President of Russia Vladimir Putin: Mr Kostin, we were going to talk about state support for small and medium-sized businesses. I know that VTB Group has developed large programmes for this purpose, which work. Let us discuss how they work and what they actually do.
VTB Bank Chairman and CEO Andrei Kostin: Yes, Mr President. Working with small and medium-sized businesses is one of our Group’s priorities. Two years ago, we even introduced a special Global Line as part of VTB Group, which is directly focused on this area. Today, our SME loan portfolio is 870 billion rubles.
I must say that last year was difficult for work with small and medium-sized businesses. On the one hand, high interest rates held back the demand for small business loans, while on the other hand, the difficult economic situation led to a very high level of non-performing loans, so banks’ interest in providing these loans decreased.
However, I note with satisfaction that since the beginning of this year, the situation has begun to improve. In the first quarter, we have seen not only a growth of funds in the accounts of small and medium business customers, but also an increase in demand for loans. We believe that this the loan portfolio for this category of borrowers will grow by at least five percent.
It also helps that there is a state programme already fine-tuned by the Government and the Central Bank jointly with commercial banks. It involves the issue of special soft loans to small and medium-sized businesses through the Federal Corporation for the Development of Small and Medium Business.
Many people do not even believe that the interest rate under this programme is 11 percent for small businesses and 10 percent for medium-sized businesses, but it is true. It is refinanced by the Central Bank. VTB was the first bank to join this programme.
Vladimir Putin: Roughly, how many borrowers have taken out loans at such rates?
Andrei Kostin: We believe we will issue about 20 billion within a year, to about 200 borrowers. This is a relatively small percentage, maybe five percent of our portfolio. However, the mechanism is interesting. I think that if we continue to develop it, with your support, it should be of major help in working with small businesses.
Vladimir Putin: Very good.
How is your cooperation with the Central Bank? Are you getting along, or are there any difficulties or problems?
Andrei Kostin: No, there are not. The Central Bank is very understanding about our challenges. Of course, the regulator monitors the availability of the money in circulation and credit supply. As for such key programmes as support for investment projects, a programme started with your initiative, and the programme we call “6.5 plus” where the Central Bank is funding us at 6.5 percent for small businesses – these programmes are supported by the Central Bank, and I think we will continue to cooperate fruitfully with the regulator and the Government.
Vladimir Putin: Fine.