Arab Investment Bank aims to boost SME portfolio to EGP 12.3bn by end 2018: chairperson

Hossam Mounir
10 Min Read
Hany Seif El-Nasr, Chairman and Managing Director of the Arab Investment Bank (AIB), said there are six projects which can put Egypt among the most important economies worldwide.

 The Arab Investment Bank (AIBK) aims to boost its small and medium enterprise (SME) portfolio to EGP 12.3bn, equivalent to 50% of the bank’s total loan portfolio, by the end of 2018, according to chairman of the bank Hani Seif El Nasr.

He added that the bank is currently funding these projects with EGP 3.5bn, as reported at the end of 2016; however, the bank plans to inject a total of EGP 2bn to these projects in 2017, to reach EGP 5.5bn.

Seif El Nasr said that the bank gives great importance to SMEs—being the locomotive of economic development—to accelerate economic growth in Egypt and add value to the Egyptian economy, as well as create new jobs for youth and fresh university graduates.

The ordinary general assembly of the Arab Investment Bank, headed by Minister of Planning Hala El Saied—being the prime minister’s delegate—approved the financial statements of the bank for the fiscal year ending 31 December 2016.

During the meeting, Seif El Nasr presented the assembly with the remarkable development of the bank’s five-year performance indicators, the operations of restructuring, the development of systems, and its policies to meet the needs and desires of the clients.

He noted that the bank’s strategic direction is based on several trends, including that the bank is in the process of completing the best banking technology system in Egypt—the T24—in cooperation with Temenos.

He stressed that the activation of this system will enable the bank to provide banking services of high quality, using the latest information technology available, along with exploiting the advanced solutions to reduce operational risk, in accordance with the rules and regulations of the Central Bank of Egypt (CBE), to achieve sustainability in success and compete better in the Egyptian banking market.

Seif El Nasr said that the the bank is currently strengthening its presence by providing services to all customers throughout the country through the geographical spread of the bank locally. The number of branches is to be increased from 12 branches to 38 branches by the end of 2017. In addition, a plan is in place to unify the design of all branches, according to Seif El Nasr.

He added that this strengthens the bank’s identity and strengthens its position by providing customers with a unique experience while conducting their transactions, providing fast and easy services, providing competitive services within the branches, providing the customer with everything that helps them to identify the bank’s products and services, establishing transactions based on full credibility and transparency with customers, and communicating with customers better.

Moreover, he noted that the bank has undertaken a complete restructuring of the retail banking sector and attracted a lot of banking expertise in this field, which is a true addition. He added that the bank will witness a major breakthrough in retail banking, in parallel with the completion of the information technology system.

Regarding the bank’s geographical spread, Seif El Nasr said that the bank has been able to increase the network of correspondents to include a large base around the world, noting that the credit limits of the bank’s correspondents have been divided according to geographic division and risk aversion, so the limits would be based on the country and correspondents.

“The bank is keen to participate in the financing of large and major national projects, whether being directly financed or through syndicated loans, which contributes to shaping a better future for the bank’s development and sustainability. This is based on the bank’s pioneering role in driving economic development by providing all banking services and financing major projects for sectors inside and outside Egypt,” he pointed out.

In addition, he explained that AIBK cooperated with the Suez Canal Economic Zone (SCZone) to promote investment opportunities in the region, provide banking services, and finance major projects through offering a range of services, including customer money management services and international trade services among many, along with linking national major projects to SMEs in order to maximise development results.

He said that AIBK is also currently conducting a comprehensive structure of labour to enable a boom in its indices and performance, and upgrade the capabilities and practical skills of the employees of the bank through the implementation of internal and external training programmes for all employees, through a specialised sector for human development, which determines the training needs of the employees.

He pointed out that this is done in parallel with strengthening the bank with the best qualified staff in the banking market—at all career levels—in order to support the bank in achieving the objectives with the best quality and fastest time.

Seif El Nasr added that the bank’s strategic direction has led to positive results and achieved growth rates of more than double on the loan portfolio, deposits, and profits, despite the expenses of the new branches and the development of infrastructure and technology.

He explained that the total budget of the Arab Investment Bank amounted to EGP 23.9bn on 31 December 2016, compared to EGP 12.8bn on 31 December 2015—an 86% increase of EGP 11.1bn. He also noted that the bank’s budget increased by 421% compared to 2011, with the improvement of the financial indicators of assets and liabilities, and showing the strength of the financial position of the bank.

He pointed out that customer deposits jumped to EGP 20.4bn by the end of December 2016, compared to EGP 11bn by the end of December 2015—an increase of EGP 9.4bn, which is a growth rate of about 85%. When compared to 2011, the growth rate registers 529%, next to improvement in the cost and quality of deposits and their terms.

As for loans, AIBK granted EGP 9.4bn as reported at the end of 2016, up from EGP 5.6bn registered in 2015, which is a 67% growth of EGP 3.8bn, after deducting the necessary provisions for the portfolio, as well as improving the quality and degree of merit and classification of customers and diversification of activities while reducing risk. The growth rate compared to 2011 reaches 165%.

He pointed out that the portfolio of loans and new facilities granted during 2016 only amounted to about EGP 3bn.

Seif El Nasr said that the net income from the revenue reached EGP 613.4m at the end of 2016, compared to EGP 376.1m in the year 2015—a 63% increase of EGP 237.3m compared to 2015 and 268% compared to 2011.

He noted that the bank’s net profit before impairment and taxes reached EGP 505.7m as of 31 December 2016, compared to EGP 297m as of 31 December 2015—a 70% increase of EGP 208.7m—with a growth of 259% compared to 2011.

The net profit after elimination of provisions, depreciation, taxes, and currency differentials reached EGP 122.2m at the end of 2016, compared to EGP 76m at the end of 2015—a growth of 61%, and a growth of 95% compared to 2011—even though the provisions were set in accordance with the policies and standards, as well as opening new branches.

“The Arab Investment Bank, through the Arab Investment Bank for Development—the development arm of the bank—signed a cooperation protocol with the Foundation of Misr Alkhair to provide financial support for the dismantling financial support for those in debt, along with contributing to the development of the old children’s hospital at Ain Shams University, as well as slums,” he added.

Finally, Seif El Nasr said that AIBK focuses on the fields of education, health, and infrastructure, as well as community development and support for the most needy, out of the belief of the bank of the importance of community development in promoting the fair development of society.

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