The Agricultural Bank of Egypt (ABE) aims to inject new loans worth EGP 4.5bn this year, bringing the bank’s total loan portfolio to EGP 28bn, compared to EGP 23.5bn at the end of 2017.
ABE President El Sayed El Kosayar told Daily News Egypt that the bank directs about 80% of its total loan portfolio to the agricultural and livestock sectors, and related activities.
He pointed out that about 30% of the portfolio is directed to plant production, 20% to animal production, and 30% to related activities.
“At the end of 2017, the bank’s small and medium enterprises (SME) financing amounted to EGP 17bn, representing 75% of the bank’s total loan portfolio. This reflects the bank’s interest in developing these projects,” El Kosayar said.
El Kosayar pointed out that the bank has many programmes to meet the needs of different segments, including working women, youth, and farmers, with the aim to provide job opportunities and increase production rates, as the bank is a key partner in the country’s agricultural and rural development plan.
During 2017, the ABE signed a financing contract with the Micro, Small and Medium Enterprise Development Authority worth EGP 220m to finance new and existing small agricultural and livestock projects.
Through this contract, 2,200 existing and new projects are being financed, providing 4,600 permanent and temporary jobs.
According to El Kosayar, a new contract worth EGP 40m is expected to be signed with the authority to finance the women’s projects launched by the bank under the name “Bent Misr” in all governorates to support rural women in implementing agricultural, industrial, commercial, handicraft, or trade microprojects, as well as small groceries or bird breeding projects.
El Kosayar explained that these programmes aim to develop the Egyptian countryside in particular and to eliminate unemployment, especially among rural women, as they are the most groups with the biggest focus to increase their income.
He pointed out that the bank has funded 6,000 projects for women, within the Rural Development Programme, with a total funding of EGP 350m.
“The ABE participated in the financing of an electricity project in 2017 and is preparing to contribute to the 1.5m feddans project in cooperation with The National Bank of Egypt (NBE) and Banque Misr. Once the beneficiaries of the project are finalised, the bank will develop financing programmes for them.
In another context, El Kosayar revealed that the bank aims to settle default debts of EGP 1bn in 2018, reducing the volume of such loans to EGP 2.4bn, compared to about EGP 3.4bn at the end of December 2017.
During the period from 1 April 2016 until the end of December 2017, the ABE succeeded in dealing with the outstanding defaulting debts of some 21,000 customers at a value of EGP 1.255bn, of which EGP 856m were repaid and the bank wrote-off EGP 399m.
It is noteworthy that the bank’s management had developed a sector to deal with troubled debts for the first time, in recognition of the importance of solving the problems of defaulters and lifting the burden on farmers on the one hand, and contributing to raising the results of their business and making profit on the other hand.
The size of the bank’s non-performing debt fell to 13% of the total credit portfolio by the end of 2017, compared with about 20% in previous years.
“The ABE is currently implementing an expansionary strategy aimed at achieving growth in the bank’s activities, enhancing its ability to regain its role as the country’s agricultural sector financing arm, achieving rural development, supporting farmers, and expanding the financing of small and medium enterprises,” according to El Kosayar.
He pointed out that the bank aims to achieve growth in the bank’s activities of about 15% annually over the next three years, as part of its restructuring process aimed at boosting the bank to contribute to the revitalisation of the agricultural sector.
He added that the bank also aims to bring the ratio of non-performing loans to less than 10% of its total loan portfolio, improve the performance and development of branches, upgrade electronic infrastructure and payment systems, improve the efficiency of human resources, and improve the bank’s mental image to customers.
According to El Kosayar, the customer deposits portfolio at the ABE reached EGP 45bn by the end of December 2017. He pointed out that the volume of the deposit portfolio, which attracted products that comply with the provisions of Islamic Sharia, reached EGP 939m by the end of 2017 compared to EGP 844m at the end of June 2017, and the volume of Islamic employment portfolio amounted to EGP 648.5m.
He further pointed out that Islamic banking activity witnessed the launch of new products in order to attract more customers, including the financing of livestock in the form of Islamic Murabaha.
El Kosayar revealed that a new special product is also being launched for livestock, through the initiative of the Central Bank of Egypt (CBE) for the development of SMEs, pointing out that it is intended to expand the number of branches offering Islamic transaction services.
As for the national project to revive agriculture, El Kosayar explained that the number of customers benefiting from this project in its first phase reached 618 customers at a value of EGP 99.9m.
The bank also granted EGP 147m in the second phase of the project to 1,037 customers.
El Kosayar pointed out that the second phase of this project was financed by the bank’s resources as part of the initiative of the CBE to support SMEs at a return rate of 5%.
“The ABE seeks to create a network of correspondents in Asia, Africa, Europe, and America to increase its role in supporting foreign trade between Egypt and various countries of the world,” said El Kosayar.
He explained that the bank is currently establishing a mobile wallet system to carry out cash transfers through smartphones.
He said that a successful test was conducted for this service in preparation for the CBE to approve it.
“The ABE is one of the main actors in the implementation of financial inclusion to enable the community to access banking and financial services, especially marginalised groups, whether rural residents, women, youth, or Upper Egypt residents,” he said.
El Kosayar explained that the bank plans to integrate more than 3 million farmers into its services system, in accordance with the principle of financial inclusion, taking advantage of the farmer’s card which was launched in coordination with the Ministry of Agriculture and the company e-finance.
During its participation in the Arab Financial Inclusion Week in July 2017, the bank succeeded in attracting about 7,500 new customers with a value of EGP 55m distributed among savings accounts and micro and small projects through its network of 1,210 branches nationwide.
“Despite the comprehensive banking services provided by the ABE, the bank’s main message will be to maintain its role in the service of Egyptian farmers and to play this role strongly, which is currently what the bank is working on, through the unlimited support provided by the CBE and its support in the implementation of restructuring programmes, ” said El Kosayar.
In a context related to the restructuring of the bank, he said that the bank’s senior management attaches particular importance to the training of employees and raising the efficiency of human resources.
He explained that 200 employees have already been trained at the Egyptian Banking Institute to be the nucleus for the development of the bank’s SMEs sector. One hundred of them have been selected to be granted a credit certificate.
According to El Kosayar, the total training opportunities in all fields during the year 2017 reached about 3,000 opportunities.
“The ABE is currently working to change the mental image of the bank for customers by agreeing with a specialised agency to better advertise the bank and its products, to present the bank’s strategy and explain its objectives and the comparative advantages of its products to the public opinion by exploiting all means of promotion, El Kosayar said.
In another context, he revealed that the bank has finished preparations for marketing the local wheat crop during the 2018 season. It has compiled and approved all the suitable silos from the supply departments in the governorates, as well as the processing of all the collection centres so that they are close to the farmers to facilitate them.
The bank has six storage units with a capacity of 360,000 tonnes of wheat, 82 hangars with a storage capacity of 220,000 tonnes, and 88 silos developed with a capacity of 350,000 tonnes, and thus a total storage capacity of 1 million tonnes.