By Walid Abdel Azim
The board of directors of the Union National Bank (UNB) Egypt have prepared an ambitious five-year plan to increase market share by 5%. They also seek to increase its fund portfolio to EGP 6bn by the end of 2015.
UNB Egypt’s Managing Director Atef El Dib told Daily News Egypt that these optimistic numbers and expectations reflect the fast growth strategy adopted by the bank. This was boosted last year, after the bank had multiplied its capital and received the Central Bank of Egypt’s (CBE) approval to increase its branches by one-third within two years.
What about the bank’s performance last year?
Last year, UNB Egypt recorded the highest development rate in the Egyptian banking sector. It also increased its assets by 42% and its market share by 21%.
What are your future plans to maintain your successful performance?
The bank’s market share in the Egyptian banking system is now less than 0.5%, so the bank prepared a plan to increase this percentage to reach 5% within 5 years. The bank maintains supporting its development rates. In the first quarter (Q1) of this year it achieved revenues amounting to EGP 32.9m, an amount which presents half the revenues achieved over last year. The five-year plan aims to fund small and medium-sized projects, increase the number of clients, provide companies with banking services in each geographical area and direct attention to maintain training in order to develop the employees’ skills. The results of Q1 will not prevent the bank from achieving more success, so it aims to increase revenues to reach 20% to 25% by the end of this year. The development rate of the bank’s assets witnessed last year an unprecedented increase estimated by 42%, thanks to the new products offered last year after continuing the development and preparation of the bank’s infrastructure in order to attract new clients. Over the last year, we attracted deposits worth EGP 2bn, bringing the total customers’ deposits up to EGP 8.3bn by the end of March. This year the bank targets a growth rate of 20%.
Does the bank plan for new activities?
In principle, the bank approved a feasibility study related to establishing a company to fund micro-projects. The bank aims to intensify training courses for employees in small and medium-sized projects to fulfil needs of this vital sector and to establish an investment arm, influenced by the experience of CIB and the National Bank of Egypt, among others, in order to utilise available investment opportunities. Among other countries in the Arab region, Egypt is one of the top countries when it comes to investment attraction, especially after the constant regional changes in relation to politics and economics. The Egyptian economy has the ability to absorb different kinds of investments especially after the role which will be played by the new investment law to attract more investments.
What about the bank’s current and targeted credit portfolio?
The bank’s credit portfolio grew by 20% in the first quarter (Q1) of this year to be at EGP 4.2bn in March. The bank targets an increase by EGP 1.8bn to reach a credit portfolio of EGP 6bn by the end of the year. Individual’s funds reached EGP 1.6bn by the end of March, and we plan to pump EGP 600m this year to be at EGP 2.2bn by the end of the year. The total funds for companies amounted to EGP 2.6bn by the end of March, and we aim to pump another EGP 1bn so that the total facilitations granted to companies reach EGP 3.6 by the end of this year. The total bank assets reached EGP 10.8bn by the end of March, and the bank plans to increase it by 20% to 30% this year. The banking retail sector owns 10% of the growth of the credit portfolio, with an increase by EGP 155m. The rise in loan financing for companies amounted to EGP 525m, with a rate of 27% in Q1 of this year. Small and medium enterprise funds also increased to EGP 40m. The bank’s use of public debt tools and bonds totalled EGP 5bn by the end of Q1 of 2015. We also established an independent department for real estate financing to prepare for the real estate initiative by the Central Bank of Egypt (CBE). The amount for participation in the initiative is yet to be decided.
Are there any updates on the Internet banking or insurance banking services?
We plan to launch the Internet banking and insurance banking services in the second half of the year, in addition to offering some new products with the local and foreign currencies to increase the number of clients, within our aim to achieve this year’s plan. Our bank gives great importance to small and medium enterprises, which are the engine for growth, for their role in developing local industries and employing youth. This is in line with CBE’s vision to subsidise the sector, which made it allocate a separate budget to fund small and medium enterprises. Our bank recently received an approval by the CBE to open 11 new branches this year and the beginning of next year, so that the total number of our branches reaches 43 branches. We will also open small branches in parallel with big branches.
What is your evaluation for the Egyptian economy in light of the recent changes?
There are huge challenges for the Egyptian economy in all the economic sectors which need development all at once. This is hard to implement on the short run and requires all the interested parties to set the priorities in line with the available capabilities. Our bank has joint funds in several different sectors which are still being studied. We give great importance to the projects of the Suez Canal axis and the national projects offered by the government. The bank has great interest in manpower and developing the workers’ efficiency in the bank through courses that increase the workers’ experience in all sectors, especially financing the small and medium enterprises sectors.
Is the bank planning to offer new products soon?
We plan to offer new products that go with the Islamic Shari’a (Islamic law) after getting the necessary approvals from the CBE, because demand on the Islamic products is not as strong as the rest. We are committed to applying the American Foreign Account Tax Compliance Act (FATCA) through our headquarters, and the bank’s branch in Egypt is committed to all the regulations of the CBE for this law. The bank prepares all the programmes necessary for applying the law. We trust in the Egyptian market and plan to strongly expand through several axes. We also aim to fund national projects offered by the Egyptian government, especially energy projects. Through the three past years, the banking system proved its ability to face any challenges, and the banks working in the Egyptian market played a great role in supporting the state’s different sectors which were negatively affected by the consecutive instabilities.