Ameriabank does not favor dumping
Media Room

“Dumping should not only be avoided but it must not be considered as an option at all”, says Elen Danielyan, Head of Ameriabank’s Individual and Premium Client Managers’ Service

Ameriabank is one of the leaders in the Armenian banking market offering diversified service portfolio. The bank is applying modern market segmentation techniques, in particular, identification of “latent demand” among the potential clients.

“Capital” daily’s correspondent interviewed Elen Danielyan, Head of Individual and Premium Client Managers’ Service.

- Ameriabank is a corporate bank, however it serves the retail segment as well. How it could be substantiated, considering that the level of risk in this segment is higher?
- According to Ameriabank’s 2011-2013 Strategic plan it is envisaged to shift from corporate investment bank to universal bank, which implies that we will be more active in providing retail services. This however does not imply that we will abandon the investment banking operations. We will be offering investment services, in particular, structured deposits, distant terminal, brokerage operations etc. I am happy to acknowledge that the interest among clients towards these services is continuously increasing. I am sure that in the nearest future, the Armenian legislation framework and the social-economic development will facilitate the implementation of classic pension schemes, formation of equity funds with individuals.
As concerns the risks level, I may safely state that any banking service involves high or low level of risk, to some extent. We have an efficient risk management system which enables us to prevent the potential risks and manage them before they become problematic for the bank. This is evidenced by the rather low level of non-performing loans within the bank. The share of non-performing retail loans in the total loan portfolio amounts to 0,22% which is indeed a very good indicator.

- A number of banks operate in the Armenian retail segment. What is your bank’s progress in this market segment?
- I would not say that the retail segment is fully saturated. Besides, among two options of growth - extensive and intensive, we prefer intensive growth as a development trend. This implies not only attraction of new customers but also enhancing cooperation with the existing clients. Being a corporate bank we have been offering retail operations as well, resulting in well-established and developed variety of retail operations, which are not behind but in many instances is beyond the offers from a retail-oriented bank. Besides, I render high importance to the approach used by the bank in customer relationship. Individual manager is assigned to each client, and individual client development program is developed and in progress for each client. There is the concept of “latent demand”, i.e. when the client does not realize its own demand until after getting the offer. As a rapidly growing bank we study the latent client demand and develop the appropriate offer specially tailored for that particular client.

- How do you intend to attract new customers if Ameriabank’s service fees for retail customers seem to be not competitive?
- I do not agree that our services are not competitive, which is also evidenced by the indicators published for the previous year for loans provided, deposits attracted and other services. At the same time, it is important to note that when comparing the service fees and interest rates, all terms and conditions pertaining to that service should be taken into consideration. It may be the case that the declared interest rate could be low, however, the study of the loan product would reveal that the loan product at that interest rate is associated with preconditions which are in most cases hard to accomplish. Consideration should be given to all costs associated with the loan and hence the ultimate interest rate which will be actually applied.

- Is the publication of annual percentage rates on the official website not a legislative requirement?
- Indeed, publication of annual percentage rates is a requirement of the law, however, in most cases, the clients do not give due consideration to the annual percentage rates. We have a clear standpoint and strictly adhere to the concept of integrity and clarity in our communication with the client. When we communicate the interest rate to the client, we inform them of all the associated costs pertaining to the loan, and of the ultimate “value” of the loan. In the relationship with clients an emphasis should be placed not only on the short-term results or profits, but also on the long-term cooperation.
Currently we are proud to say that we have numerous loyal clients who are the most valued assets for the bank.

- Consumer loans segment is more profitable. Is this what attracted you, or there are other factors as well?
- We do not value only profitability but also enhancement of the overall effectiveness. Indeed the retail operations are profitable, however, like I said before, there are a number of preconditions underlying the bank’s decision to transform to a universal bank. One of those preconditions is the current macroeconomic situation worldwide. It is also noteworthy that saying “universal” bank does not imply “retail” bank and it is not the consumer loans’ profitability that would play a key role in this regard.

-Are you going to offer credit cards in classical terms?
- We already do offer those cards. Our credit lines with cards are these classical credit cards. A credit line is opened for the client without any collateral, based on the client’s credit history, salary, turnover volumes. The client has an option to repay the loan within up to 21 days of grace period during which zero interest rate is applied on the credit line. The credit line is revolving, meaning that it may be repaid by free schedule and be reused. Besides, we do not necessarily force the client to use the entire credit line and no penalty is accrued on the unused amount.
The bank studies the credit history of its cardholders as well as their turnover volumes through the bank, and we may offer to extend the credit limit which is also an element of a classical credit card. Currently we have large number of cards which are demanded both by our corporate banking clients’ staff and individual clients, first of all they are accessible and easy for use.

- Are you going to use dumping for progress?

- Dumping should not only be avoided but it must not be considered as an option at all. Dumping may yield short-term results, probably resulting in a number of customers shifting to our bank however this cannot serve as a basis for long-term partnership. If you are able to clarify and assure our individual customers that the bank’s interest rates and service fees are not based on dumping but are a result of thorough analysis and derive from the overall strategy which inspires more confidence to the client. Our bank will never offer the highest interest rate on deposits, nor will it offer the lowest interest rate on loans. We will never use attractive phrases in our advertisement. Instead we will offer unique services which will be interesting and attractive, owing to their exclusiveness rather than their price.

Updated 23.05.2011, 12:20
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