French Credit Agricole Bank is one of the leading financial entities actively cooperating with agricultural sector. Today the bank’s portfolio of agricultural loans makes 2,7 billion UAH. How positive growth dynamics is maintained, how portfolio structure changes and what programs the bank offers to agrarians – these are the topics covered by Alexey Stupak, Head of Corporate Business Development Department at Credit Agricole Bank, in his interview.
— What factors contributed to increase in the volume of loans granted to agrarians this year?
— The portfolio grows due to attractive lending terms and because agricultural companies appreciate professional approach of the bank. Unlike other financial entities, Credit Agricole Bank employs not only financial experts, but professionals specializing in agricultural technologies, with a degree in veterinary medicine. Quite often agricultural enterprises find it difficult or even impossible to secure the entire loan with fixed assets (real estate, equipment), that is why, alongside with attractive interest rates in hryvnia and foreign currency, we are rather lenient when it comes to securing a part of the loan with future harvest or other biological assets.
— How has the structure of the bank’s loan portfolio changed?
— From the beginning of 2013, we have managed to increase the portfolio of agricultural companies from 2 to 2,7 billion UAH. At the same time, we still have considerable growth potential by the end of the year. This is underpinned by several key factors, such as expansion of land banks of the agroholdings, improvement of agricultural technologies, among other things, at the expense of transition to seeds and plant protection agents of higher quality, necessity of technical infrastructure modernization. The portfolio mainly grows at the expense of large and middle-sized agricultural companies which understand that effective investments lead to increasing profitability. When talking about the regional structure, loan portfolio enlargement became possible due to risk-free land cultivation zones.
Taking into account the increase in the gross crop harvest and shortage of high-quality storage facilities, the demand for long-term loans needed for elevator construction grows. In contrast with the previous years, when agricultural producers were selling harvest by the end of the year and repaying loans, this year the situation is a bit different: our partners require greater resources seeing that so far the product prices were rather low and their sale may result in losses for agricultural producers.
Thus, we are ready to provide additional funding or prolong the existing repayments till spring to enable the customers to see more attractive prices for agricultural products and organize efficient preparation for the next sowing campaign.
— What banking services aside from loans are the most popular with the agrarians?
— Aside from credit resources, we are actively offering cash management products which contribute to quicker and more convenient management of the company’s cash flows. If two or three years ago only few clients paid attention to the quality of cash management services, today everybody understands that it is important to not only get a loan but have an easy access to your funds. The bank has high concentration of exporters and importers which enables us to offer one of the most interesting conditions for working with foreign currency in the market. It involves both exchange rates used by the financial entity to carry out its currency exchange transactions and advisory services in the area of currency law. Now the market is structured in such a way that the majority of the companies wants to see the bank as not purely a creditor but as a business partner that understands the customer’s business, knows the market, is ready to share its vision and provide various instruments for efficient business development.
— Competition for agrarian customers among the banks is getting stronger. What are competitive advantages of Credit Agricole Bank?
— We are a universal structure and cover a very broad range of agricultural companies. Our partners range from the farms with more than 400 hectares of land to agroholdings with a land bank of over 500 thousand hectares in various regions of the country. The major part of our customers works in the risk-free land cultivation zone and builds vertical integration there.
The Bank offers solutions aimed at boosting business efficiency of our partners. For example, a loan for the purchase of equipment allows to save money on lease from the third parties, financing of stocks after the harvesting gives time to wait and sell harvest at more favorable prices, and purchase of an elevator cuts expenses on crop storage without loss of quality. Together with International Finance Corporation we offer a program when a farmer can use promissory notes to pay for plant protection agents. Such type of financing is much cheaper than the classic loan and costs agricultural companies only 4-5% p.a. With Nibulon Company, having more than 20 elevators in different parts of the country, the Bank has concluded the agreement on financing of agricultural producers against grain stored in the elevators of the company. We also have numerous partnership programs where we can offer a beneficial interest rate when financing the purchase of machinery or elevator equipment.