11. 2. 2022

Interview with the CEO and Chairman of the Board of Directors Mr. Diomidis Nikoletopoulos

The interview was published in Kapital magazine od February 11th 2022

Kapital: Since March 2020, COVID pandemic is the main issue globally – how Stopanska Banka responded on this?

Yes, completely unexpectedly, the world entered for two years into an unprecedented crisis that has had an incredible impact on the social and economic life of all of us. The world was dealing with something unknown and it affected every corner, every family and every single person.

Faced with such thorough disruption, a systemic bank, such as Stopanska banka had to immediately react, regroup and rethink all of the processes to enable business continuity and remain at the disposal to the retail and corporate clients allowing them certainty during the pandemic. The focus on business continuity also meant search for options to remain sustainable and profitable, which is crucial considering our significance in the performance of the national economy.

We are proud that we took significant part in the early solutions and activities undertaken by the Government and the Central bank to ease the economic pressure on the clients while at the same time we provided much needed help to the health system with donations to the most affected hospitals and covid centers. Our thought has always been, that whenever we are in position to do good, we do it and this time it was the urge to be part of the solution, part of the way out of the covid pandemic and the crisis that it brought on, and I believe we managed to do so.

Kapital: However, it seems the COVID pandemic is evolving gradually into an endemic disease – what are the challenges and risks that will concern us in the near future? Can these risks have a negative impact the banking sector i.e. slow-down of credit expansion or endanger the collection process etc.?

Indeed, after two difficult years, everything shows that societies will soon return to normality, but at the same time important challenges will have to be addressed. Due to the pandemic as well as previous policies to address the economic problems that last at least a decade, the new challenges in the global economy have to do with the significant increase in the prices of energy, raw materials and goods, transportation etc.  and the increase of inflation which in turn will lead sooner or later to the increase of interest rates. In our case we should add the issues of the continuing uncertainties within the EU integrations processes of the country and, apart from the construction sector, the inadequate level of investments by domestic and foreign investors.
The increased cost of operation and cost of living is negatively impacting the corporations’ profitability and the available income of individuals and in turn this affects their intention and ability to access new lending products and also to regularly service their obligation stemming from existing lending exposures.
Obviously we need quick and effective answers and solutions in order to avoid the material impact coming from  risks and uncertainties for the economy and the banking sector and in particular, the growth of deposits and loans, as well as the quality of the bank credit portfolios.
However, we in Stopanska banka remain optimistic and we have plans for significant development in all business segments and in parallel optimization of its operation that will ensure a continuity similar and why not better than its successful course so far.

Kapital: Almost all banks have published their financial data for 2021 and it is obvious that they have done quite well - what is the performance of the bank in 2021?

Yes, the Banking sector thankfully performed well in 2021 mainly because it has solid fundamentals and adequate liquidity levels which enabled the business expansion to continue. We are very proud to see that Stopanska banka yet another year performed excellently and achieved the highest profitability among all banks with profits before taxes of 44 million euro.
I must emphasize that in addition to the long-term very successful course of the bank in retail banking, special emphasis has been given in recent years to the development of the corporate loan portfolio in both large and small and medium enterprises. Despite the unfavorable conditions in the economy, the net increase in the loan balances to companies reached 16% in 2021, expecting this trend to continue and strengthen further in the coming years.
The Bank maintained the sources of income sustainable, while achieving low levels of operating expenses and excellent provisions management even during the covid crisis which brought on many projects and expenses.

Kapital: What is the reason for the successful course of the bank for so many years, even especially after such a serious crisis?

Stopanska banka AD – Skopje after becoming a member of NBG Group went through intense restructuring and since then, over the course of the past 20 years it has implemented contemporary banking business policies which provide the Bank the tools to set up clear and consistent strategies and execute the ambitious business plans in a successful and effective way. The continuous success lead us to the position of most capitalized bank with the biggest loan portfolio on the market working with a high quality assets that in turn allow for affordable level of provision charges. Stopanska banka also optimizes the use of the deposit base by placement at adequately yielding assets structure, to the benefit of everyone involved.
The success has also given us the scale to invest in technologically advanced solutions that aide our customer centric platform that in turn enables us to create and build interpersonal relationships and strengthen our brand over time. We have aggregated generations of highly professional, experienced and loyal management and staff that are proactive and involved in the further development of the banking sector by participating in local professional networks and groups empowering the entire system even further.

Kapital: Deposits seem to be rising year by year, enabling banks to increase lending to businesses and households – do you believe that the trend will continue despite very low deposit rates?

Bank deposits remain high despite the lowest interest rates in history signaling the high trust in the banking system but also we should admit the limited options the depositors have for alternative investments. The interest rate dynamics are reflecting the global trends and the inflation rates.  Passive and active interest rates are coinciding, which allows for the lowest interest rates in lending products as well and the further expansion as both retail and corporate clients use the products to execute their life dreams and business ambitions.
In total, the three leading banks hold almost 5 billion Euro in deposits, mostly balanced between local and foreign currency in structure. This significant deposit base allowed the continuous growing lending activity for many years, however, as I mentioned above, the increased cost of living and reduction of disposable income might have a negative impact on the level of deposits.
Therefore and since the level of deposits is the most critical size for the development of the banking sector and by extension the economy, everyone, especially the policy makers, need to realize that a an effective and smart strategy is needed to attract new deposits and capital, mainly from abroad, an effort that can be helped by the expected increase in interest rates.

Kapital: The government and various authorities such as the central bank forecast economic growth rates of around 4% in the coming years - is this growth satisfactory and able to provide the necessary incomes to businesses and individuals to survive in a globalized system with so many challenges?

We share the same assessments for the perspectives of the economy. However, in my opinion we should be more demanding in terms of growth rates, as the current growth rate may seem satisfactory for a developed country, but in our case the GDP base is quite low and such growth barely is enough to meet the global challenges.
It is also important that due to chronic weaknesses and distortions in the social and economic model, both the existing wealth and any increase in GDP are not spread across the board proportionally to all layers of the society, resulting in a large part of the population to be still out of the market, not allowing in turn to give a new impetus to the economy.
Therefore, the efforts of all of us should be to further increase the rate of GDP growth but this growth to be also channelled more fairly to all levels of society, creating through the most normal income distribution a strong middle class, approaching the levels of developed countries.

Kapital: Given these weaknesses, what do you think should be done so that the economy can overcome the problems and thus give the residents a new perspective for their future?

North Macedonia is a small country & a small scale economy of app. EUR 12 billion of GDP which is a disadvantage itself – and despite other significant advantages we have to deal with a long lasting unresolved issue with so called “country and political risk” that every serious investor sees first and before even thinking to analyse the business opportunities in the country.
Therefore, in my opinion and provided that the country risk is somehow seriously mitigated, the country and the economy needs to fight the organic state of introversion. Infrastructure investments are paramount in exposing the country to more trade, transit, tourism which by default will mean more jobs and opportunity and not just for Skopje but for many regions which have great potential waiting to be harnessed.
The complex bureaucracy, ineffective administration, the chronic corruption and nepotism as well as the effectiveness of judicial system are always on the agenda for improvement as they significantly influence the economic development. Continuous growth of the economy will eventually dissolve the root causes of these negative occurrences enabling the country to attract new investors who will open new jobs and further empower the economy.
We can see that shifts in the education system have begun channelling the students towards skillsets and abilities that are needed for the modern economy, and with the proper programs we can keep these skilled professionals in the country, rather than just serving them to the more developed economies as we do now. From this point of view, besides promoting and aiding the traditional businesses that the country is proud of because of the competitive advantage, additional support is also needed for startups that work with new technology as they can generate new fields of competitive advantages of the country.
As we witness more and more frustration and defeatism across the spectrum of social and economic life, there is a need for a political, economic and spiritual elite with vision, dynamism, optimism, faith and confidence of their abilities to achieve great things.
These will help reverse the worrying trend of mainly young people leaving the country, to stay, to work and to grow economically in the country for the benefit of all.

Kapital: As a veteran in the local banking sector, how do you evaluate the development of the sector where has it mostly progressed and where does it still have room to improve?

Since 2009 when I joined the local banking market the market has significantly changed in parallel with the economy and the entire business landscape. I am glad that I have the opportunity to be part of the banking history especially during the years when the market developed, advanced, became more profitable and consolidated. It is a completely different setting now. The banks are modernized, customer oriented, technology driven and provide much more for the community and the economy.
I have been at the helm of Stopanska banka since 2013 and from this point of view, Stopanska banka enjoyed some of its best years and all that reflected on our employees, on our community and on the economy. We are able to support bigger and more significant projects, we have the strength to overcome global challenges as the pandemic is, we invest in our people and they drive us forward, we invest in the premises and the technological infrastructure, we are able to look and plan ahead in order to remain on the top in both retail and corporate banking.

Kapital: Stopanska Banka is a significant subsidiary of NBG – how your group is doing especially after a serious restructuring taking place the last years?

The NBG Group underwent significant restructuring following the global economic crisis in 2008/9 and has since become stronger and resilient, focused on the new era of banking. In that sense, the Group embarked on a large scale transformation program that lead to a competitive advantage and a new effective way of working confident that by the end of 2022 the Group will converge to European asset quality benchmarks. In particular, the transformation program had six main pillars, namely, the clean up of the Balance Sheet, the enhancement of efficiency and agility, the boosting of revenue generation, the people mobilization, the improvement of visibility and controls and the significant upgrade of technology.
The digital transformation demonstrated impressive results re-engineering its core processes, freeing up time for our front-line to better serve the customers. At the same time NBG in Greece serves roughly one third of the market digitally, which is proof of the enormous effect of the transformation, which was of course “aided” by the pandemic as clients vigorously sought digital channels when brick and mortar were unavailable due to the restrictions.
The Group is now profitable, very strong in terms of capital, the level of NPLs has decreased significantly and always having the advantage of greater liquidity from its competitors, it looks forward with great optimism to the future where it is expected to have a strong role at the regional level.

Kapital: In recent years we have seen a rapid influence of social media in our lives. Apart from many positive elements, we also see many negative ones such as the publication of false and unsubstantiated news by rude and unserious people with your bank having a bad experience with this phenomenon. What is believed about this and how do you deal with it?

We are living an interesting era where we devour more information during the day than our parents did in one month or a year. It is very difficult not to be triggered by the sheer volume of information especially when those that benefit from spreading information do it so in a very baiting manner – most of the time twisting the reality, improvising and outright lying to the public.
Just look at the damage disinformation has done in the process of managing the pandemic. Without the pool of fake news and attention seeking individuals (and media outlets) we might have fought back the pandemic sooner and with much less casualties. This is the challenge of our generations now – getting the facts straight.
Stopanska banka has experienced firsthand the effects of false news being disseminated without any responsibility or precaution. What helped was that we have a very solid structure, our employees are smart and capable to address any questions coming from clients and their opinion is highly rated among peers. In addition, we still have many respectable media outlets which can recognize the danger of misinformation and have the means to help the public find the way to the truth. We made a significant effort then to make sure the public was aware that our operation was unhinged and it was an unnecessary distraction from everyday operations. My message remains as then, clients please approach us, ask us, talk to us and challenge us with all the questions and worries you might have. It is one of our mission features to educate the clients and the public. We are here to help navigate the bundles of information broadcasted daily.
Our Contact center is available 24/7 via phone, e-mail and even via social media platforms. We maintain our web site with abundance of information and records about the Bank, the products and services, we develop tutorials and explanatory videos where necessary, we hold presentations and participate in financial education campaigns across the country and of course, we are present in mass media with interviews and Q&A sessions. All of this is set up as we are a respectable and transparent company, with nearly 80 years of legacy and superior market performance. Therefore we are a reliable source of information and on top of that we are always available.
What my personal approach is in processing information from media (TV, radio, web, social media etc.) is to read / listen carefully, check the sources, cross check with other relevant media that have proven trustworthy and then decide if the information is something for me to consider or not.

Kapital:  In closing, what we should expect from your side for the coming years and how you can contribute to shaping this economic climate that allows us to see the future with more optimism?

Planning for the coming years is getting more and more challenging as we can witness tectonic changes in industries and technology. We must remain vigilant in learning, we must be close to our clients to assess their needs and find ways to develop products and services that will serve those needs in a sustainable manner. It is the same for every industry. Data is available and we need to use it and reinvent ourselves constantly.

Therefore, what I know will happen in the years ahead is that banks, including Stopanska banka, will focus on digitalization of internal processes, communication and transactional channels for clients, services and even branches. We will do so in secure and stable platforms, open to constant improvement and adjustments and will create added value not only to our customers but our shareholders as well.

On the core side of our business, we are poised to offer our clients financial advice and superior solutions that will aid them in achieving their goals. Stopanska banka is renowned for being the Bank behind the most significant industrial and infrastructural projects in the country and we are strong enough to continue to build on that premise. Corporate clients have open doors to come to us with sustainable projects and get the support they need stimulating the economic growth, especially in this post pandemic period, and at the same time creating new opportunities for employment in the country. In addition, the Bank will expand the market offer of financial products by introducing the leasing business line. This will give more opportunities to all our clients, individuals and companies, for full satisfaction of their needs and preferences.
In our plans is to create a new home for Stopanska banka, a new building that will be built on the basis of the new standards and will be environmentally friendly, at the same time worthy of the bank’s brand and image. It goes hand in hand with further development of our people and our working environment, who in turn give us the stamina to endure and overcome periods such as the global pandemic.

And of course, something Stopanska banka is also very connected to: our commitment to the society. We have a new CSR policy in place which was developed based on global trends of responsible corporate governance. It will enable us to reach out to the community and help as we have before in building together new environmental friendly habits (i.e. biking as a means of transport), healthy habits (i.e. sports and recreation especially among kids and youth), elevating the value education (i.e. reading, competing, financial education etc.), empowering the health system (i.e. investing in equipment that will be used for thousands of patients), supporting cultural heritage and so on.
We hope that the end of the pandemic will help us to experience again our most popular events such as Vozi pravo, vozi zdravo and Sonuvame.Menuvame as we have missed them this past 2 years and we know the public missed them too.

After supporting many athletes, sport clubs and federations during the past 3 years with the voucher system this year we became part of the team that supports the Olympic Committee of the Republic of North Macedonia, meaning that we stand behind the most promising athletes and we bolster their aspirations.

So in conclusion, I will only say that Stopanska banka will continue to grow and improve and will remain on your side.