Venezuela’s economy has been through a turbulent time over the past decade, with national growth remaining unstable. However, recently the economy has maintained solid expansion and financial services are doing particularly well. The last four years have seen the money supply grow exponentially, with a 77 percent rise in the first quarter of 2014 alone.
This has largely improved capital for Venezuelan financial firms, which as a sector contribute unprecedented growth rates to national GDP (see Fig. 1), and has taken to supporting the local economy. In particular, Banplus Banco Universal has found its strength and capital in local small and medium enterprises, which have seen positive growth in recent years.
As a result, Banplus Banco Universal has maintained a constant growth rate in its turnover during the last five years, resulting in higher market shares in loans and deposits, reaching 0.67 percent and 0.75 percent respectively at the end of the first half of 2014. This good progression resulted in the firm last year receiving approval to increase capital and conclude its transformation into Banco Universal from the Venezuelan watchdog, the Superintendency of Banking Sector Institutions. In part, this comes down to the firm showing sustained and significant growth in the segment of small banks in the past five years, thanks to strong financial balances and a diversification of its offerings of products and services to target customers.
The firm currently serves its 112,600 account holders through 47 agencies, 38 ATMs and a work force over 800 employees. “The sheer size of Banplus has grown in recent years, and this has paid off in terms of customer satisfaction,” says Diego Ricol, Executive President at Banplus Banco Universal.
“The opening of new branches in strategic locations and the growth of the sales force have sustained the level of trust and increment of funds deposited by customers and administered by Banplus Banco Universal. This strategy was responsible for Banplus Banco Universal climbing positions in the Venezuelan market, increasing the market share from 0.14 percent in June 2007 to 0.75 percent in June 2014, which represents $1,929m,” explains Ricol.
To this end, the firm has performed particularly well when it comes to financial intermediation loans for the first half of 2014, recording an annualised increase of 101 percent to $884m. This allocation effort helped the bank climb two places, to the 12th spot in the national rankings of private banks as it continues to hold a prudently low rate of arrears among customers, significantly below that of the general sector.
According to Ricol, this performance has been maintained by the continuity of three strategies, including credit placement in sectors with economic growth and controlled risk levels; efficient processes for admission and approval of credits; and efficient collection processes.
In particular, SMEs have proved to be a sector with massive growth prospects, in addition to Banplus focusing on and investing in significant technological advancements that could increase its transactions and clients based on numbers.
“A winning strategy for Banplus Banco Universal was to increase the involvement in the market share of electronic payments, focusing efforts on expanding attention to segments formed by individuals and small and medium business establishments, which complement each other. Flagship products for these market segments are Points of Electronic Sales and Credit Cards respectively, and in both segments Banplus reached a better position than other banks in the small segment,” says Ricol.
More importantly, the bank has developed product and transaction services that enable customers to manage their daily finances through electronic channels, like home banking, which is gaining ground in markets such as Venezuela where distance to branches often leaves many unbanked. With technological advances allowing for electronic and mobile banking, firms such as Banplus are quickly gaining an upper hand by tapping into a new and broad customer base.
As a result, the firm saw its cumulative net profit reach $39m by the end of the first half of 2014, leading to a 59.9 percent return on equity, making it the fifth most profitable private bank in Venezuela. Hopefully this growth trend will continue as Banplus Banco Universal pursues nationwide expansion in 2014, as well as a strengthening of the processes and internal control required. By investing and believing in Venezuela’s development, Ricol maintains that Banplus will see a year of growth benefiting employees, customers and shareholders.