A business model that helped survive the war

Massive delays in loan payments. Stoppage of work of many enterprises… These and other consequences of a full-scale war were to kill the banking system of Ukraine. But she persevered. And some financial institutions even showed growth.

In particular, Acordbank opened 39 new branches in 2022, doubled the portfolio of individual deposits and stably maintains highly liquid assets at the level of 85% (balances on the balance sheet, NBU certificates of deposit, government securities, etc.). In this article, we tell Acordbank how he succeeded.

The war slowed down the rapid development

Acordbank was founded at the height of the global mortgage crisis in 2008. Its fastest growth began in 2017‑m and it went onalready five years. During this time, the bank increased its assets 33 times: from UAH 450 million to UAH 15 billion. He also expanded the regional branch network. At the start, there were only 5 of them, at the beginning of 2022th — 109, and now – 148 (9-that place among all banks).

Only during 2021‑ th Akordbank increased the amount of funds raised from private clients and enterprises by 2.4 times — up to UAH 9.2 billion. Therefore, according to this indicator, it entered the top 25 banks in Ukraine.

In February 2022, the smell of war was in the air. More precisely, another exacerbation of it in the east of Ukraine. The banking sector was preparing for worst-case scenarios. However, it was just in case. Few people believe in the possibility of a full-scale war with missiles, planes, tanks and Grads– really believed.

Despite mass skepticism, Acordbank prepared reserve sites in western Ukraine in advance. Conditions were also created so that the bank could work continuously, even if there are problems with the main communication channels and server equipment. Therefore, February 24, of course, was a shock, but there was no confusion. Instead, the bank had a clear action plan and strategy for further work. She was not hindered by the massive missile strikes that the Russians launched on all the cities of Ukraine. During one of the attacks, the head office of Acordbank was damaged. Several bullets still remain in its walls.

But not only the walls of banks suffered, but also the system as a whole. People withdrew cash en masse, took deposits, went abroad. Units were calculated for loans. Entire cities have lost access to banking services due to occupation or hostilities. The incomes of people, enterprises, banks and the entire state fell.

Despite the chaos that engulfed the market, the banking system passed this test

A strategy that helped to survive

Despite the chaos that engulfed the market, the banking system passed this test. The correct Development Strategy helped Acordbank to survive the dark times. It is based on a transactional business model. It involves the active development of a network of branches where risk-free commission-trading banking products are sold to clients. And also — receiving interest income with a minimal level of risk. This model allows you to maintain a high level of liquidity. Instead, it restrains the active growth of the loan portfolio.

Here are the results of the Development Strategy of Acordbank in the military year 2022.

Growth in the share of net commission and trading income. At the beginning of the invasion, the structure of operating income was at the level of 45%, now it is about 60%. This ensured the operational profitability of the bank and made it possible to cover credit risks through the additional formation of reserves.

Small credit portfolio. In the structure of assets, the share of loans before the war was 11%, on average in the market it is at the level of 40%. This protected Acordbank from excessive credit risk. In the first month of the war, the bank did not charge interest at all on personal loans, regardless of the quality of service. Loyal conditions for restructuring have been developed for enterprises.

Highly liquid assets. Acordbank always placed funds in NBU and OVDP certificates of deposit, kept a high level of cash balances. Such assets have the highest degree of liquidity. As of February 1, 2022, they were 85%. This level is maintained to this day.

In March-May 2022, the number of bank clients with balances decreased, in terms of money, it was an outflow at the level of UAH 1 billion. But since July, the amount of term deposits of individuals began to grow. Therefore, by the end of the year, the portfolio has more than doubled.

In order to be safe, Acordbank received refinancing from the NBU in March 2022. But did not use it. To date, the bank has repaid all refinancing loans ahead of schedule, including pre-war OVDP loans. Thus, there are no debts to the NBU.

Having a successful business model that has shown its effectiveness even in wartime, Acordbank continues to implement it and thereby supports the stability of the entire system.

At the same time, the bank does not forget about the support of the Armed Forces – during 2022, the military received more than 200 multi-purpose and armored vehicles. Acordbank has repeatedly transferred significant sums for the creation of a fleet of naval drones, for the purchase of kamikaze drones and various military equipment.

NBU license No. 245 dated November 7, 2011, date of entry in the State Register of Banks August 5, 2021