Azerdemiryolbank: "Our aim is to attract new investment inflow to Azerbaijan's economy"

It would be very interesting to know about the history, achievements and distinctiveness of Azerdemiryolbank?

First, I would like to say that Azerdemiryolbank, one of the oldest banks of Azerbaijan, was established in 1989 as Limited Liability Company and became Open Join Stock Company in 1992. The bank is owned by European Reconstruction and Development Bank (EBRD) (25%+1 stake) and about 850 individual and corporate bodies. The bank's uniqueness can be found in its product mix, as well as services to its customers. Our bank's profit was AZN 1.283 million for the first quarter, higher 2.9 times from the same period last year. The bank's revenues rose 75% to AZN 4.332 million and expenditures went up 38% to AZN 3.049 million. As of April 1, assets grew 8% to AZN 96.04 million, loan portfolio expanded 15% to AZN 68.8 million. The aggregate capital reached AZN 14.55 million.

What about plans to branch out to regions ad take part in mortgage lending program?

Azerdemiryolbank has 29 branches and offices, of which 16 are located in regions. Our branches almost reach all regions. We are planning to establish 10 more braches in economically active regions. Our bank is one of those who lent the first mortgage loans. The number of applicants for home loans is growing very rapidly now. We also hold seminars to train our employees involved in this field. We have to date processed more than 100 applications and issued 39 mortgage loans.

Does Azerdemiryolbank plan to enlarge its ATM coverage? What about the issue of bank cards?

In general, the large number of ATMs is an indicator of the large amount of cash money in circulation. It is not that good in itself. I would prefer installing more POS terminals in shops and other trade facilities. Azerdemiryolbank has about 40 POS terminals and ATMs throughout the country. We have also rolled out five products for card business. One of the products is related to multi-currency operations for euro, dollar and manat. The second is Pin Change. The third is SMS banking. The fourth is CAR-to-Card money transfer service. The Express Card product enables customers to get a card within 10-15 minutes without any payment. Our bank is a principal member of Visa International and MasterCard. Azerdemiryolbank has to date issued over 20,000 bank cards.

Which transfer services does Azerdemiryolbank use?

Economic migrants are important market segment for our transfer systems. We use Migom, Express Money, Contact, Travelex and Bistraya Pochta. Besides, we created an in-country money transfer system called Shinshek (Lighting). Through its branches the bank implements money transfer within 7 minutes.

How do you estimate the National Bank's requirement for banks to increase their authorized capital?

I think this policy is right. Bank's capital is the indicator showing its reliability. The authorized capital is an important factor in loan investment and receipt of funding. Of course, I think the National Bank's demanding policy is good.

Could you give any information about your bank's development strategy and plans?

Unlike others, Azerdemiryolbank did well to conclude international loan agreements. Foreign funds account for 30% of our assets. Foreign loans make up about 40% of the loan portfolio. The bank's principal objective is to come in line with banking standards maximum, to learn experience in project financing and to attract reasonable funding to the economy of Azerbaijan. We are negotiating with Germany's DEG, Holland's FMO Investment Company and other leading banks on cooperation. We are planning to conclude a number of important agreements with international financial institutions in the second quarter of 2007.

How long will EBRD be a stockholder of the bank?

EBRD will remain a shareholder for 5-7 years. EBRD's taking a stake in our bank helped application of corporate governance standards, diversification and several other achievements. EBRD will, it seems to me, complete its mission by selling its share to a strategic investor.

Please, could you let us know about the bank's involvement in equity market and penetration into the world market as an issuer?

We have lately completed placement of AZN 4-million corporate bond issue on the domestic market. We are also working on initial public offering abroad. Azerdemiryolbank is represented in the securities market by ADB Broker.

What about Azerdemiryolbank's cooperation with international rating agencies?

We have cooperated with Fitch since 2004. Fitch assigned B- to out bank a while ago. The results of the audit conducted by Pricewaterhousecoopers will released in two weeks.