WELCOMING STATEMENT AND REPORT BY THE CHAIRMAN OF THE BOARDS OF DIRECTORS OF TENGER FINANCIAL GROUP AND XACBANK
25 April 2013, 6/F, Ulaanbaatar Hotel, 9.30-18.00 hours
Dear Shareholders,
It is a pleasure and honor for me to welcome you again at our joint Annual General Meeting (“AGM”) of the Shareholders of TenGer Financial Group (“TFG” or the “Group”) and XacBank (the “Bank”) for 2012.
I would like to congratulate all our stakeholders with a successful closing of another year of growth and concerted actions to develop TenGer Financial Group as a group of companies providing equitable access to inclusive financial services. The year of 2012 signified a major milestone in the history of TenGer Financial Group as the company’s consolidated assets surpassed MNT 1 trillion. We owe this remarkable achievement to all our Group companies but first and foremost to XacBank, our pride and biggest subsidiary.
On behalf of the Board of Directors, I would like to congratulate the team of TenGer Financial Group led by Chief Executive Officer Bold Magvan as well as the teams of the Group’s other subsidiaries for their hard work and dedication to make this possible. Special thanks go to the management team of the Bank for their efforts to transform XacBank into a leading universal bank. Our board directors also deserve a commendation for their stewardship and wisdom to guide the Group throughout our journey. I extend my and the board’s sincere appreciations to all our shareholders who continued to support and inspire us to attain farther horizons.
In 2012, the Group’s consolidated assets reached MNT 1.1 trillion, an increase of 35 percent from the previous year, and total net profit amounted to MNT 15.9 billion, an increase of 23 percent compared to a year earlier. Our book value has reached MNT 7,057.18 per share, an increase of 16 percent over the reporting year.
All our Group companies contributed to such success despite challenges posed by the external environment in 2012.
- In addition to the size and scale reached in assets, XacBank earned a net income of MNT 15.2 billion, a 26 percent increase from 2011 and increased its return on equity to over 17 percent. The Bank started a number of new initiatives to refresh brand identity and refocus the business lines.
- A new CEO was appointed in 2012 at XacLeasing. Risk management requirements increased and profits almost tripled at XacLeasing compared to 2011 making XacLeasing one of the most profitable businesses within the Group. Cost of funds has been kept low and XacLeasing has succeeded in expanding its funding sources and attracting significantly more funds from foreign lenders.
- In 2012, TenGer Insurance has not only maintained its position but was named by the Mongolian Chamber of Commerce and Industry as one of top 3 insurance companies. Its total assets increased by 28 percent from 2011, the number of customers tripled and its reinsurance strengthened further by signing a treaty with one of the top three global reinsurers.
- Our 2011 newcomer - TenGer Capital, a brokerage company, where TenGer acquired a controlling 80 percent stake – made also progress, refocusing its strategy not only on brokerage but on other sources of revenue as well to become able to look into larger transactions. TenGer Capital advises SMEs and corporate clients on fundraising, capital budgeting, valuation and financial management and serves as a conduit for our clients to interact with international investors and capital markets. The company has become also a focal point of our cross selling activities.
Efforts over the last two years to establish a micro credit institution in Urumqi, Xinjiang and build presence in one of the biggest regional financial markets resulted in the official opening of TianRong, our greenfield investment in China. The management team is in place and first disbursements are made. Primary focus is made on institutional capacity building and staff training. Although it is only a start and results are yet to be seen, we are, nevertheless, confident that the Chinese venture will replicate the success of XacBank as there are opportunities to capitalize on the economic growth in China and relatively low penetration of financial services among SMEs in the Xinjiang province and utilize the substantial knowledge base of XacBank in microfinance.
The Group’s employee headcount increased by over 20 percent and reached 1,932.
We strengthened our senior management teams across the Group companies with new appointments at XacBank, XacLeasing and TenGer Capital. In addition, we continued to build our institutional capacity at TenGer Financial Group to provide consolidated management and coordination amongst the Group companies in risk management, financial planning, legal compliance, corporate governance and human resource management. The senior management team of the holding company, leading each of these functions, was supported further by hiring bright young junior professionals – investment officers and accountants – who brought new energy and enthusiasm to the Group.
Never has it been more important to improve and strengthen our good corporate governance practices. Recognizing always that that a strong and efficient board is part of good corporate governance and a sign of a healthy organization, the board of the Group conducted a self-evaluation to assess its overall functioning and efficiency. This exercise was instrumental in sharing different opinions among board members, highlighting strengths and weaknesses of the board, and improving the board structure and performance. A strong professional independent director Ms. Saran Binderiya – a seasoned banker with 30-year experience in the banking and financial sector of Mongolia – joined the board of XacBank, continuing our commitment to good governance and transparent decision making. We welcomed in 2012 an interim director on the boards of both TFG and XacBank – Ms. Tselmuun Nyamtaishir who is a representative of MAK, one of the largest companies in the Mongolian business community.
We have always given importance to gender balance and female representation in our boardroom. 3 out of 9 board directors within the Group are women, which is already exceeding the aspirations of the boards globally to have a minimum of 25 percent female representation.
Throughout the year, the board of the Group has remained highly committed to the highest standards of personal and professional ethics, integrity and values to fulfill their fiduciary duty to the shareholders. All directors completed and filed an Annual Conflict of Interest Disclosure Statement.
The year of 2012 also marked the beginning of the process of share sales by some of our existing shareholders. This process of change of ownership coincides with the transformational process at the Group as XacBank transitions form a niche player to a universal bank of systemic nature. The driving force of our past success and guide to the future achievements is the diverse and balanced shareholders’ structure, combining international investors as well as Mongolian business representations and organizations. We believe that the on-going change in the ownership structure of the company will not only maintain such balance but also strengthen it further on with new strategic institutional investors, both local and international.
Closing 2012 and welcoming 2013, I would like to remind and reiterate that we have more challenges and opportunities ahead and more responsibility. I would like to wish to all of us – shareholders, stakeholders, board and management - to stay true to our fundamental mission of People, Planet and Profit, encourage progress and be faster and smarter while combining courage with prudence. I am confident that we will build on our successes and meet new milestones in the years to come.
I would like to wish all of us a very productive and successful AGM.
Thank you!
