homepage_name! > Editions > Number 118 > Interview - Milos Vujnovic JUBMES

Miloš Vujnović PhD, President of the Executive Board of JUBMES banka a.d. Beograd

40 Years of Experience-based Decisions

With the results achieved in 2018 by all key parameters, JUBMES banka significantly exceeded the plans and objectives defined for the mentioned period. Profitability growth and earnings of RSD 465.28 million have been recorded. High growth of balance sum, i.e. volume of business activity, which has been increased by 33.5%, has led to the highest level in the Bank’s history ever since it commenced operating as a commercial institution. The growth of business activity volume is the result of a distinctive trend of growth of depositors’ trust in the Bank, retail and corporate customers alike. In 2018, a 46.8% growth of deposits was recorded. This resulted in significant continuation of the trend of progressive growth of placements to the Bank clients and earnings from interest rates of 44%, in spite of continuation of the trend of continuous decrease of interest rates on Bank placements in the banking market, and consequently in the Bank as well. The trend of significant growth of portfolios of placements to the clients existing in the last three years, especially in 2018, has created a basis for a further certain and continuous profitability growth in the following years.

Mr. Miloš Vujnović PhD, President of the Executive Board of JUBMES banka a.d. Beograd speaks for Profit magazine.

1.What business results did JUBMES banka ad Beograd achieve in 2018 and did you meet your defined objectives?

With the results achieved in 2018, the Bank significantly exceeded the defined plans and objectives for the mentioned period by all key parameters. Profitability growth and earnings of RSD 465.28 million have been recorded. The amount of earnings from ordinary business activities is RSD 178.47 million, which represents an almost threefold increase of earnings compared to the previous year and indicates the stability of business. High growth of balance sum, i.e. volume of business activity, which has been increased by 33.5%, has led to the highest level in the Bank’s history ever since it commenced operating as a commercial institution. The growth of business activity volume is the result of a distinctive trend of growth of depositors’ trust in the Bank, retail and corporate customers alike. In 2018, a 46.8% growth of deposits was recorded. This resulted in significant continuation of the trend of progressive growth of placements to the Bank clients and earnings from interest rates of 44%, in spite of continuation of the trend of continuous decrease of interest rates on Bank placements in the banking market, and consequently in the Bank as well.

By undertaking all legally available measures and activities in collecting non–performing receivables, a high level of collection has been achieved again, resulting in further decrease of share in overall loan receivables. At the end of the year, the level of Bank's non-performing loans is still far below the banking market average.

2.This year, you are celebrating a big jubilee 40 years of successful business in Serbia. What has enabled your Bank to survive and successfully operate for so many years, considering the turbulent times that had come upon our country?

There is a long-lasting, but also rich tradition of business behind us. The national export-credit agency was at the time the first and only institution of that type in the regions of Eastern, Central and South-Eastern Europe until the beginning of the 1990s. In the financial sector of the former SFRY, it was the first institution which was organized in the form of a joint-stock company in 1989, denoting the beginning of ownership and market transformation of domestic banking. It was transformed into a commercial bank in 1997, focusing on the corporate client target group. Until today, the business strategy of the Bank has not suffered any major turnarounds, yet the objective has been further specialization in the areas in which we can really offer financial expertise. The key to success in all these years is based on the synthesis of experience and knowledge from different development phases, adapted to contemporary market trends and client needs.

3.Do long-lasting tradition and experience of your Bank have significant impact on clients who place their trust in you?

The fact that the Bank has existed for four decades now certainly inspires security and trust. Business with corporate clients remains our strategic commitment even today, especially when it comes to the products for financing trade, financial support to export business, as well as in providing expert and technical assistance in the domain of collection of commercial receivables from foreign debtors. By operating in a clearly defined market niche, we try to continually improve the relationship with our clients once established, by building strong and long-lasting relations. We are proud of the fact that we have extremely low customer defection rate, while recommendation still remains our main marketing channel.

4.Where do you see potential for growth in the Serbian market, both when it comes to your Bank and the country’s business in general? How does the banking market currently operate in Serbia in comparison to the countries in the region?

Serbia’s banking market and its operation is not that different compared to the region. Basically, the only difference is the size of the market which is a consequence of the sizes of countries and the strength of their economies. What is common to all markets is the process of consolidation of the sector. Serbia’s banking sector still has the largest number of banks in the region, with an increasing growth of the market share of banks with domestic capital and capital from the countries in the region. Having in mind the challenges banks are facing, for example the need to improve profitability, more complex regulations and growing competition, it is realistic to expect the trend of bank market consolidation to continue at the same pace in the upcoming period as well. Such a trend has created conditions for a growth which is not organic, but rather based on taking over banks or portfolios of placements, enabling higher yields in the conditions when the market is experiencing continuously lower margins. The banks that plan further business operations in the local market and in the region will experience significant new investments and adjustment of business models in order to fully respond to the fast changes and new trends in banking. Banking digitalization provides a significant potential for growth, especially for the banks that do not have a branch network, like ours.

5.What is the expected net profit of the Bank in 2019 and do you expect to form a base in this year for significant growth of profitability in the following years?

The business policy for 2019 estimates achieving earnings from ordinary business activities in the amount of RSD 209.2 million. The trend of significant growth of portfolios of placements to the clients present in the last three years, especially in 2018, has already created a basis for a further certain and continuous profitability growth in the following years.

The capital adequacy ratio at the end of 2018 is 26.48%. Apart from a very high growth of the Bank’s placement, we are still on a significantly higher level in relation to the regulatory prescribed minimum, as well as in relation to the banking sector average. The Bank's regulatory capital will experience significant growth of 13.7%, on the basis of earnings achieved in 2018. Such high capital adequacy and regulatory capital growth provide significant room for the expansion of the Bank's business activities in the upcoming period as well.

6.Is the trend established in 2018, concerning the increase of active commercial placements, going to continue in 2019 as well? What is your business policy in the market?

The trend of progressive annual growth of the Bank’s active commercial placements was present in the previous three years, especially in 2018. The increase of active commercial placement portfolio levels, primarily through further expansion of the portfolio by introducing new clients, has continued in 2019 as well. The focus of previous year's activities, which continues in the current year, is on attracting new clients and on increasing the credit portfolio, efficiency in providing banking services to the clients, and also on a careful approach to credit risk assessment.

7.How important is digitalization to your Bank and what can your clients expect in the following period?

In the near future, digitalization will be an imperative and criterion for survival of any bank in the market. In the following period, we are planning to additionally improve the existing electronic banking services and develop new ones. Digital technologies offer possibilities to additionally bring our products and services closer to retail customers. The future of banking, as well as many other businesses, lies in investing in software solutions in order to operate more efficiently.

8.The banking market in Serbia is considered to be highly competitive. From your perspective, in what manner should the banks adapt in order to fulfill the needs of their clients?

The domestic banking market is competitive, significantly segmented, and it is facing a withdrawal of certain groups from the market and consolidation, but at the same time, new participants are introduced. From the perspective of one of the participants in the market, it is rather challenging to operate in such an environment. The battle for clients is not easy and obliges us to continuously develop all aspects of banking, which is very beneficial for the clients. The banks realized the importance of the client-oriented business model a long time ago. The offer of banking products and services is fully adapted to the unique needs of the clients. Traditionally formal financial institutions are becoming clients’ social media friends, while the branches are seen as cozy places where you can pay your bills while playing on your tablet, reading daily newspapers, or drinking a cup of coffee. Alternatively, clients do not have to worry about working hours or location of the nearest bank, due to the fact that a smartphone application is sufficient for most transactions. In that sense, the future of banking is adaptation to specific needs of the clients, and the quality of the process becomes the criterion for competitiveness.

9.Important part of JUBMES banka ad Beograd business strategy is also corporate social responsibility. Which projects have you already completed and which areas will be your focus in the following period?

Traditional understanding of business with the sole purpose of creating profit has been replaced with a new business vision and culture recognizing social goals as well. The principles of corporate social responsibility and sustainable growth are a permanent strategic commitment of the Bank. By cooperating with employees, local community, and society in general, we support scientific, educational, cultural and health protection projects of the local community. Through membership since 2008, we have been involved in all activities of the national network of the UN Global Agreement. We have continued to promote the significance of maintaining the cultural identity and inclusion of endangered groups, especially on the territory of AP Kosovo and Metohija. When it comes to environmental protection, we have continued our longstanding collaboration with the Uvac Special Nature Park, by supporting the project involving feeders for griffon vultures, which are the symbol of one of the richest nature reserves of the Republic of Serbia. The Bank is one of the significant founders of the humanitarian foundation “Child's Heart” and has been focused for 27 years on collecting funds to enable better conditions for surgical treatments, rehabilitation, and social adaptation of the youngest patients with inborn heart diseases. In children and youth, we see the perspective which should be fully supported. With special care and great pleasure, we are planning new activities of the foundation.

10.What is the percentage of market share of JUBMES banka ad Beograd and what is your ranking in the banking sector market in Serbia? What are your expectations for the growth of your business activities in the following period?

According to balance sum value based on the published non-revised official financial reports for the third quarter of 2018, our Bank was ranked as the 23rd in the banking sector with 0.42% market share. Regarding the market share, the Bank has moved up by one position compared to the end of 2017. With the stated net profit of RSD 430.07 million at the end of 2018, the Bank takes the 18th position in the overall result of business operations in the banking sector, which represents a six position progress compared to 2017.

The fact is that we are a Bank with lower market share and, in terms of nominal values of balance positions, we cannot compare to large players in the market. However, the results we obtained in terms of achieved growth rate of particular balance positions in 2018 put us at the very top of the banking sector. It is with pride that I am emphasizing that the Bank, based on the business results in the first nine months of 2018, holds the first place in the banking sector according to achieved growth rates of earnings before taxation, and the second place in achieved growth rates of balance sum, deposits, and other obligations to the clients and interest rate revenues.

In addition, in the first nine months of 2018, Bank recorded the second biggest return on assets (ROA) in the market with 3.23%, and it is ranked as the fifth Bank in the banking sector of Serbia based on the 11.70% return of equity (ROE).

Having in mind the achieved results of the Bank in previous period, the defined objectives regarding the growth rate of relevant balance positions, as well as business results to be achieved in 2019 and in the following years, are at least doubled in comparison to earlier projections.

11.Banking, as an industry, has been changing fast, which can be very stressful. How do you personally cope with stress?

The changes which we advocate sometimes do not work in our favor. We encourage digitalization which enables networking and 24/7 office from any place, while at the same time we willingly sacrifice what little freedom we used to have after work. In that process, we have accepted stress as a challenge and motivation for continuous progress. Due to the way and pace of life, hobbies and other exclusively personal pleasures have become elusive luxury and I refer to them as ancient history. Every moment dedicated to my family reduces the stress I cope with at work and additionally motivates me.


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