Halkbank General Manager Hüseyin Aydın

“As the market expands, the weight of SMEs increases” 

Saying SMEs (Small and Medium size Enterprise) are the keystones in the foundation of Halkbank; Hüseyin Aydın adds their target is “to increase the number of client SMEs, together with the volume of credits extended to SMEs.”

 Halkbank has declared its 2008 target as increasing the profitability by 25%. Have the recent fluctuations caused adjustments in your targets? 

Doubtless to say, the global crisis has negative effects also on our financial markets. The negative impact that was observed in banking sector in the third quarter of the current year was the increase in the costs of resources and the resulting shrinkage of margins. Both the worries over rising inflation all over the world and the deterioration in financial markets have caused the interests on loans and lending to go up. Although it is impossible not to get negatively affected by this movement, limiting the impacts of the rise is connected, to a great extent, with the balance sheet structure of banks. At Halkbank we took care to manage our balance sheet structure in a way that makes it possible to remove the impacts of changes in interests and to maintain this structure. We have made efforts to minimize the interest rate risk to a certain degree and to reprice our assets in accordance with rising rates by forming a considerable part of our securities and nearly half of our credit portfolio using variable rate products for this purpose. We have adopted a funding approach that reduces our dependence on foreign markets. 

When our performance in credits in the first 6 months of the year, and the new solutions we have developed with regard to nonperforming credits are also added into this picture, our performance has remained quite positive. Being very strong as to resource structure, I think Halkbank is in the best position in the sector to emerge out of this period unscathed with both its extensive deposit base and the liquidity opportunities it enjoys. As you already know, Halkbank posted 642 million YTL net profit in the first six months of 2008, with 20% growth when compared to the same period of last year. Despite the relative contraction in credit markets and interest margins in the third quarter, I believe that the downward trend in inflation expectations and the revenues to be reaped in the last quarter of the year will compensate for the third quarter. In this period we have introduced different campaigns especially in consumer loans and we could match increases in volume with profitability. With a period of securities repricing stepping in, I can safely state that we do not have a need at this point to revise our profitability target for 2008 year-end. 

As the bank with the closest ties with SMEs, do you think the weight of SMEs in the economy is accordingly reflected? What kind of steps should be taken for developing SMEs?

 In the past, banks have focused more on corporate structures and preferred large companies with sound financial structure. Just as with retail banking, the importance of SMEs was realized only lately. However, Halkbank is dedicated to SMEs as required by its mission. With its expansive branch network, competent employees and its experience in SME banking Halkbank is a leader in this segment. SMEs are facing global competitive pressures more seriously now due to the new players entering Turkey from foreign markets and to technological developments. As both the domestic market and overseas markets expand, also the significance of SMEs in the economy began to grow more and more. Among the most important demands of SMEs from banks are; loans with lower interest rates and longer terms, low meditation commissions and reduced credit guarantees.

Nevertheless, it has appeared recently that what SMEs need most is not loans with favorable costs and terms. In this context, the importance of providing training and consultancy services to SMEs was understood more clearly. In parallel with this development, banks have begun to consider SME banking as a separate segment, setting up special units dedicated only to SMEs and also SME hotlines. Banks have launched efforts to determine sectoral needs and demands, eventually coming out with product lines suited to these demands. I believe that banks’ contributions toward increasing the weight of SMEs in the economy will continue unabated. 

It is observed that many banks tend toward SMEs. Do you think this trend creates problems for you?

 SMEs are the keystones in the foundation of Halkbank. In today’s competitive landscape banks are involved in a close contest in every customer segment. Banks that can provide quick and efficient services to SMEs will get a larger share of the market. At Halkbank we plan to increase the number of client SMEs, together with the volume of credits extended to SMEs. Halkbank’s SME strategy is based on two pillars: First we consider SMEs as a whole designing solutions that can facilitate their transactions and secondly we develop various products and agreements that take into consideration differences between SMEs as to sector and business volume. We aim to be able to bring out quick and efficient responses to developments in banking sector and to changes in firms’ needs. In fact, we are happy that other banks also tend toward SMEs. In this way, our client SMEs can easily access services and products in financial markets. As a result, they can find the bank that is most suited to their needs offering the optimal advantages. At that point, I do not see any harm in declaring that a great majority of SMEs prefer Halkbank. Our figures also prove this.

 While banking sector shows a 20,2% increase in loans in the first six months of 2008 compared to the same period of last year; Halkbank exceeded this growth with an above-the-average increase of 24%. Our total loan volume increased to 22,1 billion TRY. We obtained a 31% growth in commercial loans which also include SME loans, as compared to the end of 2007. All these growth figures are the surest sign of the fact that Halkbank’s activity in SME loans is going on increasing.