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HDB aims to be among Egypt's top 10 banks by end-2022: chairperson Negotiations continue with CBE to separate real estate from banking activities, says El-Sebaey
The Housing and Development Bank (HDB) aims to be among the top 10 banks operating in the Egyptian market by the end of 2022, according to Fathy El-Sebaey. El-Sebaey explained that the bank's board of directors has drawn up a plan to achieve this, noting it is already being implemented and will continue through 2022. He noted that the HDB's strategy in the upcoming years includes increasing the bank's geographical presence, focusing on financing small and medium enterprises (SMEs), increasing the size of mortgage finance, and increasing the bank's participation in syndicated loans arranged for various economic sectors, while cutting down on financing clients for consumption purposes. He added that the bank aims to improve the services it provides to clients in all fields, apply international best practices in the field of governance and commitment, create qualified and trained staff at the highest level, build a modern technological system, increase its shares in subsidiaries, and strengthen the confidence of shareholders and customers in the bank. "The Housing and Development Bank has opened 10 new branches in 2017, reaching a total of 81 branches, with plans to reach 100 by the end of 2018," El-Sebaey said. He explained that the bank's geographic expansion plan aims to keep abreast of the successive developments in the Egyptian banking market and to be closer to its customers and to provide the best banking services that meet all their needs. The HDB held its general assembly last week to approve the bank's financial statements through the end of 2017. During the meeting, El-Sebaey disclosed the bank's success in realising a profit of EGP 1.49bn at the end of 2017, versus EGP 920m at the end of 2016, an increase of 62%. The bank's net profit after tax was EGP 1.075bn, which El-Sebaey attributed to the senior management's professional strategy and the efforts of HDB employees. El-Sebaey stressed that the bank managed to achieve these profits despite the limitations and difficulties faced by the Egyptian economy, noting that the bank was able to attain achievements in terms of activity, while maintaining acceptable limits of risk. According to El-Sebaey, the total loan portfolio at the bank at the end of 2017 amounted to EGP 13.4bn, up from EGP 10.5bn in 2016, an increase of 27.6%. Deposits amounted to EGP 40.9bn compared to EGP 22.8bn in 2016, a growth rate of 79.3%. El-Sebaey pointed out that the bank's return on equity reached 43.2% at the end of 2017 compared to 29.3% in 2016. The return on assets was 2.07%, versus 2%. The bank's general assembly approved, last week, the financial statements for the year ending in December 2017 and the report of the board of directors and auditors, while it decided not to approve the item of cash dividends to shareholders once again because of shareholders' objections to the value. It deferred the item until presenting it to the Central Bank of Egypt (CBE) at a later time. The HDB's board of directors will hold a meeting this week to discuss this matter and determine the new date of the general assembly, Daily News Egypt learned. During last week's assembly, El-Sebaey announced the reduction of cash dividends on the bank's shares to EGP 1.5 per share instead of EGP 2.5 per share. According to El-Sebaey, this reduction comes in line with the instructions of the CBE, which considered the value of distributions significant in light of the bank's commitment to applying international accounting standards, foremost of which is IFRS 9, noting that the bank has decided to save EGP 147m to comply with the requirements of this standard. In a related context, El-Sebaey pointed out that talk about increasing the offered shares on the Egyptian Exchange within the governmental initial public offerings (IPOs) programme is premature, stressing that this step will not affect the bank's performance, but on the contrary, will increase the volume of liquidity available to it and make its shares more attractive. El-Sebaey also confirmed that this matter is up to the bank's shareholders, expecting that the new shares to be raised will range from 10% to 15%. Last week, the government unveiled its programme of proposals to partially float its affiliated companies or those in which it owns a stake. The programme includes offering shares in Banque du Caire, the HDB, and the Bank of Alexandria. The capital of the Housing and Development Bank is EGP 1.26bn, distributed over 126.5m shares, with a nominal value of EGP 10 per share. The ownership structure of the bank is distributed between the New Urban Communities Authority (29.81%), Remco Investments (9.74%), Misr Life Insurance, (8.92%), Misr Insurance (8.29%), Housing Finance Fund (7.41%), Egyptian Endowments Authority (5.03%), Saudi national Ali bin Hassan Dayekh (6.316%), Yaseen Al Shokairy (4.61%), and other shares held by individuals and companies, of limited value. In another context, El-Sebaey said that the bank is still awaiting the CBE's approval to transform the bank into a commercial one and to separate its investment and real estate activities from its main activities. The HDB's board of directors agreed in principle, in February 2017, to begin to study the division of the bank's shares into real estate activity and other banking activities. El-Sebaey told Daily News Egypt in previous statements that there were three consultants who had submitted bids to the bank to do so, but none of them were selected, in order to await CBE approval. He explained that if the separation is completed, the bank will be limited to offering commercial banking services, such as receiving deposits and granting loans, while the assets, lands, and investment companies owned by the bank will be transferred under an investment company formed with the same shareholders of the bank. According to El-Sebaey, negotiations with the CBE on this matter are still ongoing, noting that the CBE expressed concern that the division of the bank's activities could cause a decline in its indicators. He added that the HDB's board of directors submitted to the CBE a study that suggests that the bank's business and indicators will not be affected by this, but on the contrary, will improve. The bank has yet to receive a response from the CBE.
