'Egypt unaffected by global credit crunch'

The effect of the global credit crunch is not expected to impact Egypt's banking sector. On the contrary, the banks in the country will continue to see stable growth despite the slowdown seen in the West.

"We have yet to feel the impact of the global crunch. Egypt is far behind the global markets and is severely under-banked. Having said that, we do not expect the impact of the global markets to trickle down on us for quite some time," Hisham Ezz Al Arab, Chairman and Managing Director of Commercial International Bank of Egypt (CIB), the biggest private bank in the country, told Emirates Business.

According to the Central Bank of Egypt, the number of banks operating in Egypt declined to 41 at end of June 2007 against 54 in December 2004 due to mergers and acquisitions. Despite being home to 66 million Muslims, Egypt lags far behind the GCC in terms of Islamic banks as well, and foreign institutions are stepping in to fill the gap.

"Our loan book is growing at an average rate of 20-25 per cent per annum, which is an indicator that the demand for credit is still high in the Egyptian market," added Al Arab. CIB, a leading banker in Egypt, aims to be the leading retail bank with the largest retail-banking network for private sector banks because of the huge potential.

Currently, retail and small and medium-sized enterprises (SMEs) account for 12 per cent of the bank's business, but this is expected to grow remarkably, Al Arab told Emirates Business. "As it stands today, retail and SME account for 12 per cent of our business, with plans to make it reach 40 per cent by the year 2011/2012," he said.

"For retail, we have revamped this segment and have requited international calibre. CIB has been working on building direct sales force, scaleable credit processes, new branches and new management to allow us to become one of the most competitive banks in this area. The bank will also be expanding its retail business to leverage from its extensive distribution network. CIB has a very strong credit culture and leveraging on our corporate book makes it the safest and best way to gain market share in the absence of a more informative and sophisticated credit bureau," he said.

This year, the bank has evidenced strong performance growth across all business lines, exceeding internal financial targets and has the highest profitability ratio in the sector, which it expects to maintain.

But in such a competitive market, what gives CIB the confidence of sustaining this growth?

"With GDP growth rates at seven per cent, CIB is still growing at a faster rate than the present market and given the quality of our corporate clients, we are confident that we will be able to sustain our growth and our ability to increase our market share despite the competitive market in which we operate. In addition, we have already built the necessary platforms and infrastructure that will help us realise large economies of scale," said Al Arab.

Recently, the bank received positive ratings from ratings agency Fitch, further boosting growth prospects.