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Egyptian government keen to improve investment environment: Banque du Caire Chairman As economy witnesses improvements, economically important projects in several sectors represent financing opportunities for banks
The Egyptian government is keen on improving Egypt's investment environment, and the economy is witnessing further improvement, according to Mounir El-Zahid, Chairman and CEO of Banque du Caire. In an exclusive interview with Daily News Egypt, El-Zahid added that the energy, petrochemical, fertiliser, petroleum, and transport sectors, amongst other major projects such as the development of the Suez Canal Axis, represent major financial opportunities for banks. He noted that they are also important for the Egyptian economy.
He said that the Banque du Caire's role is not limited to financing projects, but extends to helping investors in everything. What do you think of the Egyptian economy? The Egyptian economy is witnessing further improvements, and this is evidenced by the presence of the short- and long-term economic plan, and the government's keenness to improve the investment environment, increasing Egypt's competitiveness and restructuring the public budget. All this will support Egypt's economic position over the short upcoming period.
What are the sectors on which the Egyptian economy can rely on in the coming period? The energy, petrochemical, fertiliser, petroleum, transport sectors, and other major projects, represent major financing opportunities for banks and are important for the Egyptian economy. This is because these projects have the elements of success and comparative advantages that maximise their economic returns. These projects are a priority in the national development plan. Also, the projects of developing the Suez Canal Axis are of great importance, because of their direct positive effect on the national economy. Banque du Caire gives due care to contributing in financing many new projects in these target sectors because of what they can achieve of economic renaissance and revival of the Egyptian economy.
What is the bank's role in attracting foreign investors to the Egyptian market? The role of Banque du Caire is not limited to financing projects, but extends to include participating in the economic studies of projects, to help companies, and the entities that intend to invest in them, and determine the invested capital, expected cash flow, and return on investment. Banque du Caire has the banking techniques and financial models for all aspects of investment projects; whether public-private partnership (PPP) projects or direct investment in all sectors.
What is the bank's plan and work strategy over the upcoming period? Banque du Caire works according to an aspiring plan, as we target achieving growth rates in all our banking segments this year, that reach 30% in some loan products. The main means that the bank's growth will be through expansion of the bank's loans and advances operations, especially through financing small, medium and mciro enterprises, in addition to joint loans. However, the focus will be on the grand developmental projects that bring an added value to the Egyptian economy, and contribute to achieving sustainable development. Banque du Caire continues to apply the policies and procedures related to development activities, and developing a set of regulations related to presenting its products, aiming to expand its role in developing the economic activity, and meeting clients' needs. The bank has developed an aspiring strategy for the next three years (2015-2017), to maintain the bank's position and improve growth rates and performance indicators.
How much is the bank's loans portfolio? The total size of the bank's loans portfolio at the end of the past fiscal year (FY) 2014/2015 was approximately EGP 30bn, against EGP 25bn at the end of FY 2013/2014, an increase of EGP 5bn. This increase in the loans portfolio is attributed to simplifying operational procedures in branches, speed in meeting clients' needs, and improving the level of services in them. This attracted many entities to deal with the bank, also the expansion in issuing loans to various entities led to increasing the portfolio, in addition to the bank's expansion in retail banking activities and microcredit.
What is the bank's role in supporting small- and medium-sized enterprises (SMEs)? Banque du Caire is aiming to become a major bank in financing SMEs, in which the bank has specialised experience. The bank's plan targeted selecting qualified human cadres, and developing them through choosing a team specialised in financing SMEs, and their development through a credit training programme according to international standards. The reason for the bank's attention to SMEs, is that they have a main role in developing national economy in various vital sectors in the county, and also moving the market, in light of the increasing need for creating job opportunities. The bank is keen to occupy a leading position among competing banks in Egypt and to become the main driver of the SMEs sector. The bank also has a significant opportunity to develop a range of banking services to the owners of about 40,000 SME projects in Egypt, which are within the Central Bank of Egypt's (CBE) database.
What about the bank's role in financing micro-enterprises? Banque du Caire has wide expertise in financing micro-enterprises. This expertise goes back to the bank's achievements, as it was one of the first banks that took the initiative to provide funding for micro-enterprise programmes in Egypt since 2001. The purpose of that was to support and develop the professional activity of the clients of this sector, and raise their social and living standards. The bank aims, through financing these projects, to reach a wide base of clients and encourage various crafts. The bank also depends, in financing micro-enterprises, on a trained team that offers its clients all the successful experiences and expertise that would help them develop their activities. They also help clients in transitioning to another stage of success, through which every successful project financed by the bank passes. The purpose of this is creating micro-enterprises that extend and feed medium and large enterprises with all their needs of components, and become an alternative to the foreign component that costs us a lot of currency.
What is the size of the bank's retail portfolio so far? What is the target? The size of the bank's retail banking portfolio reached approximately EGP 18bn at the end of July 2015, and we target increasing this portfolio to EGP 21bn by the end of this year. Banque du Caire has a diversified portfolio of banking products and services that meet the needs of all client segments, and have many advantages. Banque du Caire aims to present new products to be added to the other innovative products the bank currently offers, which are able to compete in terms of price, services, and interest rates. These products also meet the needs of different client segments, and they include instalment saving accounts, loans, credit cards, instalment cards, certificates of deposit, investment funds, and other products that meet the needs of various segments of clients.
With the increased demand by clients and their desire to donate to many charity organisations, the bank added a group of new entities, foremost of which is the "Tahya Misr" account, among the entities benefiting from the return on the Al-Masry Al-Aseel deposit. This service allows the bank's Egyptian clients living inside or outside the country to invest their money and donate a percentage of the return to any charity organisation, and gives them the opportunity to support the Egyptian economy.
What about the deposits portfolio? The portfolio of deposits in banks achieved growth of EGP 6bn at the end of FY 2014/2015, as it increased to EGP 64bn from EGP 58bn at the end of FY 2013/2014, which is a 10% growth rate. This increase in the deposits portfolio came as a result of the issuance of new and diversified products in local and foreign currencies, that fit the different needs of clients. The rate of loans–to-deposits reached 46.88% at the end of FY 2014/2015, against 43% at the end of FY 3013/2014.
How much is the bank's current capital? Is there a plan to increase it in the future? The authorised capital of the bank is EGP 3bn, while the issued and subscribed capital is EGP 1.6bn. The bank aims to increase its capital base to achieve its expansionary objectives in the lending process and possession of a larger market share. This will be either through pumping new capital or directing retained earnings to increase capital.
What is the target plan for the bank's geographic expansion? Banque du Caire cares about geographic expansion to be near its growing client base, reach them, and facilitate their receiving the banking services they want. The bank plans to open eight new branches this year, within a system aimed at spreading the banking culture among all segments of citizens. The general direction of the state and its policy is to spread banking awareness among citizens and expand the bank's customer base, so that each citizen would have a bank account, through which he can perform various banking transactions. The bank is also keen on developing its branches' network, with standard designs at pace with the latest professional standards of the banking market. The bank also aims to consolidate its identity and enhance its position through choosing a unified design for its different branches, which gives clients privacy in their transactions and provides them with more ease and speed in finishing operations. The development plan followed by the bank does not end with establishing new branches and developing existing ones, but it extends to offering a competitive banking experience inside the branches; starting from receiving clients, and providing them with all the promotion material that acquaints them with the bank's various products and services, which meet the needs of different segments of clients.The bank's strategy will develop the clients' trust through simplifying operating procedures at the branches, following the principle of "Know your client", and build transactions based on honesty and complete transparency with clients, in addition to ensuring the competitive prices of services.
How did the increase in bank activities reflect on its profits? The bank's profits at the end of FY 2014/2015 reached EGP 2.1bn, from EGP 1.7bn at the end of FY 2013/2014, marking an increase of 23.5%. The net profits, after taxes, reached EGP 1.3bn, with a return on equity (ROE) of 35.26%, which is among the largest in the banking industry. The profits were concentrated in the core activity of the bank, as the net earnings from return was EGP 3.3bn in FY 2014/2015 against EGP 2.8bn in FY 2013/2014. Banque du Caire's profits are characterised by being operating profits; meaning they came as a result of expansion in all banking activities. The results of the bank's operations continue as a result of applying a bundle of policies and procedures related to developing the bank's activities and increasing its competitiveness, in addition to a set of regulations related to offering its products. Through this, the bank aims to maximise its role in developing the economic activity and meeting clients' needs. Profits have reached these levels as a result of the bank's assets increasing by EGP 8bn, to reach EGP 73bn in FY 2014/2015, against EGP 65bn in FY 2013/2014. Also, the return rate on these assets reached 1.83%, as a result of the bank's strategy focusing on using the best operating policy to achieve return on assets.
