase of durable consumer goods. The bank will also install more than 100 new ATMs and electronic payment terminals in the next year.
Nadel believes that AUB’s ambitious expansion plans will reap it immediate benefits; its net income has already doubled in each of the past three years. Mortgage lending, for example, which the bank helped to pioneer in Kyrgyzstan in 2006, already accounts for almost 25% of net interest income. AUB intends to raise Som300 million ($8 milllion) through a domestic stock offering later this year to help finance its expansion and is hoping to tap the international syndicated loan market for the first time in 2008.
