CAIRO: The National Bank for Development (NBD), which specializes in Sharia-compliant products and had LE 2 billion in capital at the end of 2010, has been consolidating its market share in car financing. Since the acquisition of 49 percent of the NBD's stock by the Abu Dhabi Islamic Bank in 2007, the NBD has been transitioning to Sharia-compliant financial services. “We have the lion's share of the market,” Anil Kumar, the head of NBD's consumer banking, told Daily News Egypt in reference to Sharia-compliant car financing. During an interview at the bank's headquarters in Cairo, Kumar stated that there are a few smaller players that tread on the Sharia-compliant terrain, but they remain largely marginal with very little tangible impact on the content of the products on the market. However, the NBD has stated that it offers the only Islamic product for car financing on the Egyptian market. The NBD's car financing program has “taken off very well” and now the bank is one of the leaders in this segment of the market by volume and in terms of the number of dealerships, according to Kumar, who did not disclose specific figures. In terms of new volume, the NBD has one of the highest, with its market share for car financing varying between 10 and 13 percent month-on-month. Nevertheless, the NBD's “lion's share” remains relatively modest, constituting only 3 percent of the overall car financing market in Egypt. This is extremely small when compared to other markets, such as the United Arab Emirates and Malaysia, where there is substantially more interest in Sharia-compliant products, Kumar explained. Asked why this is the case, Kumar explained that this is not unsurprising given that Sharia-compliant products are quite new to the Egyptian market. “Such products have been around [outside of Egypt] for 25 years,” he said, while in Egypt, it has taken “10–12 years to take shape.” The NBD's car financing program was only launched a year and a half ago and was recently modified to meet customers' growing demands. The bank is neck-and-neck with three or four other banks, such as CIB, Audi, Crédit Agricole, though their competitors do not offer Sharia-compliant products. Kumar stressed that competition is “very steep” in this market segment, with other banks coming out with various schemes. He nevertheless admitted that there are a few other options available to customers through other Islamic banks — namely the Faisal Islamic Bank of Egypt and Al-Baraka Bank. In general, customers are looking for quality service as well as quick loan approval turn around time. Customers want a loan approved the same day, Kumar stated. One of the NBD's schemes allowed customers to pay 40–50 percent of the car's value as a down payment, and to pay the rest through financing — “the most attractive” of the various options for the NBD, as well as for customers at other banks. The reason, Kumar explained, is that such schemes require minimal documentation — often a sticking point for Egyptian borrowers — and are processed more quickly. In total there are about a dozen schemes that the bank offers to its customers looking to hit the bustling streets of Cairo. Given the demonstrable success of the NBD's car financing program, as well as the market's expansion in general, Kumar stated that his bank is seeking to “build schemes around the needs of new customers.” Although unable to break down the precise value of the car financing segment of the market for the bank's overall profits within the retail sector — which includes auto and personal financing — Kumar stated that between Jan. 2010 and the end of the third financial quarter, the bank's portfolio had grown by 92 percent. The bank was unable to disclose projections for the results of the first quarter of 2011, as it will do so in March, but Kumar was confident enough to state that the bank's results would be “very strong.” Roughly 45 percent of all new car owners seek to finance their purchase through a bank loan. When asked how much the bank profits from the scheme, Kumar — rather than providing an exact figure — stated that customers request LE 50,000–60,000, with roughly 175,000 vehicles hitting Cairo's asphalt each year. To generate a “buzz” around the bank's financing program, the NBD set-up a booth at this month's Cairo's 2011 Formula Al Ahram auto show, during which it offered information about its Sharia-compliant car financing program. Kumar said that through its participation in the auto show, it became clear that there is “excitement and appreciation for Sharia-compliant car financing” amongst Egyptian consumers, he said.
