Bank Audi Egypt reveals major features of expansion plan in Egyptian market

We seek to double the bank's market share in the next three years, we receive full support from the mother group, says Chairman

Bank Audi plans to implement a powerful expansion plan in the Egyptian market in the next three years with the mother bank in Lebanon in light of its great confidence in Egypt politically and economically, according to four administrators in the bank.
Bank Audi began its activity in Egypt in 2006, after acquiring the Cairo Far East Bank.
The bank's mother group adopted an expansive strategy in the Egyptian market through which it was able to increase the number of bank's branches from three to 37, in addition to increasing bank's capital from $100m to $307m.
Last week, Bank Audi held a press conference to announce entering the first interactive device, NOVO, into the Egyptian market. The device will help achieve voice and video communication between clients and the bank.
According to Chairman and Managing Director of Bank Audi Egypt Hatem Sadek, the ambitious expansive plans in the Egyptian market and the growth of the bank's assets from EGP 350m in 2006 to EGP 38bn in September 2015 – less than 10 years – are success stories that would not have become reality if it were not for the clients' satisfaction.
They depended on the hard work of its employees, the deep confidence of contributors in the diverse capabilities, the bright future of the Egyptian market, and their commitment to supporting the bank's financial centre in the future.
Sadek said the bank capital, which now exceeds EGP 2bn, is composed of the profits achieved by the bank over the past, where contributors never obtained any profits over the past ten years but still supported the bank and its ability to loan and expand in the Egyptian market.
There is full confidence from contributors in the bank in Egypt and in its political and economical future, especially in the light of the political and economical stability Egypt witnessed during in the recent past. The successful completion of the parliamentary elections was a major step for Egypt and the world.
As for the bank's indicators in 2015, Sadek said the total assets increased from EGP 30.5bn in 2014 to EGP 38.3bn in September 2015, an increase of EGP 7.7bn and a growth rate of 25%.
The bank's loans portfolio increased from EGP 12.8bn to EGP 16bn, whule deposits rose to EGP 33.7bn from EGP 27bn, marking growth rates of 25% and 24% respectively.
The bank's profits increased by EGP 166m, from EGP 601m to EGP 768, a growth rate of 28%. Meanwhile, the net profit recorded an increase of EGP 131m, from EGP 329m to EGP 461m, a growth rate of 40%.
Sadek noted that the bank's performance indicators are more important than the numbers, whereby a bank can achieve a major growth one year and face problem in the following one.
He added that Bank Audi achieved return on average equity of about 25% in September, which is one of the highest rates in the Egyptian market, whereby the ratio of non-performing loans compared to the bank's total loans dropped to 2.2% from 2.6%.
He said the non-performing loans amount to EGP 300m and they are covered by allocations of about 102% of their value.
The bank currently accounts for about 1.65% of the total assets of the Egyptian banking system, while it accounts for about 2.17% and 1.87% of the market's total loans and deposits respectively. The bank aims to double those shares within three years.
He predicted an increase in the total equity from EGP 2bn to EGP 2.780bn in 2016, pointing to a change in the bank's strategy every year.
The most prominent sign of support from the parent group, according to Sadek, is its assistance in coping with the dollar shortage.
The parent group granted the bank in Egypt a loan of $120m and supported the bank's capital base with EGP 40m, with another loan of $60m to increase shareholders' equity. Moreover, the bank increased loans granted in foreign currency in 2015 by about $127m.
The parent group in Lebanon also granted Egyptian companies loans of about $134m.
"This shows the group's support to the bank in Egypt and its confidence in the Egyptian market and domestic economy," he said.
The bank will complete its tenth year in the Egyptian market in the first quarter of 2016.
The bank's strategy in Egypt focuses on three points; understanding different age groups to provide each of them with suitable products and services; coping with new technologies available; and providing customer service support through different channels.
"The bank diversifies its customer support methods in line with the parent group's obligation to exploit different means of communications and the bank is keen to reach all customers and all age groups. About 60% of the Egyptian population is youths, who prefer to use technology," Sadek said.
According to Deputy Chairman and Managing Director Mohamed Fayed of Audi Bank played a significant role with helping to resolve its electricity crisis. The bank aims to fund all economic activities equally, whether big or small.
The bank participated in the emergency plan for the electricity sector, where it pumped around $130m in electricity projects that were established recently. It is also ready to pump more funding into major projects offered by the government, as well as focusing more on small and medium enterprises (SMEs) in accordance with the new definition put forth by the CBE.
There has an increase of approximately EGP 3.5bn in the bank's loans portfolio for companies during 2015, and the bank is not focusing on funding one sector, but rather that each sector does not exceed 15% of the total loans, he said.
Fayed said they will soon launch a number of retail banking products and it is currently keen on studying several products corresponding with Sharia law. It has been decided that these products will be launched in 2016.
According to Deputy Managing Director and Executive Board Member Yehia Kamel, Bank Audi allocated $30m (EGP 240m) to implement a number of projects to develop the bank from 2014 until mid-2017.
Kamel said the bank's development operation is being implemented in cooperation with major international specialised companies. The operation includes developing the infrastructure with new equipment, establishing a strong data base, and providing analytical tools to take the best decisions at the right time.
He said the development process includes developing communication channels, such as ATMs to deposit, withdraw, and deposit checks.
The call centre has also been developed, as well as internet and mobile banking services. Developing operational systems, work procedures, and the bank's regulatory systems to cover the largest amounts of risks the customers and the bank may face is also part of the plan.
Head of Retail Banking Department Ihab Dorra said Bank Audi is awaiting the CBE's regulations related to mobile banking services in preparation for launching the service, as well as internet banking.
The bank has a geographic expansion plan, including increasing the number of branches from the current 37 branches to 62. They are also approaching a deal to offer a group of projects in cooperation with Fawry and Master Card Companies.
Dorra said the bank believes technology is the future and so it is keen to offer all the new products and technological services in accordance with the developments for bank's customers, particularly young customers.
According to Dorra, Bank Audi's interest in technological development does not diminish its interest in direct channels to deal with clients, such as branches, which still have a significant and effective role in communicating with customers.
Regarding the significance of the NOVO service that was launched by the bank, Dorra said communicating through video conference has not been used optimally in banking business before. All major entities are interested in it, however, since it saves time and effort compared to direct meetings.
Dorra explained that the bank owns only one device and it started to test it in its Zamalek branch. He said the bank seeks to add three more devices during 2016, noting that the difficulty is in equipping the service's infrastructure. However, once that is done, it will quickly spread according to the market's needs, he said.