Mohamed Mahmoud Ahmed Eletreby, Chairman of Banque Misr, speaks to Banker Middle East about the bank’s performance over the past year, his plans for the Egyptian market and where he sees international expansion.
editor's pickWednesday 04, September 2019
The macroeconomic landscape in the region has been strenuous. How has the bank fared operating in current market conditions?
This year our unaudited profit reached more than double the amount of the net profit of the previous year ending June 2018, which was EGP 4.1 billion. The drop in the previous year, June 2018, profits was due to local currency saving pools of high yield rates (17-20 per cent) on the back of the state’s economic reform plan as well as the corrective plan through liberating the currency exchange rate.
The state reaped the fruits as shown in the country’s economic indicators. The high-yield saving pools were issued to reduce the impact of liberating the exchange rate on citizens’ savings as well as eliminate the impact of the inflation rates, which resulted in a hike on the cost of funds.
However, the bank’s profitability gradually returned to its regular levels once the high-yield certificates started to mature. Banque Misr’s deposit market share reached 18.8 per cent as of June 2019, the ratio of nonperforming loans (NPL) represented only 2.08 per cent of the total loan portfolio with NPL coverage ratio of 96.7 per cent of the total loan portfolio, with irregular loan payments reaching EGP 1.9 billion in spite of current economic challenges and its impact on the banking sector as a whole.
The bank’s retail portfolio is valued at EGP 31.4 billion in June 2019, compared to EGP25 billion in June 2018, recording an increase of EGP 6.4 billion, marking 25.6 per cent growth rate. Our results showed notable growth in all sectors.
This year, we witnessed a steady increase in the volume of the bank’s business. With a 23 per cent growth rate, the net value of customers’ direct loans increased by EGP 51 billion to EGP 272 billion, compared to the previous value of EGP 221 billion. In June 2019, the value of customer deposits increased by EGP 76 billion to EGP 746 billion, up from EGP 670 billion in June 2018, marking a 11.3 per cent growth rate.
As rapid technological changes take place across the global banking industry as well as within the region itself, what are your digital transformation strategies for the bank?
Banque Misr believes that technology is the main drive for success, and this contributes to promoting the value of its services for our clients. The bank is always working on developing its technological infrastructure by applying the latest technologies to boost the efficiency of our services.
For the first time in Egypt, Banque Misr implemented artificial intelligence to launch a self-service chat bot on its website to better serve customers 24 hours a day.The interactive service is considered a step forward in the digital transformation process where clients can interact with the auto assistant anytime without waiting—this will reflect on the speed and flexibility of our customer service.
It is worth noting that Banque Misr is the first bank to provide withdrawal and deposit services via mobile phone wallets, through a network of ATM machines specialised for this service. Through this network, the bank enables over 11 million mobile banking users to benefit from the ATM service, which increases the number of transactions via mobile wallets, as the instant cash deposit and withdrawal services are made available for customers 24 hours a day.
Banque Misr also issued a national electronic payment card called Meeza. The Meeza Card is considered the first national payment card in the country that holds the logo of the Electronic Payment Network through the Egyptian Banks Company’s “123” network, in conformity with the state’s policies in regard with expanding electronic payment channels, as well as the Electronic Payment Council’s initiatives under the patronage of the Central Bank of Egypt (CBE).
Apart from that, the issuance of the Meeza e-payment card also facilitates to secure cash withdrawals and purchase transactions via the points of sale (POS) systems all across Egypt, which significantly contributes to the enforcement of financial inclusion initiatives and digital cashless society plans, in line with the objectives of the sustainable development strategy in Egypt’s Vision 2030.
How would you describe your pipeline for your corporate banking business?
Banque Misr is considered one of the largest national banks in financing enterprises across different sectors. Between 1 July 2018 to 1 June 2019, Banque Misr has arranged, provided for, and participated in eight financing transactions with a total value of EGP 20.45 billion across several industries, including electricity, real estate investment, contracting, oil and gas, land transportation, maritime transportation, as well as communications and information technology.
The value of Banque Misr’s coverage guarantee is estimated at EGP 10 billion. In light of its intensive market strategy, the bank seeks to attract new clients and finance operations. Banque Misr is currently studying to accomplish mega project financings worth about EGP 40.5 billion within a number of sectors such as communications, building materials, fertilisers, contracting, etc. The value of Banque Misr’s coverage guarantee here is estimated at EGP 12.7 billion.
With one of the largest client base in the country, tell us more about Banque Misr’s financial inclusion initiatives. What else are your priorities for the Egyptian market over the short term?
Banque Misr has a huge interest in financial inclusion, working on various pillars in accordance with the Central Bank of Egypt’s plan to promote the financial inclusion in the country’s banking system. This includes initiatives in transforming Egypt into a cashless society through supporting and motivating the usage of e-payment methods in accordance with the policies of the National Council for Payments (NCP) under the chairmanship of the Egyptian President.
The plan is aimed at reducing cash flows outside the banking sector and motivating the usage of e-payment methods instead. To fulfil the customers’ demands in this regard, Banque Misr has offered various e-payroll solutions for both public and private sector companies, providing a variety of salary transfer products (salary cards, salary accounts), in addition to offering tax/custom e-payment services through our extensive branches in Egypt and the UAE.
Banque Misr is ranked first among the banks that provide customs payment service. Banque Misr has a CPS service for companies enabling their employees to carry out e-payment processes for taxes, customs, and any other fees while being in their respective offices.
In addition to the BM Wallet service, Banque Misr also entered into a number of partnerships to facilitate the accessibility of e-payment methods, including partnerships with Visa, Exxon Mobil and the Egypt Post Authority. Moreover, Banque Misr’s branches nationwide also offer funds for micro, small and medium enterprises (MSMEs) across the industrial, agriculture and services industries.
In June 2019, the value of the bank’s MSMEs portfolio was accounted at EGP 24.5 billion up EGP 12.2 billion from EGP 12.3 billion recorded in June 2018, witnessing a growth rate of 99.2 per cent. Banque Misr always aims to fulfil the various demands across all segments of the Egyptian society to drive development and combat unemployment.
Banque Misr has therefore partnered with the Ministry of Local Development to fund small and micro-projects through a single-window system at our local units nationwide. The total number of customers of the bank’s SMEs portfolio reached 134,355 clients in June 2019 compared to 86,573 clients in June 2018, with an increase of 47,782 clients, recording a growth rate of 55.2 per cent.
Apart from the Middle East, the bank has a presence is Asia, Russia and Europe. Do you have any plans to grow your network?
Pursuant to our financial inclusion strategy, the bank seeks to ensure the accessibility of the financial services for various segments in the society through a geographical expansion plan. To bring the bank closer to its customers wherever they are, Banque Misr has recently inaugurated a number of new branches.
We now own the largest network of more than 661 branches nationwide; in addition to our regional and international presence in the UAE, Lebanon, France, Germany, China, South Korea (Seoul) and Russia. In the coming period, we intend to be present in Italy (Milan), Kenya (Nairobi), and other African countries. Additionally, the bank aims to have a large network of representative offices all across the world.
What is your approach on CSR for the bank?
Banque Misr is considered as one of the largest banks with a long-standing role in the development of the Egyptian society. This is in addition to the high level of awareness of the environmental and societal responsibilities, as well as rules of governance that the bank should comply with, in accordance with its long-term performance and sustainability standards.
Banque Misr is also the first state-owned bank to be accredited according to the Global Reporting Initiative (GRI) standards for sustainability as we issue our business reports in accordance with the principles of sustainability, taking into consideration governance and human rights, anti-corruption, social inclusion as well as environmental safety standards.
The bank also adheres to the UN Global Compact standards for citizenship (Corporate Social Responsibility). Banque Misr has spent about EGP 759 million on CSR activities during the 2018/2019 financial year. Believing that CSR is the essence of sustainable development, Banque Misr achieved several direct and indirect contributions through its non-profit foundation, Banque Misr Foundation for Community Development.
Through its non-profit foundation, Banque Misr has several social development contributions either directly or indirectly for a better society. The foundation has contributions in various sectors including health, education, as well as social solidarity and development projects such as developing Egypt’s most-in-need villages and slums as well as projects for developing
The bank has made prominent CSR contributions to various sectors. In the healthcare sector, it allocated as Shefa Orman Hospital’s third phase to be named after Banque Misr as recognition for its efforts. We have also provided significant contributions to various university hospitals including Cairo University Hospitals, Ain Shams University Hospitals, Assiut University Hospitals, Zagazig University Hospitals and Mansoura University Hospitals.
In addtition to that, the bank supported Tahya Misr Fund’s Nour Haya initiative to promote each citizen’s rights to receive adequate healthcare. On the other hand, Banque Misr has also financed the establishment of student services building in support of Zewail City of Science and Technology. The new building provides a centralised location for all strategic studies.
The building represents a real breakthrough in terms of professional guidance and training through advising the students about their academic journey and offering internship opportunities at major companies in Egypt and abroad. The bank has also contributed to the Nile University through a scholarship programme designed to support entrepreneurs, as well as all the university students.