SQB IS A LEADER IN THE BANKING SECTOR. CAN YOU TELL US MORE ABOUT THE BANK'S TRANSFORMATION?

 

Sanoat Qurilish Bank (SQB) is an established financial institution offering a comprehensive range of banking services, including state, corporate, and retail lending, deposit-taking, cash handling, international money transfers, letters of credit, guarantees, foreign exchange operations, and other products. The bank has undergone multiple transformations, including a 2018 rebranding, resulting in a high-tech institution focused on customer satisfaction.

 

In partnership with IFC experts, SQB has implemented a new business model in its branches, focusing on digital products, technological solutions, and customer service. The bank's strategic goals have been redefined, with a focus on digitalization, reducing loan cycles, simplifying collateral management, improving customer service, offering favorable conditions, and organizing unique events for customers. SQB has modernized its risk management system and optimized its lending process, leading to increased profitability and market share.

 

As a leader in Uzbekistan's financial market, SQB occupies a leading position in loans to key industrial sectors, such as oil-gas, chemical industry, and energy sectors. It is also the second-largest bank in terms of assets and loan portfolio size, with a BB- stable rating from Fitch and S&P rating agencies. SQB was one of the first corporate issuers in the Republic to place corporate Eurobonds on the London Stock Exchange, promoting its brand internationally. SQB's strategic goal is to become a competitive, customer-oriented company that operates according to market mechanisms and is attractive to investors and customers. The bank is leveraging its ecosystem of banking services around corporate clients to scale its business, with a particular focus on SMEs and retail banking.

 

SQB has identified key strategic directions to achieve its goals, including business diversification, commission income increase, risk management system development, IT architecture modernization, and long-term corporate strategy creation. By pursuing these strategic directions, SQB aims to find new niches, identify breakthrough business models, and form a portfolio of strategic projects.

 

In addition to its domestic presence, SQB actively collaborates with foreign financial institutions, establishing correspondent relationships with over 350 international banks in Germany, Great Britain, Austria, Switzerland, China, and Korea. The bank has also formed partnerships with leading financial institutions, such as the World Bank, ADB, EBRD, IDB, and OPEC, and has been working closely with Mashreqbank, UAE banking, and financial institutions.

 

Through its partnerships and collaborations, SQB has undergone significant transformation and modernization, positioning itself as a major player in Uzbekistan's banking sector. In 2022, the bank's total assets increased by 14%, and it received funds from IFC and EBRD. SQB's success has been recognized by authoritative international publications such as "Euromoney" and "Asiamoney," which named it "The most advanced bank of Uzbekistan in 2022" and "The Best Green Bank of Uzbekistan," respectively. Additionally, it was awarded the "Best Employer of the Year" award domestically.

 

CAN YOU GIVE US AN OVERVIEW OF THE BANK'S ACTIVITIES AND MAIN ACHIEVEMENTS IN 2022?

 

With its remarkable growth and success, SQB is positioned as a key player in Uzbekistan's banking sector. The bank's consistent achievement of global standards and recognition for its outstanding performance underscores its commitment to customer satisfaction, and its determination to remain at the forefront of the country's financial sector.

 

SQB currently holds a significant share of 12% in Uzbekistan's banking sector, placing the bank firmly among the top three commercial banks in the country. In 2022, the bank's total assets increased by 7.8 trillion sums, equivalent to a 14% increase, bringing the total assets to 64.3 trillion sums. The bank's total customer base also grew to 1.3 million customers, representing an 11.5% share in the country's banking sector.Throughout 2022, SQB received funds from the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) totaling U$125 million, with the option of converting the funds into the bank's share capital. The bank is also expected to receive funds from the Asian Development Bank (ADB) in the near future.

 

The bank is also committed to participate in efforts to ensure climate change adaptation and mitigation. It has become the first among Uzbek banks which established Green Banking in 2019, and confirming its commitment to supporting eco-friendly business initiatives by approving the Environmental and Social Management system in 2021. This plan is aimed to financing projects that contribute to the fight against climate change and the transition to a decarbonized economy. The EBRD supports our bank in achieving the goals of the strategy to create the first “Green Bank” in Central Asia. Last year, we signed a U$25 million credit line under the GEFF program (Green Economy Financing Facility program). As a result, for two years in a row (in 2020-2021), our bank was awarded the Deal of the Year “Green Trade 2020-2021” award.

 

SQB has done most of the ground-work required but now needs a formal Framework and an ESG rating to successfully tap the ESG financing market. SQB will adopt substantial improvements across the following four dimensions: corporate governance, strategy, risk management, and reporting and disclosures, based on the recommendations of the TCFD. When implemented, these improved climate-related corporate and disclosure practices are expected to have a high demonstration impact for other financial institutions operating in Uzbekistan.

 

WHAT ARE THE MAIN OBJECTIVES OF THE BANK'S STRATEGIC PLAN AND WHAT YOU EXPECT TO BE ACHIEVED IN 2023?

 

In 2023, Sanoat Qurilish Bank's priority areas will focus on several key strategies. The bank aims to diversify its business by increasing the share of SMEs and retail businesses in its loan portfolio by 33% and 13%, respectively. This will be achieved through the development of omnichannel customer service in these segments. For individuals, this includes launching online mortgages and car loans, while for legal entities, the bank will offer loans through the SQB business platform.

 

The bank will increase its commission income by launching transfer pricing, offering package deals to customers, and expanding its product line as business directions. Structural financing operations and transactional banking will also be emphasized. The bank has plans to modernize its risk management system and IT architecture. A consultant will also be brought in to create a long-term corporate strategy.

 

The new corporate development strategy will enable the bank to identify new niches for development and breakthrough business models. A portfolio of strategic projects will be created, allowing the bank to focus its resources on projects, products, and initiatives that align with its strategic goals. Additionally, the bank aims to establish a clear link between its strategic goals and incentives for each employee. These strategies will enable Sanoat Qurilish Bank to achieve sustainable long-term growth and development, while remaining a leading financial institution in Uzbekistan.