In an interview with Global Markets Magazine, Hovhannes Toroyan, Chief Financial Officer at Ameriabank CJSC, explains the bank’s strategy and highlights some of the reasons for its success in the Armenia market.

The full interview can be found below:  

- What have been some of the key strategic focus areas for your bank over the past year?

- Ameriabank has been the leading financial institution in Armenia for almost a decade. Even though the year 2022 started with another wave of uncertainty for the global economy, we were able to maintain and strengthen our positions further, reaffirming the reputation of a stable, modern, and competitive financial institution with significant growth potential.

Over the last six months, the major focus was given to digital transformation, compliance and risk management which we see as key drivers for future growth.

- Reflecting on your bank’s financial performance over the past year, what have been some of the key highlights?

- It is remarkable how much Ameriabank has accomplished in terms of financial performance and development of new products services and technology. In the past year we continuously invested in digitalization, improved our customer experience, internal efficiency, upgraded the services and streamlined our operations. The bank’s cost to income ratio was maintained below 40%. We registered impressive profitability with strong capital and liquidity positions. Our annualized ROE comprised 28%, with net interest margin of 5.4% and solid non-interest income. In line with our strategy Retail and SME loans comprised more than 60% of total loans. Three year CAGR of retail portfolio was 30% and SMEs registered 17.2%. As always, the bank applies robust risk management practice. NPL ratio continuously improved across all segments in 2022 standing at 2.9%. Cost of credit risk was around 0%, a consequence of conservative provisioning during the previous two years. At the same time, Ameriabank provided exceptional service quality with net promoter score over 75% and customer experience index at 9.5 (out of 10).
    
- What are some of the growth areas in your banking business where you have been focusing, and will continue to focus, investment?

- Staying at the vanguard of the Armenian banking industry and its transformation, Ameriabank continues investments in IT technology and digitalization in line with its strategic priorities. A big focus will be also given to cross selling and up selling of services and propositions to growing number of our customers. At the same time a series of actions are designed for exploring new opportunities in certain sectors of economy, especially those that will also boost transactional banking and non-interest income. It is important to note that more than 90% of all transactions of the bank are performed outside the bank’s branches.  

Finally, we will continue investments in human capital and increase productivity and motivation through intensive trainings.

- ESG and sustainability is one of the most important strategic topics for the banking industry. What significant developments or initiatives has your bank led in the past year that demonstrate how important ESG and sustainability are to your institution?

- As the leading financial institution in Armenia, Ameriabank acknowledges its responsibility to play a key role in advancing Armenia’s transition towards sustainable future. We recognize that climate change and similar environmental risks are immense challenge posing substantial environmental, economic and social risks to long-term growth and prosperity. We also support the achievement of UN Sustainable Development Goals (SDG) and as part of this alignment contribute to financing renewable energy systems, energy efficiency, access to clean electricity, investment in clean transportation, technology development, and ultimately support to underdeveloped communities through various projects. Since 2010, Ameriabank has financed more than USD 250 million worth similar projects with the support of various international financial institutions.  

Ameriabank is the first and leading Green bond issuer in Armenia. Since 2020, we have issued over USD 60 million equivalent of green bonds.

- Banks are in fierce competition with one another to develop and launch innovative digital banking products and services. What are some of the new and significant digital banking products and services that your bank has launched in the past year, and what success have they achieved?

- Within the fast-paced transformation of the consumer behaviour in the digital realm, we achieved promising results towards diversification and digitalization of our services. Commitment, agility, innovative mind-set and culture of shared success, driven by the desire to satisfy customers’ needs is the formula to success in digital transformation.

In this context, the past two years were remarkable in terms of developing and launching a comprehensive digital ecosystem - first in its kind in the market – that is a one-stop shop for banking and non-banking services, covering the car market, housing market, e-commerce as well as unique ecosystem for SMEs with options of online onboarding, machine learning based loan underwriting.

- The global economic outlook is challenging. What are some of the main risks and economic challenges you see for your bank over the next 12 months?

- While Armenia is having a very solid year in terms of economic growth, there are still a lot of uncertainties and structural changes, including transformation of certain industries and shifts in global supply chains that should yet have their reflection on the country’s economy. While it is more challenging to manage the leading financial institution of the country under all those uncertainties, those challenges also offer a plenty of opportunities within themselves. Under the expected increasing pattern of interest rates, deterioration of certain risk parameters, increasing need for climate action and growing dependence on digital gadgets of our customer base, Ameriabank will continue its focus on data driven digital transformation, proper risk management and further enhancement of ESG practice to achieve our mission of “improving the quality of life” of our stakeholders.