Société Arabe Internationale de Banque (saib) aims to achieve 200% growth in net profit by the end of the year, said Chairperson and Managing Director Tarek El Khouly.
El Khouly told Daily News Egypt that the bank’s market share of loans amounts to 1.31%, while its share of deposits stands at 1.47%.
“We aim to increase our corporate loan portfolio 25% and pump EGP 1bn into retail banking portfolio,” he added.
According to El Khouly, the bank’s medium-term strategy 2019-2022 was targeting maximising its revenues. The bank also aims to support industrial companies and exporters, as well as finance national projects.
He said the bank succeeded in taking the portfolio of small and medium enterprises (SMEs) to EGP 4.5bn, equivalent to 20% of the total loan portfolio in the bank, revealing that the bank is discussing with real estate developers the revitalisation of the middle-income housing initiative. Preparations are currently underway to launch the first new and innovative real estate financing programme in the Egyptian market.
El Khouly pointed out that defaulting debt ratio fell to 3.4% in 2019, compared to 4.5% in 2018, expecting a further decrease with the implementation of the Central Band of Egypt’s (CBE) Non Performing Loans (NPL) Initiative.
The bank plans to storm digital transformation services at a steady pace with the aim of achieving financial inclusion and sustainable development.
El Khouly pointed out that the bank’s branch network reached 34, and it is expected to open 6 new branches, of which 3 outside Greater Cairo.
What are the main indicators of the bank’s performance?
We achieved unprecedented growth in business results during 2019, as the bank recorded a net profit of $12.4m, compared to losses of $19.3m in 2018.
There is no doubt that the experience and high efficiency of the bank’s 1,250 employees was a main pillar for the distinguished results.
We developed medium-term strategy (2019-2022) that aimed at maximising bank revenues and reducing cost of funds which reached its peak by the end of 2018. In 2019, the bank was able to reduce the cost 35%, which left a positive impact on the net interest margin.
The most important criteria on which the bank relied to achieve this surge in results is reclassifying the portfolio of financial investments from the date they were retained, until the maturity date, which enabled the bank to sell part of those investments and invest the proceeds of sale in higher-yielding assets, as well as achieve capital gains, and reduce the consequential tax effect.
In addition, there has been expansion in the field of retail banking, as about 25 new products were launched, including personal loans and credit cards, to all customer segments, which resulted in the bank achieving a 160% growth in the portfolio of this sector.
What are the latest developments regarding SMEs financing? How much is the portfolio of these projects so far?
The size of that portfolio is about EGP 4.5bn, representing 20% of the total loan portfolio. The bank has been involved in this initiative since 2016.
What is the bank’s role in relation to mortgage finance whether inside and outside CBE’s initiative?
In line with the state’s plan to support various groups in society to have a healthy and safe housing at the highest specifications, a protocol was signed with the Mortgage Finance Fund to finance social housing customers. The value of this financing amounted to EGP 358m in December 2019, benefiting 3,480 customers, distributed over 12 social housing projects in 6th of October, Mansoura, Suez, 10th of Ramadan, Badr, El Shorouk, Obour, and Borg El Arab cities.
The bank’s mortgage finance extended to include Upper Egypt, namely in Assiut and Luxor. In support of women, the bank allocated 22% of its mortgage finance portfolio to female customers.
The bank also participated in CBE’s initiative of financing housing projects for middle-income people. CBE allocated EGP 50bn for this initiative. The agreement was discussed with real estate developers and the Ministry of Housing to finance housing units in those projects.
Preparation is underway to launch new and innovative mortgage finance programme in the banking market, as saib is considered a leader in such programmes that follow Islamic Sharia and adhere to the mortgage finance law, such as Murabahah and Ijarah.
The bank aims to launch this programme in the second quarter of this year. We expect a growth in the mortgage finance activity as a result of the increasing property prices and demand on both local and regional levels, as Egyptian real estate is an attractive investment destination.
The real estate sector is one of the bank’s main priorities through an integrated management of real estate funding. It includes a professional team, with the target of achieving 25% growth in the real estate portfolio in 2020.
What are the most prominent features of saib’s strategy in 2020?
We will continue the growth strategy through expanding in corporate loan portfolio, especially industrial companies and exporters, as well as funding economic development projects. It will also expand retail banking to continue what it started in the last five months of last year.
How much growth does saib target in loan portfolio and profits?
We target 25% growth in average, and net profit growth of over 200% by the end of 2020.
What is the bank’s plan for geographic expansion whether in terms of branches or ATMs? Will the plan include any electronic branches?
The bank has 34 branches in Egypt, and 6 others are expected to open, including 3 outside Greater Cairo, in conjunction with launching our new identity and brand.
Which areas does Saib plan to enter in the upcoming period?
We aim to expand outside the capital, as well as open new branches in Zagazig, Ismailia, Hurghada, Mineya, and Alexandria. Additionally, more branches will open in malls, including Concord in Sheikh Zayed, GUC, and New Administrative Capital.
saib also seeks to offer the best services possible to its existing clients as well as reach new clients and achieve financial conclusion.
What are the latest developments regarding the NPLs at saib?
NPLs dropped to 3.4% in 2019, compared to 4.5% in 2018. This percentage is expected to improve.
How much is saib’s capital and property rights currently?
Our capital is estimated at $150m, equivalent to EGP 2.355bn. The total property rights are estimated at EGP 4.8bn.
Our credit portfolio is $1.6bn, and the deposit portfolio is $1.6bn. saib’s market share of loans is 1.31%, and 1.47% for deposits. The bank is working to increase its corporate loan portfolio 25%, as well as raise retail banking portfolio by EGP 1bn in 2020.
What is the role that the bank plays in spreading e-payments and financial technology in the Egyptian market?
saib seeks to offer a package of services and new banking products, as well as develop its existing services, including the second phase of internet banking and mobile banking which allow customers to transfer between their accounts as well as to others inside or outside the bank, in addition to paying their own bills. More services will be available to clients through the bank’s mobile application.
saib also seeks to spread 50 ATMs across the country this year. It will also launch e-payment services for bills, whether through internet banking, ATMs, or saib e-wallet.
Earlier this year, the bank launched the SMS service for clients to enable them to follow up on their accounts and the transactions on them.
What do you think about the initiative launched by CBE to support the industry and finance housing for middle-income families?
CBE’s initiative will end recession in the industrial, commercial, real estate, and consumer markets, in line with its wise monetary policy which aims to reduce unemployment and increase growth in real investment.