Building a
world-class bank

State direction on the establishment of a balanced market economy complies with world market trends, helping the harmony in integration of Azerbaijan into the “global community” and significant improvement of the country’s image on the international arena. The International Bank of Azerbaijan (IBA) plays a significant role in these processes. Reorganised in 1992 from the VneshEconomBank of the USSR into an independent financial-crediting institution, the bank is almost the same age as independent Azerbaijan.

LOOKing BACK

Fifteen years of operations of the International Bank of Azerbaijan have passed. Although it is not a significant time frame in the global timescale, the distance passed allows the national banking sector to summarise the results.

Years 1992-1995

“Pains” of birth of IBA – successor of Soviet “VneshEconomBank”– reflected the first hard years of independent Azerbaijan. This period stayed in our memory with a combination of failures and fragmental successes, ambiguous events and facts, often occurring due to non-understanding of the nature of changes a and lack of knowledge of financial markets. In such conflicting conditions the International Bank of Azerbaijan has made its first steps as a national bank and specialty bank: its own system of correspondent accounts was established, shares were issued, branches were founded and we formed the basis for participation on the securities market. In 1993 the IBA played an active role in the foundation of Baku Interbank Currency Exchange and at the end of 1994 and the beginning of 1995 became a member of prominent payment systems – Reuters, Europay International and the Society of World International Financial Telecommunications (SWIFT).

1996-2000

As for the country in general, the turning point for the IBA was 1996, when a new development strategy was adopted targeted at the construction of a universal bank model. It proposed a complete restructuring of operational areas of the bank and widening of the customer base. This, in turn, led to the expansion of the range of services and products proposed, coverage of a significant segment of corporate clients, client servicing procedures set up, improvement in management organisation and other associated activities. Implementing set strategic goals, IBA, by the end of 2000, has increased its resource, technological and human resource potential, and has set the efficient management of retail business, strengthening its leading position at the main segments of the financial market of Azerbaijan.

2001

Positive trends in the socio-economic sector of the country achieved by reforms implemented have set new goals: development of new approaches to corporate management and banking business maintenance, and the establishment of more significant opportunities for improvement of efficiency. Reorganisation of the IBA management system has commenced, characterised by direction on resolution of national-scale issues. Duplicating units have been merged, new departments established, and staff with modern professional views attracted. These helped the bank to strengthen its market positions, establish a basis for a new level of servicing, and form the image of the most reliable, progressive and rapidly developing bank in the Caucasus region.

TODAY

Today one can surely confirm the right choice of adopted strategic decisions, which allowed the bank to satisfy client needs in quality banking services throughout the country, provide savings and increase personal deposits, their investment into real estate sector.

The International Bank of Azerbaijan as a structure holding leasing position in this sector, has rightfully established as one of its primary goals the active support of an integral, harmonically developing socio-economic system. IBA priorities are participation in implementation of large state programmes on a national scale, in particular recovery of monetary and credit relations and strengthening the bank’s influence on macroeconomics in the country in accordance with worldwide trends.

IBA is recognised as a leading bank of the southern Caucasus by world financial institutions. IBA is a founder of AzeriCard processing center, International Insurance Company, AzeriLeasing, the first bank established outside of the country – “International Bank of Azerbaijan-Moscow” (2002), subsidiary bank in Georgia (2006). Bank representatives operate in London (since 2002) and Frankfurt (since 2005). Active work is implemented over opening of representative and subsidiary bank in Luxemburg and representation in New York. IBA within the last five years has many international recognition awards: “Best Bank in Azerbaijan” award from Euromoney magazine, “Bank of the Year” from The Banker magazine, “The Best Emerging Market Bank” (“Bank of Azerbaijan”) from Global Finance magazine published in the US (years 2002-2006), “Gold Medallion” nomination established by Supreme Geneva institute of business and management and Swiss Business Club, “Quality Recognition Award” in nomination “US Dollar Clearing” from Citigroup (years 2005-2006) and many others.

Bank rating by Fitch IBCA over last four years was increased twice and today is set at “BB-”, which is only one step below the international country rating of Azerbaijan (“BB”). Also Moody’s Investors Service International Rating Agency has assessed the rating of the International Bank of Azerbaijan in national currency at “Ba2”, and long-term rating in foreign currency at “Ba2”. The agency forecasts that these will remain stable. The bank has a significant volume of deposits, despite the lowest rates in the country. IBA’s share of the plastic card market of the country is 80% today. Of 1.5mn cards issued in Azerbaijan, 935,000 have been issued by IBA. The Internet Banking system allows clients, without leaving their home or office, to gain access to their accounts, get account reports for any date and maintain balance tracking. To date the number of active ATMs of the International Bank of Azerbaijan is 550, while the total number of ATMs by Azeri banks equals 1,100.

In accordance with audit evaluation reports, annually performed by PriceWaterhouseCoopers, the bank over the last years has achieved the quality changes of main indicators of economic growth, demonstrating impressive financial results. In comparison with 2001 the net assets of the bank increased by 5.3 times, charter capital by more than 25 times, shareholder capital by 7.2 times. IBA share in total banking credits of the country is 44%, and the credit portfolio itself compared with the beginning of 2001 has increased by 471%. Similar trends are characteristic for balance incomes – which exceed the indicators of 2001 4.8 times. Last year, the profit exceeded the financial results of 2001 by 11.5 times, with net profit upon payment of taxes increased by almost 15.7 times. Deposits increased by 4.6 times, in these the deposits of individuals increased in volume by 500%. Thus, IBA over last few years has reliably strengthened its position of the banking sector leader, by maintaining high financial stability.

IBA fruitfully co-operates with international financial organisations and the world’s largest banks. Via credit lines provided by these entities without state guarantees, most of the projects in the non-petroleum sector of the country have been financed. Thus, funding of the new industrial equipment for cotton processing has helped within short time frame achievement of significant results in increased productivity. Along with this, implementation of the project covering various levels of production development process – harvesting, storage and production of cotton oil – over the last three years has increased the production of cotton, being the strategic product, establishment of multiple permanent and seasonal work places. Another successful project, which was funded by the International Bank of Azerbaijan, is related to rehabilitation of silk production in the country. There are about 2,000 people occupied at the refurbished plant and more than 4,000 are engaged in growing of silkworm at home. One of the advantages of this project is that it is export-oriented. The bank funds significant projects in the tobacco industry. In the past significant funds were allocated for expansion of cultivation areas, which resulted in a tremendous increase in production.

IBA over the last few years activated its performance on attraction of credit lines of international financial institutions, such as Commerzbank, Societe Generale, JBIC, Bayerische Landesnabk, AKA, Bankgeselschaft Berlin, Credit Suisse, UBS, Sumitomo Mitsui Banking Corporation, opened under guarantees of export and import agencies, such as USEXIM, Euler-Hermes, COFACE, SACE etc. For efficient and rapid solution of problems associated with project finance, IBA actively uses its representation in European countries. At the same time the IBA is not only the main creditor in the country, but also in syndication with other leading European financial entities participates in funding of other banks all over the world. IBA continues to implement the policy of expansion outside of Azerbaijan. An example of this is the opening in January 2002 in Moscow of the affiliated bank “The International Bank of Azerbaijan – Moscow”. Under the support and direct participation during the state visit of President Heydar Aliyev to the Russian Federation, the affiliated bank in Russia was established in only one month. Russian experts note that in over 140 years of history of the Central Bank of RF there was no case where any bank got all necessary approvals and opened within such short time frame. “The International Bank of Azerbaijan – Moscow” is the first CIS bank in Russia with foreign capital and for its capital rating is in the list of 500 largest banks of Russia. IBA-Moscow opened its affiliates in Saint-Petersburg and Yekaterinburg and a number of branches in Moscow. Within the next few years “IBAMoscow” intends to continue its operations on formation of its affiliates network.

Another subsidiary structure of the IBA – “The International Insurance Company” – was established in April 2002, with charter capital of about 30% of the cumulative capital of all Azerbaijan’s insurance companies. Other subsidiary companies of IBA, such as AzeriCard processing center, AzeriLeasing company, also maintain leadership in the local market. Thus the socio-economic parameters of the Azeri economic development, balanced politics of the country’s management and compliance clear IBA strategy provide the basis to hope that the following years for the country and bank will be both profitable and very important.

Contact details:
The International Bank of Azerbaijan
Tel: +994 0 12 4930091
E-mail: ibar@ibar.az
Website: www.ibar.az

 

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