What are your thoughts on the performance of Egypt’s economy last year?

The Egyptian economy has witnessed a great improvement since the successful execution of the economic reform programme by the government and the Central Bank of Egypt (CBE) in November 2016 which included several pillars, mainly the liberalisation of the foreign exchange and fiscal reforms.

The outcome of these reforms was reflected across various key macroeconomic indicators including gross domestic product (GDP) which reached to 5.6 per cent in the 2019 financial year. Unemployment rates were recorded at 7.8 per cent and the decline in inflation rates to record was at 7.1 per cent.

The liberalisation of the exchange rate led to a high influx of foreign currency, bringing foreign exchange reserves to $45.4 billion at the end of December 2019. This helped the Egyptian economy attract direct and indirect foreign investments which in turn stimulated local investment recording considerable growth rates.

Our expectation is that the economy will witness a huge leap in growth rates across various sectors. This is expected to be achieved on the back of major national projects implemented by the government, particularly in construction, infrastructure and energy—all of which attract investments, reduce public budget deficit and create job opportunities.

The improvement in the exchange rate was also a result of the measures carried out by the central bank which led to an increase in foreign exchange resources for banks including Banque du Caire’s. This in turn enabled the bank to direct those resources to a large base of customers, providing foreign trade operations and foreign currency needs for national projects.

How is digital transformation making way in the country’s financial sector?

Egypt has made a remarkable journey towards digital transformation which began with the establishment of the National Payments Council. This was set up by a comprehensive plan to spread societal awareness on the importance of digital transformation and achieving breakthroughs in digital infrastructure.

Egyptian banks witnessed a qualitative shift in digital transformation as many electronic payment methods and services became available. The central bank introduced various initiatives on financial inclusion and digital transformation.

They include: encouraging citizens to use digital financial services; creating awareness on the diversity of banking products to meet the needs of the different segments of society; issuing control instructions for payment systems and mobile phone wallets; introduced the mobile payment acceptance (QR Code); introduced the first national payment scheme “Meeza”; encourage entrepreneurship and transformation of the informal sector to work under the umbrella of the formal sector; providing greater liquidity to the banking sector and creating greater growth rates for the national economy.

Over the next five years, digital transformation will also increase GDP rates creating a suitable climate for a digital economy in a way that supports the state’s plans to convert to a system of financial inclusion while promoting economic growth.

As one of the important agendas in achieving Egypt’s 2030 vision, it also represents one of the pillars of sustainable development and an essential pillar for building competitive and diversified economies.

What is Banque du Caire’s approach to digital transformation?

We have many plans for digital transformation and financial inclusion. We recently introduced a comprehensive payment service through the ‘Qahera Cash’ mobile wallet. New services were added in the app to meet various customer needs and reach a larger segment of customers encouraging them to subscribe and use the service.

The initiative also facilitates subscription and reduces the fees for the service. We also added new deposit and withdrawal outlets to enable customers to access their money without having to visit the bank’s branches.

The bank also launched internet banking services for retail customers in the second quarter of 2019. We plan to do the same for corporate clients this year, in addition to a mobile banking service. The bank has a continuous development plan in place encompassing a suite of new products and services.

One of the most notable ones is the ‘Meeza’ card, including debit and prepaid cards to limiting the use of cash as the bank has issued more than 450,000 cards thus far. Following central bank approvals, the bank was the first to launch the mobile acceptance of payment through a QR code scan to support a large category of merchants encouraging them to use the service.

We also implemented the first mobile phone payment process in the Egyptian market. It provided fast and safe solutions for merchants to receive payments from a large base of mobile phone customers (reaching more than 13 million customers), giving them greater opportunity to increase sales and follow-up on transactions made through electronic wallets.

This step is part of Banque du Caire’s keenness to create new digital banking channels to meet the needs of different customer segments and keep pace with developments in the global banking services sector, whilst encouraging a culture of financial inclusion backed by electronic payment methods.

The bank also plans to digitise its microfinance platform, open two digital branches by mid-year and upgrade the core banking system over the period of 18 - 24 months. Recent figures indicate that digital transformation is on its right course. Even though 49 per cent of Egypt’s total population are internet users, 28 per cent of them use mobile banking. Additionally, we have 34 per cent of the population that are eligible to own an account within a financial institution, which means there is still room to increase the percentage of internet banking users.

There is still a significantly large unbanked population in Egypt. What is your approach to financial inclusion?

When we looked at financial inclusion figures, we witnessed a very high increase in the ratio, reaching 34 per cent by end of 2019. A lot of initiatives were carried out in this by both the government and central bank aiming to transform the country into a cashless society.

For example, new regulations were released in May 2019 to stop accepting cash for any transactions exceeding EGP500 across all government entities.

Investment in technology came at the top of the bank priorities for 2020 to broaden the reach of the unbanked segment, particularly in rural areas. For example, Banque du Caire succeeded in acquiring 250,000 unbanked customers over the last three years under the microfinance business and leveraging on technology.

As previously mentioned, the bank is working on the digital onboarding of small businesses as we target to increase productivity search by more than 40 per cent. We also plan to leverage on the new initiative—EKYC—that the CBE plans to launch in 2020 as technology will play an important role in reaching the unbanked.

Currently, Banque du Caire’s infrastructure enables the bank to cater to this segment through simple products encouraging citizens to deal with banks. Yet the awareness remains the main challenge in which the government, CBE and banks are taking very serious steps to address.

For a better reach, the bank is also expanding its current branch network of 230 with an additional 25 new branches every year, particularly in the untapped markets to transform the branch model to a more customer-centric approach to better cater for the different customer needs.

In support of women inclusion, an agenda which is on the top of the central bank’s priorities, Banque du Caire recently launched the ‘Bokra’ account which is specifically designed to meet the banking needs of women, through a package of services and promotional offers tailored to this segment. We also plan to launch a variety of banking services for youths in the coming months.

Additionally, we are working on a strategy to launch innovative technology banking solutions and services for microproject clients. Banque du Caire has been a very active player in the CBE’s financial inclusion initiatives, through designing distinctive custom-made banking products and services to fit the needs of the youth and the women segment.

The bank has also launched on ground activations in a number of Egypt’s governates throughout the year advocating financial literacy and raising awareness about financial inclusion, while providing products that meet the banking needs of Egyptians. Through this account Banqe du Caire targets women from different social and economic classes, with different saving needs, located across Egypt’s different governorates, especially rural areas where the reach of banking products and services are still in early maturity stages.

Banque du Caire was named as one of the banks that would float its shares on the Egyptian Stock Exchange. There has been a delay since this announcement was made. What are your views on this and how would the IPO impact your business and the domestic banking landscape?

We look forward to having the initial public offering in the first/second quarter of 2020. The IPO will be open to retail and institutional investors—whether Egyptian, Arab, or foreign— to ensure a diversity in the bank’s shareholder structure, in line with the rules and laws of the Egyptian Stock Exchange and the Central Bank of Egypt.

With an impressive track record, an all-time high brand recognition, and a dynamic performance over the past few years, a broad base of investors is looking to subscribe to the bank’s shares, as it is one of the oldest Egyptian banks that enjoy a robust performance at all levels with excellent growth rates, and a market share of about four per cent.

Moreover, there are many positive indicators surrounding the timing of the offering—the improvement and attractiveness of the Egyptian economy which make the transaction more attractive to investors as well as the encouraging performance of the Egyptian banking sector which is demonstrated by the healthy financial indicators of operating banks.

How do you envision Banque du Caire’s role in the country’s banking sector and overall economy?

The Egyptian banking sector witnessed major reforms during last decade that targeted the entire sector ranging from laws, policies and procedures, to staffing as well as monetary and fiscal policies.

This reform which was the main shield of the Egyptian economy during the tough period which began in 2011. In 2014 Egypt had launched a full and comprehensive, nationwide infrastructure revamp. This, coupled with the economic reform and the foreign exchange liberalisation, were the measures that kept Egypt’s economy afloat.

These large steps led to a solid banking system evidenced by the strong solvency and liquidity position of the entire sector. As part of this strong system, Banque du Caire succeeded in positioning itself as a major player over last couple of years.

The bank became one of the top five banks in the market in terms of assets size, growth ratios and branch network. In-line with the direction the country was heading, Banque du Caire was a major market player in financing the private sector and national projects, supporting the overall economy’s welfare.

Over the course of 2018 and 2019, the bank’s corporate portfolio increased by about 110 per cent through the financing of diversified sectors including but not limited to contracting, industrial, real estate, pharmaceuticals, oil and gas, power and food industries.

It is worthy to mention, that the fiscal policy which was efficiently managed by the Central Bank of Egypt had its positive impact on rates and inflation—a low inflation rate, an appreciation of the Egyptian pound appreciation against the US dollar, lower unemployment rates and a higher GDP, amongst other indicators.

Over the last two years, Banque du Caire well-utilised its large branch network and client base to reposition itself in the market. We enhanced our suite of product offering to include smart and up-to-date products including digital channels to reach all targeted clients.

The business model we are currently implementing provides us with the required level of banking services and products to support all relationship channels either through corporate services, retail banking, microfinancing or SMEs, while maximising our returns, adding the highest value to our clients and the Egyptian economy.

By applying the new model, we were very selective in staffing. We expanded the existing team and onboarded highly qualified individuals from the market in all areas. We also set up a corporate service division to provide the best customer experience for our corporate banking relationships.

Additionally, we introduced two new differentiated product lines, namely: Debt & Structured Finance and Global Transaction Banking. Both areas have had a positive impact on our clients’ journey and improved our market share, and most importantly increased our share of our clients’ wallet.