The National Bank of Abu Dhabi (NBAD) celebrated its 40th anniversary in the Egyptian market on Wednesday, highlighting successes and a new five-year strategy (2020 plan) focusing on the expansion of financing major corporates and expansion in wealth management and retail banking.
NBAD is ready to help investors from the west east corridor to invest in Egypt, and not only UAE investors, NBAD Group CEO Alex Thursby said. The bank is currently studying funding other projects in renewable energy, either directly or through syndicated loans, NBAD CEO Egypt Ahmed Ismail said.
Daily News Egypt interviewed Thursby and Ismail to talk about the bank’s plan in Egypt.
What is your opinion regarding the Egyptian market?
Thursby: We have a very good profitable focus business in Egypt. We have made good return and we served the customers extremely well, particularly in the corporate side. We should be very proud, as we built this bank organically so we came with less stability than other entrants to this market possible have normally. Egypt is our second most important international business. We entered cautiously, and at a period of time when Egypt had its ups and downs, but we have our system.
We are very pleased that after 40 years, we are here in Egypt and I think there are more opportunities for us.
I think Egypt is making numerous transitions and getting infrastructure, such as in the Suez Canal. Business here is getting more and more confident. The country tried to engage the people and bring them along a long journey of change, which started, but it still has hard decisions to make. I think it is important to go forward towards a real clear industrial export strategy and import substitution strategy and to involve the private sector in the development process. I think people need to be patient and their expectations measured. I am sure Egypt will progress and I think it is credible for the Arab world that Egypt is successful. To me, Egypt’s position in the Arab world is similar to China.
What is your strategy for the next five years?
Thursby: We have a west-east corridor strategy with high value proposition to customers to help in Egypt and other areas.
In retail, it is little different since the world is changing so rapidly. Mobile technology became more important than launching new branches. The measure is not the hundreds of branches, but rather how successful the bank is with the customers, and how the technology platform is performing in 10 years to provide better services.
What are the bank’s target activities in Egypt during the upcoming period?
Ismail: We target achieving strong growth rates by the end of this year and in the upcoming years. The bank is targeting to achieve 60% profit growth, 30% growth in loans portfolio, and 25% in deposits at the end of 2015. In addition, we target increasing size of profits by five times over the next five years and achieving a growth rate of 25% annually in the volume of loans.
Egypt is trying to attract investors, especially from UAE. Are you ready for this competition between Egypt and the UAE?
Thursby: Absolutely, we are ready for this competition and of course we want to help people from the west-east corridor, especially from the UAE, to invest. We helped a lot of UAE companies in the development of their business here into co-partner strategy.
We have a different strategy from any different UAE banks since we focus on not only the UAE but also other countries in the west-east corridor.
Our capital market business has been successful in the west-east corridor. We are in the top three in the world in Sukuk financing, in the top three in Gulf syndications, and top three in MENA syndications. We are progressing in the field and making deals in Asia.
In my view, Egypt needs to develop especially since it has efficient sourcing funds. In the next five years, we can help in the development of the market.
What about projects that were debuted in Economic Summit in Sharm El-Sheikh?
Ismail: The bank is already interested in these projects. We funded a number of projects, which were launched in the Sharm El-Sheikh conference in the electricity generation sector. The bank is currently studying funding other projects in renewable energy, either directly or through syndicated loans.
Oil prices dropped and affected all banks in the Gulf region; what is the bank’s status regarding the issue?
Thursby: We are safe in cases of catastrophe, security changes or structural changes, and the bank has a buffer margin for a period to continue with the same quality.
On liquidity, we felt the prices of oil begin to drop and it was important to diversify to reserve our bank liquidity; we made the decision 18 month ago.
We balance wealth with health, and we run the bank in that manner to guarantee the bank maintains its quality.
What is the bank’s plan for 2020, in terms of expansions, and branches in Egypt?
Ismail: NBAD aims to achieve significant growth rates in its performance in the upcoming period. The Board of Directors adopted the bank’s work plan until 2020 last month.
The plan is based on four basic axes; including the expansion of financing major corporate as we identified 600 bank’s customers worldwide that we serve. Moreover, the bank aims to finance commercial companies in various sectors and small and medium-sized enterprises (SMEs) and expansion in wealth management and retail banking.
We will not launch new branches in the next five years but will focus more on alternative services such as e-banking and mobile banking. We already have 24 branches in Egypt.
Thursby: We still need branches but we do not need hundreds. Branches in many parts of the world changed from transactional places to somewhere you sell and buy products.
Ismail: We are working on e-banking infrastructure, which will launch before the end of 2015 or at latest during the first quarter of 2016. Regarding mobile banking, we expect it in the second quarter of 2016.
Thursby: ATMs are now less used in some countries as they depend on mobile banking.
Do you have any concerns regarding the Central Bank of Egypt (CBE) in terms of the instability in the local currency value?
Thursby: I think governor Hisham Ramez lit the way and his successor Tarek Amer will continue to move forward. One of challenges for Egypt is to strengthen foreign reserves and it is not only the CBE that should solve the problem but by collective strong policies, investments, and confidence since it is a difficult and long road.
My only concern is that people’s expectations are very high, expecting instant results and solutions. But the policies and solutions will take time; it takes a bit of volatility to get to the determined destination. I have confidence that Egypt is on the way in its long-term plan.
I do not have concerns regarding the devaluation or increase in the value of the pound.
You declared in the last conference in Cairo that NBAD was selected to manage 1.5bn bonds of the National Bank of Egypt (NBE); what is the update?
Thursby: We are just waiting for the market and the client to determine when we go the market since we are very pleased to work with them.
Are you optimistic about the economy in Egypt? What do you say to international investors?
Thursby: I am optimistic and we advise investors to come to Egypt, help them, and sometimes finance them.
How much was allocated for commercial sector and SMEs in Egypt?
Thursby: About 20% of our business is allocated for the commercial sector.
Which sectors are most promising sectors in Egypt the bank is interested in?
Thursby: At the moment, energy is very attractive, as well as the logistics and agriculture sectors.
Is the bank interested in being involved in the Suez Canal logistics projects?
Thursby: The customers themselves do but we only do the banking and finance for customers who have business there.
Does the parent bank contribute with the bank in Egypt in syndications?
Ismail: Yes, the main bank in the UAE largely supports us in Egypt in various fields and we are involved together in a number of syndications that were recently arranged on a number of major projects in various sectors.
The parent bank contributed with the bank in Egypt in co-financing, which was arranged in favour of the General Petroleum Corporation, Electricity Authority loan, financing arranged for the NBE, and other loans.
The parent bank gave us this support as a result of the board’s confidence in the Egyptian market, which is considered among the most important market.
The board of directors put Egypt among the top five markets in which NBAD group has progressed in all banking services. There is permanent coordination with the parent bank to support any UAE investor wanting to enter the Egyptian market.
The bank celebrated their 40th anniversary of starting business in the Egyptian market a few days ago. Egypt was the first country where the bank operates outside the UAE and NBAD was the first Arab bank operating in the Egyptian market.
Do the crises in Egypt undermine the bank’s confidence in the Egyptian market?
Ismail: Not at all, Egypt passed through good conditions and difficult circumstances. But the bank continued its operations and expanded in Egypt. This is the approach the bank has taken over the past 40 years due to the bank’s belief that the events in Egypt are causal and will soon end.
Furthermore, Egypt is a large and promising market full of enormous investment opportunities, which encourages the bank to expand in it.
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