The Egyptian Arab Land Bank (EALB) is looking to enter into partnerships with real estate developers to utilise its assets, according to the bank’s Chairperson Medhat Kamar.
In an interview with Daily News Egypt, Kamar revealed the EALB’s plan and strategy in the local market during the coming period. He said that this plan is based on entering the digital banking field, and providing an integrated digital service to customers.
He outlined, during the interview, that customers will be able to carry out transactions through this online service, without the need for visiting a bank branch or physically communicating with employees. Here he explains more.
What do you think of the Egyptian government’s economic reforms and its role in enhancing the economy’s ability to face the crises caused by the novel coronavirus (COVID-19) pandemic?
Despite the global challenges facing the world’s economy after the coronavirus pandemic crisis, Egypt has managed to preserve the economic gains that have been achieved since the launch of the economic reform programme.
The Egyptian economy has received a certificate of confidence from many international institutions, mainly the International Monetary Fund (IMF) and the World Bank. Credit rating institutions have affirmed Egypt’s rating with a positive outlook, despite the rating decline in many countries of the world.
The IMF praised the Egyptian economy’s performance, and expects growth to reach 2.8% during fiscal year (FY) 2020/21, after the Egyptian economy achieved a growth of 3.6% during 2019/20.
The Fund indicated that the Egyptian economy has performed better than expected despite the coronavirus pandemic. The containment measures taken by the Egyptian authorities, their rational management of the crisis and the elaborate implementation of the Egyptian reform programme have all contributed to limiting the effects of the crisis.
In addition, the Bloomberg Forum for New Economies has chosen Egypt as a model for emerging economies in the region after the coronavirus pandemic. This choice was the result of the economic reforms and opportunities that characterise Egypt, despite the economic challenges at the regional and global levels.
How do you see the Egyptian banking sector’s role during the liberalisation of the exchange rate and the COVID-19 crisis?
The banking sector has played an important role in providing financing and foreign exchange since the liberalisation of the local currency thanks to the strong indicators achieved by the banking sector. This has most notably been seen in the increase in the lending portfolio in the banking market, which increased to about EGP 2.2trn.
Furthermore, there has been an increase in net foreign assets to about EGP 157bn, and a decline in the portfolio of non-performing loans, reaching 3.9% in March 2020 compared to 4.1% in March 2019.
The Central Bank of Egypt (CBE) has played a major role during the last stage in mitigating the effects of the coronavirus pandemic. It took many measures and initiatives to address the global health crisis, which strengthened the attractiveness of the Egyptian market.
What are your hopes for Egypt’s new banking law?
The new banking law will help provide more electronic services. It is directed towards providing fully digital banks, in addition to regulating electronic payment services.
This will take place under the legislation of a law that encourages growth in this sector, and maintains the integrity of transactions between the customer and service providers. The law has dedicated an independent entity to regulate payments and activate financial inclusion and digital transformation. All of this comes as part of the plan towards digital transformation and a cashless society.
What is the EALB’s strategy during the coming period?
In addition to our plans in the retail banking field, the EALB is currently considering all available means to enter the world of digital services, including middle solutions and digital services for individual and corporate clients. This would enable customers to view their accounts at any time and move within certain limits, such as making transfers between accounts, paying bills, and other services.
On the other hand, the bank is considering the possibility of entering the digital banking system, which is the most recent development that the markets have reached in the field of integrated digital services. This allows clients to perform all kinds of transactions, without the need to enter a branch or physically dealing with employees.
Can you tell us more about the bank’s network of branches and ATMs?
The bank currently has 29 branches. Until recently, the bank’s policy was based on installing ATMs in branches only.
Finally, a plan has been made for ATMs to be located outside branches in distinct locations, such as major shopping malls, as well as in places where there are no bank branches.
The first 15 ATMs outside the bank’s branches have been installed based on a plan that followed extensive financial and technical studies. Additionally, the bank has updated all ATMs, inside and outside branches, and introduced new services, including deposit, currency exchange, and bill payment.
What are the most prominent new plans and products the bank has introduced to keep pace with digital transformation?
In the field of electronic payments (e-payments), the bank is currently issuing the national prepaid and debit cards, Meeza. The bank was one of the first to accept Meeza cards of all kinds on its network.
What about the volume of customer deposits and loans at EALB?
The bank achieved a growth rate of 87% in total deposits and certificates, to reach about EGP 45.3bn by the end of December 2020, compared to EGP 24.2bn at the end of September 2017.
The volume of facilities approved, and which fall under the umbrella of the CBE’s initiatives to support Egypt’s industry, contracting and tourism sectors, amounted to about EGP 2bn.
The EALB has a plan to expand financing in several sectors, most importantly education, health, chemicals, food and beverages (F&B), petrochemical industries, and the feed industry.
The bank has also achieved 5.5% growth in its total portfolio of loans and credit facilities to reach EGP 21bn by the end of December 2020, compared to EGP 19.9bn at the end of June 2020.
What about the EALB’s expansions in the SMEs and retail banking sectors?
We achieved growth of 3.7% in our total portfolio of SMEs, to reach about EGP 5.8bn by the end of September 2020, compared to about EGP 5.6bn at the end of June 2020.
The retail banking portfolio recorded about EGP 1.9bn in total at the end of December 2020, compared to about EGP 1.6bn at the end of June 2020. This compares to only about EGP 12m in October 2018, which is when we started our retail banking activity.
How much is the bank’s mortgage financing?
The total number of mortgage finance clients increased from 4,000 in 2017 to 8,000 clients in 2020, with a growth rate of 100%.
They were granted financing worth EGP 1.5bn, thus raising the outstanding balance in the portfolio to about EGP 1.2bn in December 2020. This compared to EGP 400m in 2017, reflecting a growth rate of about 200%. The total amount of mortgage finance provided amid housing initiatives for middle and low-income people reached about EGP 363m by the end of December 2021.
What is the bank’s plan for the assets it obtained in exchange for debt settlements?
The bank seeks to maximise the utilisation of its real estate assets, by entering into partnerships with real estate developers, which will also achieve a good return on investment. The bank sold 662 real estate assets, at a value of EGP 1.04bn, during the period extending from October 2017 to the end of 2020.
During the last six months of 2020, the bank’s asset disposal sales reached EGP 93m, in addition to other assets whose sale is being finalised, with a value of EGP 102m. This brings the total reduction in the real estate assets portfolio to about EGP 195m.
Long Beach Ain Sokhna Resort is considered one of the distinguished assets owned by the EALB, in terms of its beach-side location. It also takes into account the completion of its technical documents and buildings, along with the utility network and water treatment plants.
That is why the bank deliberately studies the proposals presented. However, in general, the current strategies are based on two principles: participating with minimum sales with a real estate developer who has experience in the local market, as is the case with government agencies now, or selling the current valuation price. This price is inclusive of the land and buildings, with the payment period also agreed upon.
The concerned team at the bank is also considering a proposal to improve the project and market and sell its units through one of the bank’s companies specialised in the field of real estate development. This would happen in the case of the absence of appropriate investment offers by real estate developers to maximise the bank’s profitability.