Bosnia and Herzegovina (B&H) is a small beautiful country in the heart of Europe, with a highly regulated banking market of 23 banks, mainly the offsprings of large European banks. Only one bank, Bosna Bank International (BBI), operates under Islamic banking principles. Over the years, after the 1990s aggression on B&H that had destroyed the economy and financial sector of the country, the banking sector has grown into a respectable, self-sustaining, profitable sector, a leader of positive changes in society.
B&H has a small open economy, predominantly dependent on the consumption and export of goods. At a time when all countries are experiencing economic stagnation due to the coronavirus pandemic, inevitably our small and slow-growing economy will feel the negative impacts of declining economic activity in the country and within its main export partners, primarily the eurozone. The importance of an adequately capitalized banking sector and its financing potential to support both businesses and individuals will therefore come to the fore in the coming months, to support solvency, investment and general consumption. It is expected that BBI, a strong and stable Islamic bank that has proven its support and devotion to the development of the country’s economy with constant efforts to promote the country among foreign investors by organizing the largest investment conference in the region, the Sarajevo Business Forum (SBF), will lead the process.
Review of 2020
BBI started the year with extraordinary results in term deposits and financings growth, as well as year-on-year profit growth of 46%. After the first cases of COVID-19 were registered in the country, officials closed the borders, imposed a ban on the operations of many businesses and closed schools, restaurants, cafes, libraries, cinemas, etc. The decision led to a sharp slowdown in economic activity and an increase in unemployment, with decreased exports, consumption, etc. The banking sector was affected as well with a decline in financing activity, deterioration of the financing portfolio and new measures introduced to help businesses and individuals affected by the pandemic to overcome the negative consequences.
The main focus of BBI was to keep the high quality of its portfolio as the bank had the second-lowest non-performing financing ratio among large and peer banks in the market at the end of 2019. As a partner to its clients, the bank approved moratoriums on payments, grace periods and new financings for those affected by the pandemic. At the same time, as a socially responsible bank, the bank offered the expertise of its employees and partners to help the economy as urgent measures and a new strategy to cope with the new reality were needed.
On the SBF platform, BBI gathered domestic and international experts who prepared a strategy with the symbolic phrase “We can do it” with a plan and key guidelines for overcoming the economic crisis in B&H. With a focus on creating a self-sustaining economy for B&H, domestic experts in this document offered concrete steps to be taken to save the country’s economy and prevent a significant decline.
During 2020 and the pandemic, BBI achieved three times higher growth of total deposits than the whole market of B&H, which shows a high degree of trust and confirms the positive image of a strong and stable bank.
As everything went digital overnight, BBI dedicated itself to the organization of the SBF online webinar, which was held during the month of May. In 2020, four online sessions were held with an emphasis on successful practices from around the world for overcoming the economic crisis with a special focus on the development of strategic industries: energy, pharmacy and agriculture.
Even during the pandemic, BBI continued to search for excellence and implemented the best business practices and solutions. As a result, BBI received four awards during the pandemic: ‘Best CRS Bank in B&H 2020’ and ‘Best Banking CEO of B&H 2020’ by International Business Magazine Dubai; and ‘Golden BAM for the quickest growth of deposits and financing in 2019’ and ‘Special Golden BAM for Idea of the Year’ awarded by Bank and Business Magazine in cooperation with the Bank Association of Bosnia and Herzegovina for BBI’s Card Guard application. BBI also became the first global payments innovation (GPI) member in the region to provide GPI tracking services to its clients.
Preview of 2021
It is evident now that the pandemic will continue in 2021 as well, along with the negative economic effects. BBI will continue to support its clients to overcome the difficulties and to offer its expertise and partners in order to help the economic development of the country.
The COVID-19 pandemic is changing life as we know it. Digital business must be the focus of future development. In 2020, we faced the sudden need to do everything online — from buying groceries, remote working to handling our finances. BBI will continue to pursue excellence in this field in order to ensure its clients have the best experience of banking from their homes.
BBI is one of the fastest-growing banks in B&H. In the previous years, it has strengthened its position in the segment of medium-sized banks and certainly paved the way for it to take a leading position in this segment in the next two to three years. Certainly, the corporate culture with deeply incorporated Islamic banking principles has helped in the process as clients recognized the devotion and commitment to work in the best interests of clients and society.
Anisa Lojo-Bajrić is the head of the Planning and Controlling Department at Bosna Bank International. She can be contacted at [email protected] Alma Šljivo is the head of the Product Development Department at Bosna Bank International. She can be contacted at [email protected]