As a tumultuous year for the global financial sector drew to a close, many banks in Egypt found themselves working with more positive numbers than expected. Although globally bankers were more conservative, the local market saw both local and multinational institutions foray into new sectors and launch a variety of products and services.
One such bank, BNP Paribas Egypt, saw total income reach ?4.5 billion in the first nine months of 2009 and saw revenues increase by 34 percent compared to the same period the previous year.
The bank currently has 56 braches around the country, offering clients products and services in retail banking as well as corporate and investment banking.
BNP Paribas Egypt recently launched the “New Year Free of Hunger initiative, donating the budget allocated for annual in-kind gifts to feed 1,180 families from villages in Menufiya, Beheira, Minya, Sohag and Aswan for an entire year. The bank has been working with the Egyptian Food Bank for over two years.
“We send the details of this initiative to bank clients and staff in the form of a letter that .inform them that we have donated the mentioned budget on their behalf to feed needy families. It also identifies the regions, names and number of benefactor families, said Shahinaz Foda, deputy managing director and head of treasury and private banking at BNP Paribas Egypt.
Foda, who is directly responsible for all capital market activities including asset liabilities management, foreign exchange and interest rate management, derivatives, fixed income and custody business, spoke to Daily News Egypt about the bank’s activities and what it was like to break into the sector.
Daily News Egypt: Was it difficult as a woman to break into the banking sector?
I never felt that being a woman was an obstacle to work and excelling in a bank. I joined the Egyptian American Bank in 1991 as a marketing/credit officer and at that time it was required for any relationship manager to rotate among different departments within the bank to establish full awareness of all the business functions and operations.
Among those departments was the dealing room. The minute I got my training there, the spark was ignited and I felt that this is where I want to be – my career’s start point. I accepted to be transferred to the treasury.
I worked there from 1992 until 1995, then I got married and had to travel until 1997. When I came back to the same bank I was appointed as the general manager and deputy treasurer until 2004. In Aug 2004, I joined BNPP Egypt and four years later I was promoted to deputy managing director and head of treasury and private banking, looking after the treasury, fixed income and wealth management.
My daily responsibilities encompass managing the bank’s balance sheet, interest and FX exposure, managing the different relationships between the bank and various financial institutions and attending to our high net worth clients.
What is your take on the CBE’s interest rate policy as more or less pegged to inflation? Has it been effective?
I think it was an effective strategy and it was very much aligned with the inflation and GDP growth objectives.
How do decisions on interest rates get implemented at your bank? How has it affected business (deposits, loans, etc)?
In our Asset Liability Committee, I portray the overall economic situation in light of the current developments and I present my outlook based on the future’s prospect events that I anticipate.
A full analysis of the current and expected growth of the bank’s balance sheet is also presented covering loans, deposits, liquidity gaps, interest rate gaps, different ratios, etc. And by taking into account those views and data; different members of the committee can accordingly agree/disagree. A collective decision is made whether to keep, increase or decrease the interest rate on our different instruments.
How has the bank fared during the economic crisis?
We all know that the banking sector in Egypt was fairly remote from the economic crisis from liquidity’s perspective, thanks to the average of loan-to-deposit ratio for markets at less than 60 percent. In simple words, for each LE 100 we collect from customers, banks lend less than LE 60. Hence, no bank suffered except from profitability’s perspective.
For BNPP Egypt, the situation was [smooth] sailing for other reasons. First off our loan-to-deposit ratio was in the range of less than 50 percent, this was due to the fast growth in deposits compared to loans, which showed customers confidence in the bank’s position and reputation.
In addition, on the group level, the bank is ‘AA’ rated by S&P which is considered one of the highest ratings in the world. This in turn offered both local and international clients more visibility and confidence in the bank.
Last but not least, BNPP Egypt’s access to cheap funds also played a supporting role.
Can you tell us of the bank’s investment/expansion plans?
Our bank’s objective is to become one of the best five banks in Egypt over the five coming years and, accordingly, gain a larger market share. This will be accomplished via organic growth and network expansion.
There’s been a focus on microfinance this past year, what are your goals for this area?
We are currently working with microfinance companies and we will continue to finance them but at this stage we will not be directly having a microfinance product.
Which sectors are you looking to grow?
All sectors including retail, corporate, fixed income and wealth management business lines.
What is your assessment of the effects of the economic crisis on the banking sector?
I believe that the sector is performing in a healthy manner; it’s highly controlled and extremely liquid. This was very much needed during the economic crisis and in dealing with less developed clients.
In times where we are [looking] to grow and develop, more products and openness should be established to educate customers and to serve the more sophisticated clients. Still all banks are comepeting to serve the same strata of people; more diversification will be seen in the coming years.
Is there a recovery on the horizon?
Indeed there is and I think it’s sooner than expected.