Specializing in working with leading manufacturers of agricultural machinery, cars and trucks, OTP Leasing is a leader in the Ukrainian leasing market.
We spoke with the CEO of the Company, Andriy Pavlushin about the results of 2019 for OTP Leasing.
– The Ukrainian leasing market is only 20 years old. In what condition is it today?
– The Ukrainian leasing market is growing at a slower pace than it would like, as the economic instability of the past years is reflected in the pace of development of the whole country and in the leasing industry. If we consider this market from a macroeconomic point of view, then leasing is one of those financial instruments by which Ukraine can find a second wind in its economic development.
– What is leasing within your company?
– Leasing is first and foremost a capital investment and a long-term relationship. When a client thinks that it is necessary to buy a certain fixed asset (in our case it is a question of transport), then he comes to us. We do not finance its running costs – it is the prerogative of the bank. Our company, frankly, is financing a “piece of iron” that will serve for three to five to ten to twenty years. Business owners think about such capital investments when they are all right. But if the company barely makes ends meet and does not renew its fleet of motor vehicles, agro or wagons for a long time, it slows down the economic development of both the company itself and the whole country. We are actively seeking to change this trend.
– Speaking of growth rates, how does OTP Leasing develop in this sense?
– Judging by the financial indicators, we are growing faster than the market. Compared to last year, we grew by about 45%, while the leasing market itself grew by 16%. Currently, OTP Leasing assets amount to almost UAH 9 billion. The size of OTP Leasing, for example, is 2 Pravex Banks. Our deals start at $ 30,000 and average from $ 50,000 to $ 100,000. Speaking of the size of a new business, in the last 11 years, we’ve come to $ 1 billion.
This is our milestone – a key moment of development, which means a quality transition to the next level. We are unlikely to reach the trillions of dollars, but we have already reached the billions, which is a big indicator for us.
If we talk about the size of new business within 2019, we had a plan of $ 165 million, and we will make somewhere $ 225 million. It turns out that 20% of our first billion we made in the current year.
– Such active growth requires some financial infusions. How did you manage to achieve a sustainable balance?
– We had to make a lot of effort not only to sell our products, but also to find financial resources. The thing is, there is a certain financial limit that we can take at OTP Bank in Budapest. It can be any size, but only changes once a year.
To increase its loan portfolio, it was necessary to work multi-vectorially and to attract financing from external partners. This year we have raised 10 million euros from the EBRD with 10% compensation. It works like this: for example, we buy tractors for that amount and lease them to recipients who, through us and the EBRD, receive grant money of 10% of the cost of the equipment from the European Union.
We received another $ 17 million from our German partners, the KfW Foundation. We also managed to obtain a $ 50 million financing package from the International Finance Corporation (IFC) to increase investment in Ukraine’s green energy. For us it is first of all tractors, combines and trucks with new, more environmentally friendly engines.
Photo: OTP Leasing
– What does it mean for your team to be a leader?
– Our inner motto is Winston Churchill’s famous call: “Never give up! Never give in! ” Being a leader in our market segment means enduring tremendous psychological and technical workloads. We have been able to form a team of strong professionals who do not know firsthand what true endurance and maintaining quality work throughout the year. This can be compared to great sports: we have endured a difficult business tournament-2019 and again become champions.
Reference:
OTP Leasing is part of the European financial group OTP Group. Founded in June 2008 as a subsidiary of OTP Bank, OTP Leasing provides financial and operational leasing services. Since 2008 OTP Leasing is a member of the Ukrainian Association of Lessors and actively participates in the promotion of leasing in Ukraine.