Maib transformation journey 2021-2024 by Giorgi Shagidze, CEO, maib

First of all, we will be speaking about the transformation of the largest bank of Moldova. But let's start with who has been in Moldova or who is familiar with Moldova. So I see not many people. Thank you. So basically, I also used ChatGPT and asked it to please draw a picture of Moldova, and this is what it came up with, which is really nice. Then I said, okay, come on, add to this picture the fact that Moldova is joining the European Union, it has a very strong IT sector, and it has per capita one of the largest wine industries as well. And this is what ChatGPT came out with. I don't know what it is, but this is what it came up with. Seriously though, it's a small country between Ukraine and Romania. It is becoming a member of the European Union with about 3 million population. One third of Moldovans do have a European passport already. 60% of exports go to the EU, 60% of imports come from the EU. So in parallel of ongoing political integration with the European Union, the on-the-ground real integration with the European Union is happening. Then I also added the fact that about two years ago, one team from Moldova won against Real Madrid. That's what I don't know what this means, hold on. But it gives you also the images or the text, both the text and image. It's a paying version.

So maib is by far the largest bank in the country with a market share of about 32 to 38%, depending on how we measure it. We have the strongest brand, the best customer experience, the payment capabilities with about 40%. We are transforming the bank from a very command-and-control disciplined institution to a more agile, future-proof bank. And we worked with many consultants during this journey, but I think Morton and Elena have a specific role there, and thanks for this, and I can share about it more. So basically, the transformation we started touched many areas, but we will be discussing very important ones. The very first one is about the cultural transformation. And again, as I said, the bank has been already the leader in the banking sector of Moldova. It was mostly corporate-focused bank, mostly command and control, when the boss is always right and you never question. Pretty much if you would come to my office, you needed to open two doors before seeing me, and I was called the president of the bank. The change we started clearly is something that instead of boss or command, we want to implement servant leadership. Instead of no mistakes, we do allow people making mistakes, and we encourage people to basically take initiative, and sometimes those initiatives end up with a mistake.

The biggest transformation in the operating model was to implement agile at scale, the one that ING pioneered. Obviously we were here to understand how ING did it. We worked with many consultants. It's already the third year, and I think we can say that the first phase of the transformation has finished. An entire retail perimeter works in agile model, plus we already started to work in agile in our branches. The same transformation clearly resulted in change in the leadership. So what we tried to do there is to use a unique mix of people who have stayed with the bank for many years and people who have had international experience and education. So we listed few people here. Marari is here as well, joining us from McKinsey, or Stella who had been there from PwC. So I think we tried to do this unique mixture of the best of the two worlds. I think it's not working. Yeah, now it's working, right? So basically we changed about 40% of the leadership team, that applies to top management and middle management as well. We developed the long-term incentive plan for about 100 people on top and middle management to align their interest to those of the shareholders and align them to the vision that we have had. We started to invest in education of the middle management. I'm sorry, we came here to study how the transformation we did. We did this effort: executive management program for 8 weeks for about 60 of the people, which was designed specifically for maib. So what I'm trying to say, in addition to attracting people, Moldovans with international experience and education, we also tried to educate them, investing in their education.

Rebranding. We started with the rebranding. We did the drone show which was quite exciting, which we did in the country. You see the old brand which is the maib there on the left-hand side, and you see the new brand which we try to firstly have some linkage in the heritage but also make it more digital, more modern, and more fine-tuned to the next generation. And you see all the reputable agencies in the country naming us the best bank in the country in a row. This is the branch network transformation, and it has been huge. We changed the model across all the branches in the country. Basically the new model is one-stop shop, when you basically go and start and finish the operation with one person, which had not been the case before. We renovated and rebranded all the branches. More importantly, perhaps, we grew the number of customers by 30% and we decreased the number of branches by 30% in parallel. You can see the Alto, which is our premium banking service that we launched, and this is the first time in the country, and it's getting quite a big attraction with dedicated personal services to our premium customers. And then the branches layout: more importantly, our branches are more focused on consulting and sales activities as opposed to processing simple transactions.

These are the numbers of our digital banking, and this is our new feature in our mobile app which takes your picture, goes to the public registry, pulls up your picture that you had deposited there for the passport, compares it, and then if there is a match, then of course you can do the onboarding of the operation, you can process the transaction, you can process quite high amount transactions because this is additional security that we are checking through this match. Obviously, the other features also supported the growth in the numbers. You can see about 200% growth in the users of the mobile banking each year. We enjoy 50% growth year on year of the mobile banking numbers. 50% of our loans and 60% of our deposits now are granted through the mobile banking. Technology today is against us, but okay, that's on mobile banking. Another ambition that we have is to list our shares on an international stock exchange. And about two years ago, we started to basically operate as if we are already listed on a stock exchange. We do run quarterly investor calls, we do publish our numbers, we do one-on-one meetings. And then clearly, when the largest bank does an IPO from a small country on an international stock exchange, it acts as a gateway to present the country to the international investment community and bring the most reputable, most successful big names in the country who will be investing in other companies as well. So we have progressed in this area as well, and hopefully in the medium term that also will be the reality. In terms of numbers, basically what we had is about doubling plus the profit over this period of time. So long-term focus but with short-term results has been our focus. 129% growth in loans market share. We grew market share to 38%, but more importantly we increased our market share in retail loans by 5 percentage points and in loans by 15 percentage points. Pretty much created a new bank. Every second business loan last year, for example, was originated at maib. You can see the other numbers as well. They are clearly small in scale but large in the context of a small bank in Moldova.

And this is my last slide. Again, I asked ChatGPT to draw a picture of the bank who will do an IPO and come up with a digital offering in Romania, which is our next focus to approach Moldovans living in Romania and the European Union with digital channels, because our digital capabilities are quite strong and competitive if you think about in the regional context. And that is what we want to do starting from this or next year as soon as it is ready. Thanks a lot. Hopefully it works.

No, I think I see it more opportunity than challenge. I think I'm Georgian myself, I understand this is a once-in-a-century opportunity for countries like Moldova or Georgia, because it provides a very predictable environment, access to the market of 500 million, up to 500 million after Brexit, whatever it is, 430 million. Investment, there are so many benefits. Of course challenges remain: the region and the war in Ukraine and the uncertainty related to it. But that said, the war has been taken a little bit farther from the Moldova borders, unlike when it started it was quite close to Odessa. We all hope that Ukraine will win one way or the other, and that will create even more opportunities for countries like Moldova and Georgia, especially Ukraine. Thank you.

So I saw Stella... No, I think we already comply with most of the compliance and regulatory requirements that are in the European Union. Before this, there was the Association Agreement of Moldova and the European Union, which implemented many European Union requirements in terms of compliance. I would say that in certain areas we are even more conservative than the European Union. And to be honest, sometimes people, not knowing exact rules, take even more conservative approach. So it's better that you are part of some clear framework, as opposed to you are somewhere in transition and the vague rules push people to be more conservative, if you know what I mean. Thank you.