interview with Steven van Groningen, President and CEO, Raiffeisen Bank
How would you describe year 2012, as it was for the entire financial market? What were the strong points of your bank last year?
Year 2012 was rather difficult, the expected economic recovery did not come, and there still are many uncertainties. As a consequence, the bad loans ratio in the banking system soared to 18.2, costs with the provisions created for these bad loans led the banking system to a record losses level of RON 2.12 bln. As a comparison, in 2008 the banking system reported profits of RON 4.4 bln. In these conditions, I am proud to say that we are the most profitable bank in the system and we succeed having very good results each year. We were able to improve the efficiency of the bank and curb costs by 8 pc through efforts and investments in optimising processes and activities. The dimension of the bank, the permanent improvement of its efficiency and the continuous increase of quality allowed us to keep and diversify the income base in 2012. Last year, Raiffeisen Bank succeeded increasing its customer base by 60,000, a sign of the confidence the bank enjoys in the market and of the success of its strategy of staying focused on the relation with existing customers.
What can you tell us about the products offered this year by your bank and what are the targets set for the end of 2013?
Raiffeisen Bank is a universal bank and we want to preserve this specificity. We address all categories of customers, from individuals to large companies. The strict control of costs and the increase of efficiency will remain our priorities in 2013 too, but what we wish most is to provide customers with an excellent experience in their interaction with the bank.
What do you think should be done at this moment, which is rather sensitive for the economy, to the benefit of the financial-banking segment in Romania and beyond? What are the risks, at a general and particular level?
The same we did since the very beginning. We always took strategic measures whose result we saw in few years. We have just announced the financial results for 2012 and they are very good once again, with a net profit of millions of EUR. Why is this happening? We demonstrate that we have a sound business model, tested for many years in difficult economic conditions. In our case too, the bad loans ratio advanced against the end of 2011, from 6.4 pc to 7.2 pc, but it is still very far from the 18.2 pc reported by the system as a whole. Moreover, we decided to increase the provision coverage ratio of bad loans to 75 pc (from 73 pc in 2011) and remain prudent about risk.
What are the most acute problems you experience in the Romanian market? How do you think they can be solved?
There are two things which I want to emphasise. I believe that Romania’s long-term potential cannot change, so an interest for Romania will remain. On the other hand, there is a very serious state of uncertainty, for too long time. Obviously, if an investor does not know what taxes must be paid, if he knows there will be no economic growth, if the labour code changes every day, he will not make an investment. It is very important to have predictability, for someone who comes to Romania for a long term. This means that there must be a framework which shows the direction chosen by the government for the country – a long term strategy which does not exist now. Plus, any change should start with a dialogue between the business environment and the government, after talks, after an impact analysis, not through emergency ordinances.
What is the trend of the financial-banking market in 2013?
We expect a modest economic growth in 2013, a difficult market, with still fragile macroeconomic equilibriums. In these conditions, delaying structural reforms will only put more pressure on economic growth. The failure of implementing fiscal and structural policies seen as adequate by foreign investors and the business environment represents an important risk at local scale, given the high dependence of the economy from external financing. Add to this the risks generated by the evolutions of foreign markets, with the most important being a new deceleration of global economic growth and new tension episodes related to the crisis of sovereign debts in the eurozone.
As a conclusion, I expect to see a modest growth of loans in 2013, between 0 pc and 5 pc. Considering that in 2012 the amount of loans remained constant, if we eliminate the impact of the exchange rate, the dynamics will remain differentiated on customer segments, with large companies further being those which will sustain the increase of crediting, probably together with mortgage loans, if the First Home programme continues.
What expectations do you have from the new government?
As I was saying, I want predictability, above all. I think that worries are currently on the rise. What can be seen in practice: investments are delayed, everybody waits. And it does not matter what people say, it matters what they do. It takes time to build a reputation. Unfortunately, this is not about the last months, but the last 10 years: I saw no form of predictability. However, as long as growth expectations are high, an investor would accept this as an “emerging market,” but if growth expectations are no longer so high, and there is also a lack of resources at international scale, Romania becomes a country with a certain risk.