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05.03.2014

Center-invest Bank ranked among Top 100 Russian Banks by The Banker magazine

Center-invest Bank holds sustainable positions in the ranking of the Top 100 Russian Banks* recently published by The Banker. The English-language business magazine has also published Dr Vasily Vysokov’s expert opinion on the secrets of the success of the bank’s business model, which is based on the concept of sustainable development.

The Banker has ranked Center-invest Bank in 67th place for assets ($2.1bn), 72nd for Tier 1 capital ($169m), 64th for Tier 1 capital adequacy (8.2%; requirements of international standards ≤ 4%), 19th for return on capital (ROE) (27.7%), and 31st for return on assets (ROA) (2.27%). Loans account for 81% of the bank’s assets, and the cost/income ratio (CIR) is 39.63%.

These results are attributable to Center-invest Bank’s sustainable development strategy, which it has been pursuing for more than a decade. In 2007 Center-invest Bank became the first Russian bank to be a finalist in the FT Sustainable Banking Awards, winning runner-up in the Sustainable Banker of the Year category. In a competition run by The New Economy magazine, Center-invest Bank was recognised as the best Russian bank of 2010 for sustainability and we were the only Russian bank in the competition final. In 2012, Center-invest Bank was the only Russian company to make it to the final of the Sustainable Entrepreneurship Awards (SEA). In 2013 the bank won a special commendation for leadership in Eastern Europe in the FT/IFC Sustainable Finance Awards (Sustainable Bank of the Year) and it published its first sustainability report. The bank has also held two international conferences on the “Sustainable banking business model” (2012 and 2013).

“New structures with new business models and practices are emerging from the ruins of the modern banking world,” says Dr Vasily Vysokov, President and Chairman of the Board of Directors of Center-invest Bank. “Since its founding in 1992 by southern Russia’s first privatised enterprises, Center-invest Bank has been embedding a sustainable banking business model into its operations. This entails not only environmental and social responsibility on the part of the bank, but also operational efficiency underpinned by organic growth (without government support), high profitability and risk management using national and international standards. The bank demands of itself stricter self-regulation, but still manages to prosper. When people ask, “How do you manage to make money in this case?” we reply, “by applying best international practice.”

A strong corporate culture, judicious risk management, strategic planning, internal control, transparent reporting under Russian and international standards, modern information systems, a policy of “nurturing” staff — all these elements of a sustainable banking business model allow the bank to achieve high profitability (ROE = 17%) and produce a creative atmosphere for our employees and customers.

The following examples illustrate the characteristics and advantages of a sustainable banking business model.

  1. Thanks to our transparent reporting and internal control system, the bank has successfully passed the inspections carried out by various supervisory bodies. In 2013, taken together, these inspections lasted 1,234 days.
  2. Lower lending rates allow us to select the best customers in the market.
  3. The international financial institutions (IFC, EBRD, DEG, BSTDB, EABD) with which we work require that the bank’s management system meets high standards, but they also provide access to best international practice.
  4. Our knowledge of best international practice and our strategic vision allow us to finance modernisation projects that increase local companies’ efficiency three- to fivefold. These include SME modernisation projects and projects to introduce energy efficiency technologies and modern agribusiness technology.
  5. Southern Russia’s diversified economy and the high proportion of SMEs reduce the concentration of risks in lending to the real economy, which accounts for 86% of the bank’s income.
  6. Rating agencies’ traditional disapproval of lending to the agricultural sector (the bank has a Moody’s Ва3 rating) actually highlights the bank’s competitive advantages: southern Russia accounts for 23-25% of total Russian agricultural output.
  7. The co-innovation collaboration between Center-invest Bank and SAP AG ensures that work to develop the software for the banking system of the future takes into account sustainable banking experience. It also gives Center-invest Bank competitive advantages over major players in the market today.
  8. Our social and educational projects for the general population, including projects for young people, students and schoolchildren, have become a benchmark for social programmes in southern Russia.

In the future, the banking system will separate out functions and risks: payments and settlements, term deposits and loans, and long-term financial instruments for investment. Center-invest Bank already separates out these risks in its operations, and its experience confirms the competitiveness of the sustainable banking business model.

*Ranking based on financial results for 2012