How do you see the prospects for the Egyptian economy in the short, medium and long term?
The Covid-19 pandemic was a test for the Egyptian economy, particularly due to the decline in the country’s foreign exchange inflows.
However, for a densely populated country like Egypt, the impact has not been as severe as everyone expected, and we have seen signs of economic activity recovering and economic growth is expected to reach 5.2% in FY 2021/22, according to the International Monetary Fund ( IMF).
As a result, the private sector will continue to grow and realize its potential for job creation and sustained market expansion.
As a bank, in which sectors do you see the greatest scope for growth?
The e-commerce sector, paired with fintech, has driven economic growth in recent years. E-commerce in MENA is expected to grow 35% year over year to around $ 30 billion in 2021, double the 2019 figure.
Consumers are more attracted to online shopping for its simplicity and speed, and our services are currently meeting this need as customers can remotely conduct secure online banking transactions.
In fiscal 2020, the number of individual customers subscribing to CIB’s online banking service increased 35% year-over-year, while the CIB Smart Wallet recorded a 107% increase in transactions.
Another leading sector in terms of growth is Fast Moving Commercial Goods (FMCG), which is being driven by strong consumer spending and an increasingly formalized retail sector.
Total household spending will increase by 3.7% in real terms in 2021 and by an average of 4.2% per year in local currency in the period 2021-25, purchasing power for consumer goods will increase.
Where will CIB pay the most attention to its own banking services and affairs?
In line with instructions from the Central Bank of Egypt and the bank’s strategy to acquire a larger share of the SME credit market, commercial banking began working on an “accelerated growth plan” by changing our credit policy, an alternative score credit model, investments in people, premises, IT developments and wider distribution via business hubs.
In order to improve our service model and ensure full coverage, a “New Service Model” was introduced in 2021, which aims to expand the coverage of small businesses. We have also divided our branches into households, flagships and businesses to provide bespoke services to our customers.
In Consumer Banking, we will continue to focus on strategic priorities such as digitizing acquisition efforts, marketing activities and the service model to support our premium pricing strategy. In addition, we are concentrating on the further development of our technologies and the redesign of our customer experience through the introduction of transformation projects.
CIB implements digital transformation across its entire business, from product development to risk management and human capital management.
Since digital banking maps the future of companies and the economy in general, big data has become an indispensable tool for building structures for information collection and analysis and for converting quantitative knowledge into building blocks for future strategies.
CIB has been vocal in favor of expanding its presence in Africa and acquiring new assets overseas. Is this still part of the CIB strategy or has the pandemic changed priorities?
The diversification of our business activities and the expansion into other African countries is still part of our strategy for the coming years. Africa is home to some of the fastest growing economies in the world, which is a unique opportunity to expand and consolidate CIB’s continental presence as a trade finance hub.
We are currently in the process of identifying potential trade finance opportunities for Africa as we continue to support the growth and development of our subsidiary in Kenya.
Is there room for bank consolidation?
Currently, the Egyptian banking sector consists of 38 banks, where the scope of business activity – number of branches, number of customers, asset and liability portfolios, etc. – is proportional to the size of equity.
This fragmentation has a negative impact on the market. We therefore believe that the consolidation of some of these companies will create a more competitive banking system with higher levels of customer satisfaction, and most importantly, will further advance financial inclusion efforts and more easily reach the non-bank and non-bank segments.
Has the introduction of new technology produced the returns you expected?
Our efficient digital banking solutions have helped expand our customer base in all segments. CIB’s digital platforms became critical for customers during the Covid-19 pandemic to conduct seamless and secure transactions. It has also helped make it easier for customers to migrate from the branches to the bank’s online services.
This has helped CIB maintain its dominant position in the Egyptian payment acceptance sector in 2020. In the past year, the number of digital banking transactions processed through the bank’s mobile banking service more than doubled, up 118% from the previous year.
Corporate digital services have also made a giant leap as customers are now completely reliant on channels that offer alternatives to cash transactions and paperwork.
The proportion of corporate internet banking transactions increased 93% year-over-year, with subscriber numbers increasing 45% in FY2020.
CIB’s digital products include Zaki the Bot, an artificial intelligence chatbot available on the bank’s website and on the official Facebook page. Zaki the Bot uses the latest AI technologies that enable CIB customers to easily navigate the bank’s products and services in both Arabic and English.
CIB recently successfully raised a $ 100 million green bond. How and where will you use this capital?
CIB’s green bond-approved pipeline currently includes projects in various industrial sectors valued at around $ 70 million, including CIB’s main building in the New Administrative Capital, which is currently being certified as a green building.
Three projects in the banking and education sector as well as in the food and beverage industry are also about to be certified, and other promising projects are ongoing. Certified green buildings are expected to make up a large portion of the projects to be funded as the CIB worked with IFC to develop the first line of finance for green buildings in Egypt.
Industrial energy efficiency, the manufacture of energy-efficient devices and water disposal projects will also be the focus of CIB financing under the Green Bonds.