By the end of 2015, the Union National Bank-Egypt (UNB-Egypt) is targeting to achieve a profit growth rate between 30% and 40% and to increase deposits and loans by 25% to 30%, according to the UNB’s Vice Chairman, Mohamed Nasr Abdeen.
Abdeen revealed that the bank is seeking to acquire a 5% stake of the Egyptian banking market by 2025.
He also noted that the bank supports Emirati investors in Egypt, adding that it issued letters of guarantee worth $150m for the National Drilling Company to dig the New Suez Canal.
About nine years ago, UNB acquired Alexandria Commercial and Maritime Bank. Since then, what has been realised of the objectives that you were seeking?
UNB entered the Egyptian market aiming to realise a qualitative leap and to contribute effectively in the development of the banking sector. We have worked hard since then and so far we have already come a long way towards achieving this goal.
The best proof on that is the bank’s recent acquisition of the Integrated Management System certificate (IMS) from Lloyd’s Register Quality Assurance (LRQA). This certificate is composed of three parts, which are; ISO 14001, ISO 9001 and OHSAS18001.
The UNB is the first bank in Egypt to acquire this certificate, which is related to providing banking services and banking products to various institutional sectors and individuals. These services include internal and external banking operations as well as private banking operations, wealth management, treasury and investment.
The UNB’s acquisition of this certificate will stimulate banks operating in the Egyptian market to compete in order to acquire it. We always believe that we do not seek to be the biggest but the best.
What are the changes that occurred in the bank over the years?
UNB-Egypt acquired the Alexandria Commercial and Maritime bank, and it was not exactly a bank, as its capital had eroded and it had no technology whatsoever. It did not even have a single ATM. Moreover, employers spent years without receiving training.
Now the bank has the latest IT system in the Egyptian market, and is present in 19 governorates through 36 branches, compared to only eight branches in 2006. We are actually seeking to cover the whole republic with a total of 43 branches by the beginning of next year.
2015 witnessed significant expansions in the Egyptian market, where we plan to end it by opening 11 branches.
According to the latest indicators of the bank until September, we achieved a net profit of EGP 111m, and total bank budget of EGP 12.7bn.
We aim to achieve a growth rate of no less than 30%-40% by the end of this year, as well as increase deposits and loans to at least 25%-30%.
The bank is paying special attention to developing the capabilities of its employees through training courses, locally and abroad, as it believes in the importance of human resources in achieving goals.
At the beginning, we were not in a rush to obtain a large share of the Egyptian market as the bank was not qualified for that; however, now we plan to expand in the Egyptian market and acquire a large share in it that will not be less than 5% over the next 10 years.
How will you achieve this plan?
It is known that expanding has its costs and expenses, and we aim to expand as much as possible and offer advanced services and products in facilitated ways.
The bank’s plan is to expand geographically and distribute branches of the bank in all governorate of the republic through launching special new products, whether in terms of attracting liquidity or utilising it.
At the same time, the bank is expanding in services for clients, including ATMs.
The bank now has a large headquarters that is set to open during the first quarter of 2016. The cost of the building is nearly EGP 200m.
Is the bank considering mini-branches?
We make sure that the all our branches have all banking operations, and provide all services. We are also keen to make our branches relatively small. We have professional sales teams to reach customers everywhere, which puts us in a good position without rushing towards mini-branches.
Which sectors does the bank focus on financing?
The bank’s strategy has not changed since it began in Egypt in 2006, and we are committed to implement it. Minor adjustments could occur depending on the circumstances of the state.
The bank has a very important role in the retail sector, which is concerned with individuals’ services, as the bank believes support for individuals is part of stimulating the economy.
In addition to retail, we also focus on financing small and medium enterprises (SMEs), because we believe they are the backbone of the economy, and are very important to revive the middle class in Egypt after it was almost eliminated during the past years.
We try to support this sector as much as possible, even though this sector’s success rate is still unsatisfactory – at least as I see it.
The SMEs portfolio at the bank is about EGP 70m. There is cooperation with the Social Fund for Development (SFD) to support this sector, where we obtained EGP 20m to re-lend to owners of these projects. We expect to raise this amount with the completion of the part we have obtained.
We also contribute to the support and financing of major projects, either directly, or through syndicated loans, which can be arranged with other banks.
We have funded projects in the fields of petroleum, energy, reclamation of land, and infrastructure, as well as the Suez Canal Axis Development projects. We support companies in various sectors, provided that their projects are well thought out.
I can say that the bank’s work plan fundamentally complies with the state’s main plan and the development objectives it seeks to achieve.
Financing major projects is often based on the rules of the Central Bank of Egypt (CBE) with regard to the capital base of banks. What is your plan to support your capital base?
Since we entered the Egyptian market, we have been working on supporting the bank’s capital base. Since nine years ago until now, none of the profits were distributed on major shareholders, not even a pound; all the profits are being directed to support the capital base of the bank in Egypt.
UNB-Emirates owns 94.89% of UNB-Egypt, compared to 5.11% owned by other Egyptian and foreign shareholders.
Does the bank wish to establish companies to serve as investment arms in any economic sector, such as financial leasing or others?
We carry out all the service from inside the bank, and believe that the moment is not suitable for getting involved in the field of establishing companies, or to have investment arms in any sector, at least until the end of the next year.
What about Islamic banking at the bank?
The bank is strongly present in the field of Islamic funding. We have a sector for the Islamic funding licensed from the CBE, and UNB-Emirates has established Al Wifaq Finance Company operating in the field of Islamic funding that has capital bigger than the bank’s capital, and business size not less than the bank’s business size.
What is the role the bank can play to support Emirati investors willing to invest in Egypt?
The bank is completely ready to offer support and funds to any serious investor, whether Emirati or from other countries, to invest in Egypt.
For those who do not know, the UNB was the major body issuing letters of credit of the National Drilling Company that was on the top of the alliance that won drilling for the New Suez Canal; the bank issued letters of credit to it worth $150m.
UNB has very strong relations with huge Emirati companies operating in Egypt, like Arabtec and Emaar; we are completely ready to support the two companies in any businesses entrusted to them in the Egyptian market.
We have communications as well with one of the huge Emirati companies operating in the construction fields, which is currently negotiating to partake in the project of the New Administration Capital.
Finally, does the bank have a crisis in providing dollars to its customers?
All I can say is that we do not have pending demands on dollars, and the bank does not grant facilitations in dollars except for customers that export in dollars only.