The prime minister asked for Pyotr Aven's view of the current economic situation in Russia. Aven responded that economic growth and return to pre-crisis figures were registered in all fields, and that people's trust in the banking system was resurging. The quality of loan portfolio is improving, the portfolio is growing and the amount of non-performing loans is decreasing, the banker said, adding that this points to positive change. He said individuals' interest in online banking is growing.
The Alfa Bank head also told the prime minister about his view of immediate tasks and prospects of his bank, which is considered the largest private lender in the country.
Transcript of the beginning of the meeting:
Vladimir Putin: Good afternoon, Mr Aven. How is your bank doing in the current situation, when the crisis seems to be ending for everyone, including your bank? Have the government's support policies, which your bank also benefited from, been effective? I am especially interested in the toxic assets. How are you dealing with them at your bank? Is the bank's portfolio growing, and if so, how fast?
Pyotr Aven: Alfa Bank is the country's largest private bank, and so any developments we see mirror processes under way in the country's economy and finance. Of course, the key trend in the past five or six months was the general emergence from the crisis. We see that this process varies from region to region. Moscow has already returned to the pre-crisis consumption standards, the cash spending rates, and people's attitude to banks. The same is happening all over the country.
You asked about the bank's portfolio: it has been growing especially fast, the same as everywhere else. Our portfolio has grown 5.7% in the first five months of the year, which gives us hope that we will reach 10%, or even approach the target figure of 15% by the end of the year.
Growth in the banking system as a whole has been weaker. Banks have increased their portfolios 2.5% for individual and 2.8% for corporate clients, which evidently points to growth. Importantly, it is not only the portfolio that has been growing; its quality is also improving. For example, Alfa Bank has dramatically reduced the number of non-performing loans: by about 30% in five months.
Vladimir Putin: That is a lot.
Pyotr Aven: Yes, quite a lot. Non-performing loans have not been growing in the banking sector as a whole, which speaks volumes about the toxic assets: their number is decreasing. The quality of deposits is improving, and assets are starting to work. We have to divest some assets, but on the whole, the portfolio's quality is certainly improving and the share of bad assets and non-performing loans is decreasing in relative and absolute terms.
This also concerns individual customers. As far as I know, their deposits have grown 9% throughout the country in these five months. People's trust in banks is growing; they bring their money to banks. Another interesting detail is that the share of rouble deposits has been growing. This signifies trust for the national currency. We noticed that radical change in the past few months.
The client base is also growing rapidly. We now have more than 4 million clients, and 25% of them use internet services. This is a revolutionary innovation...
Vladimir Putin: You mean online banking?
Pyotr Aven: That's right. A quarter of our clients use online banking. This is an apparent trend signifying that the crisis is ending, and so all that talk about a second loop, and all those political forecasts, they are...
Vladimir Putin: What is your interest rate on rouble [loans] for individuals?
Pyotr Aven: They vary. We offer 14%, 15% and 16%, or 13% interest. Loans at such rates are available. The Central Bank has done a lot lately - you spoke about the support measures - lowering the [official bank] rate, which is currently 7.75%.
Vladimir Putin: No, these are loan rates, but I was asking about deposit rates. What are they?
Pyotr Aven: 7%-8%.
Vladimir Putin: 7%-8%. Is this high or low compared to the previous period?
Pyotr Aven: Deposit rates tended to fall recently, in the wake of the Central Bank's change in the official rate. They seem to have reached the bottom... That may be so, and may be not. Anyway, [deposit] rates have been falling. They have fallen very low for foreign currency deposits, to 4.5%. This is a low rate.
Vladimir Putin: Is this higher compared to European banks?
Pyotr Aven: Yes, it is certainly higher.
The markets are not yet fully open for us, but they are opening up. We are now considering borrowing rather large loans on foreign markets. In general, we should think whether we'll be able to maintain the growth rate in the medium term. There are reasons for optimism this year and next year.
Vladimir Putin: What about your relations with foreign partners? How can you describe them?
Pyotr Aven: I think we have good relations [with foreign partners], although we still encounter resistance in some countries where we work; I will tell you about this later. But on the whole, our window of opportunity is open.
We plan to borrow about $1 billion in western markets soon, something that was impossible six months ago. This means that interest for banks and for working with banks is growing.
Vladimir Putin: Good.