23.02.2024

Mega interview with Mr. Diomidis Nikoletopoulos, Chief Executive Officer and Chairman of the Board of Directors of SB

E&B:

Mr. Diomidis, London's "Economist" has named Greece "Country of the Year" for 2023, pointing out that it has achieved the best results among 35 rich countries in the world, measured through five selected economic indicators. What is the reason for this success of Greece?

After a long period of crisis, Greek economy has entered a development trajectory, achieving significant improvements and most importantly, creating very positive prospects for the future. Within an unfavorable global environment, Greece achieved in 2023 a GDP growth of 2.2%, one of the highest economic growth rates among the member states of the European Union with a primary surplus of the General Government of 1.1% of GDP (€2.6 billion).

The difficult measures taken in the previous years, the successful response to pandemic and the strong, stable, and reliable governance focusing on the reforms and modernization of the economy were the main drivers that gradual changed the climate and the image of the country.  As a result, the economy recovered, the debt-to-GDP ratio declined by 46.7 percentage points from 2020, the tourism had a strong rebound (registering a new record in arrivals and spending in 2023), the banking sector has been consolidated and strengthened, allowing the banks to play their important role in supporting the real economy and there was a significant increase of investments amounting to by 14.4% of GDP, the highest levels since 2011.

Hopefully, the recovery of the investment grade, the expected reduction of the interest rates and the resources from the Recovery and Resilience Fund (expected to reach 36 billion euros by 2026) combined with the Public Investment Program will support further the economy to keep the same pace in the coming years.

E&B:

How could the cooperation between the Macedonian and Greek economies be increased in the upcoming period, as neighboring countries?

Everyone knows that despite the difficulties, the relations between the people and the business communities of both countries have been always at a very good level. Especially after the signing of the Prespa agreement, the prospects for cooperation between the two countries reached to another level.

There is a huge potential and wide scope for cooperation between the two countries in almost all areas of social and economic life such as trade, energy, networks, transport, tourism, education, culture etc. Asked how this cooperation will be further developed, I would say that this can be done on the basis of recognizing the opportunities in the light of understanding that the two countries have a common future, supported by an appropriate shaping of the environment by governments, institutes etc., preparation of reliable and practical plans and above all will and commitment to implement these plans.

We are proud that Stopanska banka AD – Skopje, as a member of NBG Group, is one of the most notable benchmarks of economic collaboration between both countries for almost 25 years now. We have both the experience and the know how to contribute greatly into enhancing this collaboration in the upcoming period by creating favorable conditions for investors, providing incentives, and promoting investment opportunities in key sectors and effectively building stronger economic partnerships, leveraging the benefits of our geographical proximity for the mutual benefit of our nations.

E&B:

You have been Chairman of Stopanska banka AD - Skopje for 11 years. The Bank is a part of the National Bank of Greece (NBG) group. For the beginning, what is happening within the group, its position in the regional banking market, achievements from the past year?

NBG is one of the oldest banks and strongest brands in the region with 183 years of presence in banking and financial markets. However, due to the deep crisis in Greece, like all Greek banks, it had to carry out a serious restructuring program in previous years, reducing its footprint in the wider region. Nevertheless, in recent years the Group has recovered and completely changed since it has gone through a deep reorganization, being transformed into a modern, dynamic, reliable and healthy organization with excellent prospects.

In particular, in 2023 it achieved excellent performance at all levels, i.e. profitability, growth, asset quality, while continuing the highly successful plan for transforming all key aspects of its business and operating model. Its important advantages i.e. strong capital base of app. Eur 7 billion and capital adequacy ratio of 20%, robust liquidity and large deposit base of app. Eur 56 billion and high quality of assets with NPE ratio of 3.7% and coverage of 93%, give to the Group strong growth and expansion prospects that will further enhance its profitability for the benefit of all stake holders.

E&B:

In this context, how do you evaluate the achievements of Stopanska banka during the past period?

2023 is a particularly successful year for Stopanska Banka since it achieved the highest ever profitability with the Operating profits (profits before impairment charges and taxes) amounting to EUR 83.5 mil, the best organic results in the banking sector. In addition, it was a year that the Bank improved significantly its assets’ quality by allocating important part of its profitability in reducing the Non-Performing Loans and improving substantially the reserves for covering the loan portfolios, resulting to the impressed net profitability of EUR 56 mil, higher by 47% compared to 2022.

Stopanska Banka registered also the highest growth in lending among all big banks, increasing its loan portfolio by 7.5%, amounting to EUR 1.5 billion (the largest in the country) and and in parallel an annual growth in deposits of 6.4%, while increasing its net Equity to EUR 418 mill, the strongest capital base in the banking sector, securing its ambitious plans for growth and profitability in the future.

This performance comes as continuation of similar performance in all previous years, proving once again that the bank is an very healthy and stable organization, with a proven strategy and business model (dynamic presence in all business segments, customer-centric approach, prudent management of risks & cost etc.) and dedication to achieving its ambitious goals.

In addition to the impressive financial metrics, we successfully implemented significant projects during the past year, that contributed to the overall results and increased the efficiency of our operations, but we also implemented projects of great importance for the wider community, further confirming the notable image of the Bank.

E&B:

What is your opinion about what sets Stopanska banka AD - Skopje apart from other banks on the market?

First of all, our tradition that spans over 8 decades, which is unique for the market. This year we celebrate the 80^th anniversary, 80 years of Stopanska Banka working closely with the society, with every family, individual or company in every corner of the country. This says a lot about the brand's importance to the community, the economy and the entire country. This legacy is not easy to achieve however, the performance and overall presence of the bank over the past years not only maintains but further strengthens this brand, being at the same time an important motivation and glue for our team. Each of us reflects this great heritage in our daily operations, we are proud to be a part of this history and we hope that future employees will be proud of what we have done and continue further.

Another significant distinction of Stopanska Banka is that for almost 25 years is part of a strong, modern and resilient Group. As I mentioned, NBG underwent major restructuring over the past decade, but even through the most severe turmoil it remained the devoted strategic investor of Stopanska banka. Having such an investor in your corner makes all our plans and ambitions come real – from innovative products and services, to better working and learning conditions for employees, from corporate governance to valuable experience sharing etc.

Stopanska has a significant presence on the market which is reflected in the market shares in both corporate and retail banking segments, despite the growing competition and the changing landscape. In the retail segment the Bank remains for years the market leader with customer-oriented offers and a high emphasis on providing financial advice from our front liners to the end customers during the decision-making process. In addition and following our strategy, we achieved the highest market growth in corporate and small business lending the past years, showing the determination that the Bank is a key and reliable partner for businesses, remaining one of the most important pillar of the economy.

The intensive market competition keeps us on our toes; however our team, with whom I have been with for many years and which I am particularly proud of, is very strong with a high level of professionalism, capable and able of keeping the bank under any circumstances at the highest level, realizing its ambitious plans each time.

E&B:

The Bank continuously achieves excellent results. How will the increased interest rates affect the quality of the credit portfolio and the future operations of the banks? What are your assessments and expectations regarding the future movements of the interest rates?

It is a fact that the increase in interest rates benefited all banks to show better profitability in short term. It is also a fact that due to the increase of interest rates, we only experienced a reduction in demand for new loans and in many cases early repayment of the outstanding loans, without however yet seeing a significant impact on the repayment capacity of the customers.

On the other side, as we have already seen a significant reduction in inflation, it is reasonable to expect that in 2024 interest rates will gradually begin to decline as most analyzes and estimates expect. Although risks and uncertainties remain, globally and locally, this is expected to have a positive impact, prompting businesses and individuals to make new investments and therefore to have increased loan demand compared to the very low level of demand we faced in 2023.

The impending reduction in interest rates will have obvious positive and negative effects for borrowers and savers respectively. Therefore, the same is expected to happen with banks, with their future profitability affected by the lower performance in terms of interest income but having on the other better results from reduced provision charges in order to cover the risks arising from their loan books.

E&B:

If we leave the interest rates aside, what do you think are the biggest risks for the banking business in the country, and at the same time, what are the biggest opportunities for its development?

The focus today is on agility and resilience as much as it is on prevention and detection of risks. In general, the banking system is in a good position to withstand major challenges, stable and safe and perhaps is in the best position compared to other systems in the country. However, and although banking is a key pillar in the creation of the business environment, it is at the same time the sensitive mirror that reflects the good and problematic aspects of the economy.

In this sense, the opportunities and risks of the banking is directly related to the overall course of the country and the economy, with the main issues in the current situation having to do with the general environment (political, institutional, etc.) which is perceived by a lot as not particularly positive, the weak course of new projects and investments in new technologies and production of products/services that provide long-term and sustainable prospects, the shift of private investments almost exclusively to real estate with the construction activity to be the locomotive of the economy and the continued outflow of the country's most dynamic part of people that migrate abroad.

Coming to more particular banking issues, I would say that are related with the economic macroeconomic and geopolitical conditions that affect the inflation and interest rates and therefore have a direct impact on the growth and credit risk of the banking system, the regulatory changes and requirements that have increased significantly affecting the way banks operate, the increase of capital and liquidity requirements and compliance costs, resulting in higher borrowing costs and reduced returns etc. In addition, the banking sector has been facing big challenges in adopting the digital technologies and facing effectively the risks related to Cybersecurity, areas that require high cost and new skills that are in short supply currently in our country.

As you understand, opportunities are the other side of the coin and arise from the serious and successful handling of challenges and risks, giving the opportunity to change the course of the country and the economy.

E&B:

How does Stopanska banka deal with the workforce issue? It is one of the major issue that is the most present in the private sector.

Due to extensive migration, it is obvious that there is a lack of skilled and talented people as well as labor in all sectors of the economy and this is perhaps the country's biggest challenge.

On the other side, statistically the unemployment is dropping, however, this is not only due to the increased jobs on the market but are widely affected by the evident emigration of younger generations (aged 20-40) to EU countries or even further. Of course this is the result of globalization and given that this phenomenon is not going to stop, the only answer is to become competitive at all levels in order to become an attractive environment/employer for everyone who thinks where is better to live and create its future.

It is for us a top priority as well and we are trying to do whatever is needed in order Stopanska banka to be perceived as one of the best employers in the country, a place where one can work, grow and position oneself high in the banking sector. However, banking is a demanding profession, and we understand that it is not easy, although it is very rewarding from all aspects: financial, professional, respectable, influential etc.

With the development of various communication channels, it is much easier now to demonstrate what #STBteam is and what it means to the people. We share our individual or team achievements, praise our colleagues, create events and activities to enable higher recognition and visibility of each of our team members, we party together, we train together, we run and ride together and we also care for the work life balance enabling more free time, more family time, time for self-reflection and growth. Implementing proper mechanisms for evaluation and rewarding is key for a company as STB with almost 1.000 employees as it gives us freedom to plan, execute and further develop remuneration policies that will satisfy the team.

E&B:

What activities does Stopanska banka undertake in relation to the corporate social responsibility?

Stopanska banka implements a very specific approach for our CSR activities. Besides having the formal committee with a general strategy that enables continuing support for health, education, and culture, we make sure to get all our people involved. We ask them to pitch ideas, to bring us their community issues and propose activities that will resolve them which Stopanska banka can then support.

This is the way our major CSR events came to be: the environmental “Green wall” initiative which has seen over 2.000 mature trees being planted in the wider Skopje area; the “Vozi pravo, vozi zdravo” project with its 8 editions so far has changed both the mindset and the landscape of biking in the city and of course the “Sonuvame. Menuvame.” project which pushes for social inclusion, making society a better place for all.

All these different areas of influence have been marked by Stopanska banka these past 10 years and we are proud to promise that we will continue to build upon them, we will stay mindful and we will push our boundaries further for the benefit of all.

Looking internally, what we are talking about is sustainability which our new modern headquarters will contribute to greatly as it is planned as an A level building in the sense of energy consumption and preservation, construction methodology and materials of sustainable and long lasting nature and so on.

Beyond that, we tirelesly work to maintain our image as a good employer by providing our employees a nurturing working environment where they can be what they want and achieve their ultimate professional potential.

We know our role in society. We know the value of our brand and its power to advocate which is why CSR is approached with great thought and attention. Being one of the rare companies with such a long lasting history and tradition means that most of the people and companies look up to you and you need to set an example worthy to be followed. This is not to say that we are the best, but it certainly means that we are motivated to be better every year.

E&B:

You have been living in Skopje for many years. What do you like the most and what the least about it?

Yes, I moved to Skopje long ago and I used to live some years with my family as well, so after these years, I know the city and the country very well and obviously I have an opinion on its pros and cons.

What I like more, I would say the medium size of the city which allows you to move quickly, saving time and meet friends more often than other big cities, the fact the Skopje is green with abundance of walking areas, the food, I enjoy the cousine and the markets rich with fresh and locally grown food and the general atmosphere with people who are outgoing and easy to communicate with. Also a big plus is that it is very close to Greece, allowing me to visit my country and my people easily and more often compared with other cities abroad.

On the other hand, I would definitely put on negatives the high pollution levels, especially during winters days, often the lack of cleanliness in some places as well as the lack of some theaters and stages with an international character referring to foreigners.