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The Chairman of the Board of Directors of Moldindconbank, Herbert Stepic, one of the most renowned banking experts in the Central and Eastern Europe, was in Chisinau in January and gave an interview to, where he talked about the prospects of the banking market in Moldova.

The press and the banking community refer to Dr. Herbert Stepic as a "trailblazer for investors in the Central and Eastern European region" because he was responsible for the international expansion of what is today the Raiffeisen Bank International (RBI). He served as CEO of RBI until 2013 and was the driving force behind its expansion into one of the largest banking groups in the Central and Eastern Europe, with several banks and branches in 13 countries in the region.

Herbert Stepic has been awarded numerous prizes, such as the “Decoration of Honor for Services to the Republic of Austria” in 2012, „WU-Manager of the Year 2005” of the Vienna University of Economics and Business, „Trend Manager of the Year 2005”, „European Banker of the Year 2006” and „European Manager of the 2007”. Herbert Stepic holds a Doctor of Science degree from the Vienna University of Economics and Business and is Vice President of the Austrian International Chamber of Commerce.

Mr. Stepic, how do you assess the year 2022 for Moldova as a state and for the financial sector in particular?

Herbert STEPIC: I think it has been a remarkable year for both the country and the banking sector. I do not need to remind you about the fact that we had COVID, political shocks, February 24. All of these, consequently, of course had enormous repercussions on the direction of the country's political and economic progress. In the context of your question, the most important statement concerns the monetary policy of the country's central bank. The National Bank has managed to maintain the financing process, to control the risks to the business environment and I would say that it has done it more or less perfectly.

The main topic was of course the high inflation rate, which automatically called for rapid measures that were introduced. I am referring here to the increase in the reserve requirement rule from funds attracted in national currency to 40% and to 45% in foreign currency. This was an enormous move for the market, with many consequences, of course.

The important measures that have been taken aimed at withdrawing liquidity from the market, from the banking sector. Automatically, they led to a decrease in lending compared to previous years. And we are talking here about two measures - on the one hand the reserve requirement rule and, on the other hand - the capital adequacy ratio. Respectively, through these two measures, the volume of liquidity was reduced, which had the effect of successfully fighting inflation, which began to decline from last December. Inflationary measures are moderating. So I must emphasize that the central bank has reacted quickly and to the point. And the reaction of the banks was also professional. They followed the central bank's recommendations, reduced lending activities, invested in government securities, in other words - they helped the Government to withdraw liquidity from the market, which had very positive consequences for the banking sector. They have increased profits; they have essentially increased assets - by 10% compared to 2021. So I can say that it was a very positive year both for the country's economy, in a very difficult economic environment, and for the banks, which dealt with the situation in a professional way.

How do you assess the year 2022 for Moldindconbank? What were the performances at the end of the year?

Herbert STEPIC:  Moldindconbank is definitely a leader in terms of performance last year. First, I would highlight the increase in the volume of consumer loans to the public by 54 million lei, which I think is a significant increase. And the increase in our market share in this segment of the business was also remarkable. We are number one in the market here with 28% for last year. I want to point out that we helped 7 thousand families to finance their home-buying needs, i.e. we helped them to start investments that will allow them to own their own homes. We are the first bank in Moldova to issue 1 million cards and we are currently the leader in the card market with over 37%. And this confirms that we are a bank that cares about people's needs. We have launched Google Pay, Apple Pay, we have introduced online loan application to simplify access to finance the needs of applicants. And back to cards, we launched Instant card, which allows customers to apply for and receive cards more easily and quickly. There is a lot we have achieved, which has ultimately led to our best result ever - over 900 million lei profit. At the same time, we have considerably improved the situation regarding non-performing loans - it is a very solid result. So we have a very safe bank, we have considerably increased the asset ratio, we are over-capitalized, we have a very attractive cost/income ratio, with a strong focus on cost efficiency, over 40%, which is remarkable because the benchmark for cost/income ratio is around 50% or a little under 50%. So, overall, high capitalization rate, low loss ratio, high liquidity means a very solid bank, ready for possible market shocks and customer needs.

What are the advantages of Moldindconbank due to which it achieved many positive results at the end of the year?

Herbert STEPIC:  The bank's policy of being there for its customers, very much oriented towards quality of service, constantly looking at what customers' needs are, reacting to them by creating and launching products, helping customers in their daily corporate activities, the way they carry out their import/export operations, local investments - this is what we stand for. By the way, the banking sector last year grew by about 300 people. We are talking about 8,500 employees in the banking industry. That is a substantial figure for a relatively small market. What I want to say to us - employees, management, board and shareholders - do not give up, continue to pay attention to the interests of your customers. I want to thank all of you; I want to thank every employee, because our success is the result of the work of each one of them. I am happy that I can express my thanks to the entire Moldindconbank team. Thank you very much!

How do you see the evolution of 2023 for the Bank? What are your expectations?

Herbert STEPIC: We see a relatively uncertain global economic environment, not bad, but uncertain. And with uncertainty, it is usually difficult to make estimates for your policies. So, Moldindconbank also has to adjust its policies based on assumptions, estimates. In general, we believe that the market will improve slightly; we have a positive view on future developments. I mentioned earlier some indicators with reference to inflation developments. How do I see the evolution? I want to say, that 2023 is a year of change. The first and most important task for all of us I see - we have to build for the future. I say openly that I sometimes feel that some team members see that transformation, which has been ongoing for a year and a half, more as an IT-related transformation. No! It is a process for the whole bank. If you ask me what is more important for this year - profit or developing the bank for the future, then it is developing for the future. The sooner we do it, the better we do it, the better we will position ourselves for the future. The banking sector in Moldova is a very concentrated market. The four largest banks together hold a share of more than 80 percent of the market. This means fierce competition. As a result, especially when you see the movements and development that are happening in international banking, they are related to mobile banking, internet banking, telephone banking, systemically oriented banking. And here we still have a qualitative leap to make and this qualitative leap we have to make in 2023. In conclusion, I would like to say that by developing banking, we are developing the future.

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