The Housing and Development Bank (HDB) aims to attract new deposits worth EGP 8.82bn and to inject EGP 3.7bn into the bank’s loans portfolio by the end of 2018, according to Hassan Ghanem, its managing director. The bank also aims to increase its profits by EGP 500m to reach EGP 1.5bn, a growth of 50%, Ghanem told Daily News Egypt, adding that the extraordinary general assembly of the HDB approved an increase of its issued and paid-up capital to reach EGP 1.518bn. He pointed out that the bank does not intend to exit its subsidiaries due to their positive and influential role in achieving its strategic objectives and the country’s development goals The HDB plans to open 20 new mini branches this year to bring the bank’s total branches to 100 by the end of 2018, Ghanem said.
Can you update us on the bank’s deposits and loans portfolios and its profits?
According to the latest data, the total deposits reached EGP 40.885bn at the end of December 2017 compared to EGP 22.792bn at the end of December 2016, an increase of EGP 18.093bn or 79.4%.
The total loans offered by the bank amounted to about EGP 13.413bn in 2017 compared to EGP 10.461bn, an increase of EGP 2.952bn or 28.2%.
The bank’s net profit after taxes reached EGP 1.075bn compared to EGP 644m in the comparison period, an increase of EGP 431m or 67%.
What are the latest developments of the bank’s small- and medium-sized enterprises (SMEs) portfolio?
I would like to say that the bank’s SMEs portfolio has an important role in the development of the national economy, and it has become among the bank’s top political, economic, and social priorities to stop and limit the negative phenomena of slums, drug addiction, illegal immigration, and low loyalty to the state, which threaten the national security.
The present atmosphere is suitable for the growth of certain types of projects through the Central Bank of Egypt (CBE) such as small- or medium-sized enterprises, to provide financing at the appropriate interest rates. In addition, the General Authority for Industrial Development (GAID) provides non-financial support through granting the required licences for the projects, as well as training and rehabilitation of projects’ owners in terms of the administrative and technical aspects, in cooperation with the Egyptian Banking Institute.
The HDB has developed a future vision to achieve growth in its small and medium enterprises portfolio through expansion in providing necessary funding, assisting in the preparation of feasibility studies, and providing legal and engineering advice to SME clients.
The bank has adopted several measures to support these projects, including modifying their definition to comply with the one provided by the CBE, establishing a specialised sector to finance SMEs, and developing a marketing plan for the bank’s supporting parties to attract the segments belonging to them.
The bank has also signed several cooperation protocols with investors’ associations, chambers of commerce, businesspersons’ associations, and industrial zones nationwide to reach the largest possible segment of SME customers. It also aimed at providing financing services to industrial groups and investors, particularly in Upper Egypt.
The value of SMEs reached about EGP 2.1bn at the end of 2017.
What is bank’s role in terms of mortgage finance, within or outside the CBE’s initiative?
The bank has always sought to maintain its leading position among banks in Egypt, Africa, and the Middle East. It was named the Best Mortgage Finance Lender in the Middle East for three consecutive years. We also seek to expand and acquire the largest share of the mortgage finance market.
As part of the state plan to provide suitable and affordable housing units for youth and limited income people, the bank has financed approximately 35% of the banking sector’s clients who have been granted mortgage financing as part of the CBE’s initiative.
The number of clients who have been granted these finances since its launch has reached 47,773 clients, with loans valued at EGP 4.19bn so far.
With regard to the bank’s role outside the CBE’s initiative, the bank has granted mortgage financing to high-income clients.
That financing included residential, administrative, commercial, touristic, and resort units, as the bank aims to maintain a diversified portfolio of mortgage finance customers of different income categories. It also seeks to expand in financing those who buy units owned by mortgage finance companies, such as Hyde Park, SODIC, and Palm Hills.
What are the main features of the bank’s strategy in the coming years?
As the state started to reap the fruits of economic reform and the economic situation is expected to improve in 2018, the bank’s management has planned to pursue an expansionary strategy in 2018-2022. It also aims to enhance the image of the bank as a comprehensive institution that provides banking and housing services.
Therefore, we are seeking to implement an expansion strategy in the local and external markets through geographical expansion over the next five years, as well as the launch of new branches that offer all banking services at the highest level to increase the bank’s market share.
We also aim to develop new banking products to suit the location of each branch according to its area, whether in Upper Egypt, Matrouh, or Sinai. The bank is also creating a detailed map of its various branches and ATMs. This map will be electronically linked to Google Maps to help customers reach them easily.
The bank will also provide vehicles to reach remote areas in villages to provide banking services, after obtaining the approval of the CBE.
The bank’s plan requires more interactivity on social media, as 50% of the bank’s customers are young people who regularly deal with modern communication systems. The bank will also develop a new system to serve VIP customers in large branches, through the allocation of certain distinguished places and high-level staff to help them.
The bank has also adopted the sustainable development principle as one of the most important pillars of the bank to continue its growth in the next phase, through launching mobile wallet and internet banking services.
The plan also includes providing special treatment for people with special needs, through creating distinctive products and services for those marginalised groups, and preparing the new bank’s branches with equipped areas that facilitate providing banking services within the branches.
The bank also aims to increase its corporate social responsibility (CSR) role through its contributions to the environment, social justice, and social integration fields, because the bank does not only seek to achieve economic returns, but also to achieve economic returns to its customers being a part of the bank.
With regard to the housing sector, the bank seeks to solve housing problems through engagement in financing social housing projects and providing the appropriate facilities for social housing clients. The bank seeks to maximise the value of the CBE’s limited- and middle-income financing initiative, in coordination with the Mortgage Finance Fund, which includes the Sakan Masr, Dar Masr, and Social housing projects, as well as other residential units within the 1m units project.
What are the bank’s objectives regarding attracting deposits and increasing its loans portfolio?
According to the bank’s general planning budget for 2018, we aim to increase the HDB’s deposits by EGP 8.819bn, or 40%, by the end of this year, to reach EGP 31.031bn. We also aim to increase our loans portfolio by EGP 3.711bn, or 28.2%, to reach EGP 16.874bn.
The bank also aims to increase its profits this year by EGP 500m, or 50%, to reach EGP 1.5bn.
How many branches does the bank currently have? What is the its plan for geographic expansion, and will it depend on large or small branches?
The bank has 82 branches so far, and there is a plan to open 20 new mini branches this year, bringing the number of our branches to 100 by the end of 2018, in a bid to increase our presence in the Egyptian banking market.
The bank opened small branches in greater Cairo, Alexandria, Borg El-Arab, the Suez Canal region, and Upper Egypt, aiming to reach all segments of customers which contributes to the acquisition of a large number of funds in the framework of the CBE’s initiatives on one hand and the enhancement of financial inclusion on the other. This plan also aims to increase the bank’s market share in Egypt.
What are the most important areas where the bank intends to expand in during the coming period?
The bank seeks to expand its branches nationwide to reach different customer segments.
The state’s adoption of major national projects has had an impact on the bank’s expansion approach to reach all segments of society.
The selection of the bank’s new branch locations came after a geographical study that identifies the areas most in need of the bank’s presence, whether residential complexes that need new branches or new places that lack banking providers.
Therefore, we seek to open new branches in Upper Egypt, large residential areas in greater Cairo, and the Nile Delta.
Among the places where the bank seeks to open new branches in the coming period are: Helwan, Abbassiya, Mit Ghamr, Desouq, Ras El Bar, Minya El Qamh, Etay Al Baroud, Alamein El Gadida, Rubeky, Mahalla Al Kobra, Maghagha, Mallawi, Naga Hammady, Kom Ombo, and the New Administrative Capital.
How many ATMs are owned by the bank and what is the expansion plan?
The bank currently has 227 ATM machines. We are installing more, especially in remote governorates. By the end of 2018, we aim to have 350 machines.
What is the status of the bank’s non-performing loans? What is your plan to deal with them in the coming period?
The non-performing loans portfolio stood at 4.6% of the total loans portfolio at end-March 2018.
The bank’s plan to deal with this issue is through several axes: intensifying follow-up efforts and encouraging customers to obtain appropriate banking facilities, such as rescheduling or making adjustments, in addition to continuing legal efforts and taking all procedures to obtain the bank’s dues from guarantees provided by customers.
Is the bank thinking of exiting any investments in subsidiaries at the moment?
First, subsidiaries are companies in which the bank contributes more than 50% of the capital, according to the classification of the Central Bank of Egypt and the accounting standards for investments in companies for the purpose of retention.
The subsidiary companies established by the bank and in which it owns a controlling share are: the Holding Company for Investment and Construction (92%), the Housing & Development Real Estate Investment (60%), and HD Financial Leasing Company (60%).
These companies operate in the real estate investment and finance leasing markets, while the holding company establishes companies in the fields of various economic activities, which contribute to supporting the national economy, investing surplus funds in risk-free savings, and generating profitable returns on capital.
The bank’s investments in these companies generate rewarding returns. In addition, they contribute to the bank’s strategic plan and economic and social development plan by opening up new investment horizons and activities that support the national development plan and contribute to job creation.
Accordingly, the bank is not contemplating exiting these companies at this time due to their positive and influential role in achieving the bank’s strategic objectives, the objectives of the state, and the development plan in general.
How much is the bank’s current capital? Is there an intention to increase it during the coming period? And how will this increase?
The authorised capital is EGP 3bn, while the issued and paid-up capital is EGP 1.265bn distributed over 12.650m shares. The nominal value of the share is EGP 10.
On 20 December 2017, the extraordinary general assembly approved the increase of issued and paid-up capital to EGP 1.518bn by transferring EGP 253m from the general reserve by distributing free shares for every five original shares.
The bank’s extraordinary general assembly approved on 30 April 2018 to increase the issued and paid-up capital through the legal reserve, with a free share for every 10 shares, the value of each share being EGP 10.