The Chairperson of the Agricultural Bank of Egypt (ABE),Elsayed Elkosayer, identified six important targets for the bank to achieve throughout 2019.
In an interview with Daily News Egypt, Elkosayer said that these targets include increasing the bank’s role in financing micro-enterprises, as well as expanding the bank’s electronic payment system in order to reach the third objective of achieving financial inclusion.
He added that the bank also aims to reduce the size of its bad debts from about 13% to 10% of the bank’s total loan portfolio by the end of 2019.
The bank also aims to complete the first phase of the restructuring process, which includes its infrastructure, administrative organisation and harmonising operations, he said.
“The board of directors of the ABE also aims to achieve growth rates of 15% in various activities of the bank by the end of 2019, and direct any realised profits to support the bank’s capital base,” Elkosayer stated.
According to the latest indicators of the results of the bank’s business, small, medium and micro enterprises have denominated 75% of the loan portfolio by the end of December 2018.
He explained that the volume of loans granted to these projects reached about EGP 6.5bn, stressing that the bank’s management has given special importance to the expansion of these projects, due to their role in creating job opportunities; reducing the unemployment problem; furthering economic development; financial inclusion, and integrating them into the formal sector.
He pointed out that the bank injected funds worth EGP 605m to 1,314 clients of these projects in accordance with the initiative of the Central Bank of Egypt (CBE).
With regard to the bank’s non-performing loans portfolio, he indicated that during the period from April 2016 to the end of December 2018, the bank settled debts worth EGP 2.2bn.
During the period from 28 June 2018 to the end of 2018, the bank processed settlements for 10,000 clients according to the initiative of the CBE.
He pointed out that the volume of the portfolio of deposits in the Islamic transactions activity until the end of November 2018 reached EGP 966m, up from EGP 907m in 30 November 2017. The Islamic funding employment portfolio scored EGP 831m against EGP 627m.
“The ABE contributes to the capital of some companies in the fields of agricultural development, mechanisation, insurance, and banks. It also invests in investment fund securities, housing and government bonds, in addition to its contribution to its own investment funds,” he noted.
He mentioned that the bank also owns the Egyptian Company for Agricultural and Rural Development, which is the main arm of the bank in all fields of agricultural development, and three investment funds, one of which is Islamic, in partnership with Banque du Caire.
Elkosayer further expressed the bank is currently witnessing an important phase of comprehensive restructuring, with the solid support of the CBE. The process includes developing the bank’s IT system; restructuring human resources and competency development; improving the efficiency of asset management through the development of product packages which meet the needs of all customer segments; the diversification of distribution channels; the provision of electronic services; the handling of irregular debts, and the provision of everything that supports the role of the bank in achieving rural and agricultural development.
According to Elkosayer, the most important project currently underway is the technological infrastructure development, in cooperation with the specialised body with extensive experience on an global scale in the field of IT development.
The project aims to establish a data centre, to implement a sophisticated core banking system, in accordance with best practices, on information security systems, and anti-money laundering.
He elaborated that the first phase is to be implemented within 12 months and will include preparing the specification and prospectus for the data centre, the CRM, the ERP, and the ALM. The current status assessment report was finalised, as well as the target operating model. The bank also completed the prospectus and will furnish it soon to implement the project.
Elkosayer declared that the bank signed a cooperation agreement with the Rabo International Advisory Services, of the Dutch Rabobank and the German SAND fund, to implement the bank’s technical and restructuring project in its first phase.
The agreement includes providing technical support to the ABE to develop the human resources, operations, strategic plan and portfolio of products, according to a timetable that extends over a year, during which all the objectives pursued by the ABE are achieved according to specific outputs with clear timetables, pointed out the bank’s chairperson.
He remarked that the first phase of this operation is expected to be completed by the end of the first quarter (Q1) of 2019, and then the bank will move toward phase two.
“The ABE owns 1,210 branches, including 192 branches in cities and 1,018 in villages catering with comprehensive banking services to more than 3 million clients. The bank aims to reach 7 million clients in the coming period,” he stated.
Furthermore, Elkosayer stressed that the ABE would not have achieved all this without the support of the CBE, such as a EGP 10bn deposit in several tranches in the last two years, to support the ABE’s capital base, thus improving its capital adequacy standard.
Regarding the bank’s electronic services system, he said that the ABE’s ATM network has been linked to the Egyptian Banks Company, which enables customers with salary cards and pensions issued by other banks to use the ABE’s ATM network.
He also revealed that a large number ATMs have been deployed, especially in Upper Egypt and the Delta, with plans to continue deploying more machines to cover all of the bank’s branches in the coming three years.
Moreover, the chairperson elaborated that the bank expanded its cooperation with VISA to enable it to fulfil more tasks, such as becoming an issuance bank, a collection bank, issuing debit cards, prepaid cards, credit cards, the deployment of the ATM network inside and outside the bank branches, spreading point of sale (POS) machines, and training 300 bank employees.
In addition, he announced that the bank completed its project to issue government cards, in cooperation with VISA and e-Finance. It also coordinated with e-Finance to contract on the first accounting unit during Q1 of 2019.
Elkosayer further stated that the bank also transferred its electronic cards, from magnetic cards to smart cards, in cooperation with VISA and NI. The bank offered a tender to supply 25,000 smart chip cards to modernise existing cards and issue more.
The ABE also entered into a contract with Fawry in March 2014 in order to provide the services of bill payments and collection through 200 POS at the bank’s branches, which later increased to 341 POS in the fiscal year 2017/18. Collections have since reached EGP 2bn.
“The ABE provides the electronic collection services for tax, customs, and other entitlements of government services, in cooperation with eFinance. The service is available in 213 bank branches.”
Finally, Elkosayer imparted that the bank’s branches received 2.5m farmer smart cars to offer better services to Egyptian farmers, which is within the framework of cooperating with the ministry of agriculture and land reclamation, in order to automate the agricultural tenure card, in view of the cooperation protocol between the ministry of agriculture, the ABE, and e-Finance.