The turmoil in global politics, the economy and the financial sector is ongoing, and the banking sector is deeply enmeshed in this crisis. In this article, we look at banks in Macedonia and find out how one bank, Stopanska Banka a.d. Bitola, is riding the wave.

It would be no exaggeration to say that the world is currently going through significant political, economic and financial instability.  Some of this turbulence is centred on the growing instability of the European Union in the wake of an ongoing recession, bailouts, and the political impacts of ‘Grexit’ and ‘Brexit.’

One state that has been impacted by these seismic changes is Macedonia, a country formerly part of Yugoslavia and geographically nestled between Kosovo, Serbia, Bulgaria, Greece and Albania. The banking sector of the country is particularly affected, given that around 20% of Greek banks hold assets in the country’s banking assets. The sector has seen reduced economic activity, deteriorating financial results in business, and the need for greater liquidity.

Despite the challenges that Macedonia faced in the first half of 2016, upward trends in the economy are evident.  The numbers show a GDP growth of 2 % in the first quarter of 2016 and an average annual inflation rate of -0.4%. In 2015, the average annual inflation rate was -0.3%, while GDP grew by 3.7% even though a growth of 4% was expected.

Vladimir Eftimoski, Chairman of the Management Board at Stopanska Banka a.d. Bitola in Macedonia, is well placed to judge the financial and business environment in the country. Here we talk to him about his confidence in the ability of the Macedonian banking sector, and Stopanska Banka a.d. Bitola, to navigate the choppy waters ahead.

What’s your prognosis for the Macedonian banking sector?
I want to emphasise the positive aspect. Trends in the Macedonian banking sector have shown continuous stability and increased levels of liquidity. In conditions of reduced foreign demand, which impacted the limited growth in the domestic economy, additional implemented amendments in monetary policy have stimulated the growth of loans and provided support to the private sector.

As a result, in the first quarter of this year, the assets on the level of the banking system remained on the same level as last year, proving that the banking system remains generally immune to the political crisis in the country. The gross loans to non-financial entities increased by 9.92% and deposits for non-financial entities by 10.67%. Capital and reserves increased by 2.20% compared to the previous year. The main challenge is how to utilise the increased liquidity for the support of business and economy; special emphasis is therefore being placed on retail loans.

How well is Stopanska Banka a.d. Bitola doing in the midst of these global and national storms?
Stopanska Banka a.d. Bitola retail loans grew by 9.36 % in the first five months of 2016 compared to the end of 2015, and 33.48% compared with the same period in 2015. The deposits of non-financial entities are at a stable level since 2014.  Equity and reserves increased by 14.07% in 2015, which represents a signal of a high level of capitalisation of the Bank. The overall gain has been transferred into operational reserves, which increased by 145% in 2015 compared to 2014.

We have seen an increase in the other activity revenues, mainly due to the partial sale of property and investments in investment funds’ stakes, which have proven to be a more profitable alternative in comparison to investing in long term government securities. As a result, the Bank made a profit of 1 million Euros in 2015.

We believe therefore that the Bank is recognised as a stable and safe financial institution, which has drastically improved the quality of the services offered to its clients.  We have increased the number of employees in our bank, expanded its ATM infrastructure, and issued a corporate bond of five million Euros – the first of its kind in Macedonia and with characteristics of a subordinated loan.

What do you offer to your clients, that makes your product and institution unique?
I believe our success is mostly due to the unique approach we, as a bank, has to our clients. Anyone that approaches our Bank as a new client, with the simple act of signing their name, becomes our valued client and receives high quality and professional service. We offer them friendly advice during our investigation of surplus assets, in specially developed deposit products designed in compliance with prudent risk management.  Our clients are busy, so we aim to be a one-stop-shop for advice and information, and offer them everything they need in one place. We also invest heavily in our employees, which offers a better working experience and better customer service.

We constantly innovate new products to improve our services and benefits for our clients. One example of this is self-employment credits, a project realised in co-operation with the competent institutions in Macedonia. Another is the greater use of products and services in electronic form, which will be user-friendly for business people. During 2015 and 2015 Stopanska Banka a.d. Bitola conducted multiple activities and projects for the development and upgrading of applicable systems in the direction of implementing regulatory requirements; maintaining mandatory standards for meeting the regulations of the Bank and audit recommendations; meeting competitor advantages; rationalising and optimisation of business processes and harmony within the Bank and upgrading the IT infrastructure (system, communication, database as well as security information). These changes create the right conditions for the effective monitoring of market growth and workload, and an easy adaptation of the Bank to the organisational and regulation changes. Stopanska Banka a.d. is one of two banks in Macedonia developing the project M-payment.

We see our greatest advantage in being fast and flexible enough to be able to use this period of economic and political crisis to reorganise and consolidate, with the purpose of attracting a foreign strategic partner interested in having a presence in the Macedonian market.

What plans do you have for future development?
If I say we need to grow, because we are a mid-level bank in Macedonia, it would not be the most precise definition of the development plan of Stopanska Banka a.d. Bitola. By working with our clients, and developing trusting relationships with them, we aim to increase the overall bank capital to be utilised in the business.

The banking and financial system does not recognise large and small banks, but good and bad, and successful and unsuccessful ones. By upgrading all our operations, our primary ambition is to be good and successful. It starts with our relationships with our clients, through to the product and services we offer, and continues to a higher level of social responsibility.  That is how we see the future shaping up.