BLOM Bank Egypt targets to achieve growth rates of 15% in all performance indicators by the end of this year, according to leaders of the bank.
BLOM Bank held a press conference last week to reveal its business results by the end of 2016 and to identify the most prominent milestones during 2016 and the bank’s work plan for 2017.
Mohamed Ozalp, managing director and CEO of BLOM Bank, and Tarek Metwally, deputy managing director and executive board member, and Rabea Halabi, deputy managing director and executive board member, attended the conference.
Ozalp revealed during the conference that the bank achieved a growth of 43.07% of its total budget by the end of 2016 to reach EGP 27.8bn, compared to EGP 19.4bn in 2015.
The increased volume of customer deposits increased from EGP 16.7bn in December 2015 to EGP 24.372bn in December 2016—an increase of 45.37%—and the size of the loans portfolio of the bank increased by 56.6% to reach EGP 9.4bn by the end of 2016, compared to EGP 6.2bn at the end of 2015.
According to Ozalp, the non-performing loans ratio at the bank declined from 6.2% in 2015 to 2.5% by the end of 2016—a result of the policy followed by the bank in terms of supporting its customers, as well as the collection efforts of the bank’s debts’ teams.
He noted that the non-performing loans ratio reached 17% when the bank acquired Banque Misr Romania at the beginning of 2006, with the exclusion of those debts inherited from these loans that are currently up to 1%.
The retail banking loans acquire roughly 21% of the total loans portfolio of BLOM Bank-Egypt, while the syndicated loans acquire 17%, with the remaining percentage distributed between loans directly provided to companies and loans provided to the small and medium-sized enterprises (SMEs), according to Ozalp.
Ozalp pointed out to the growth achieved by the bank in its various activities reflected positively on the results of its work, as the bank achieved a net profit before tax deduction worth EGP 757m by the end of 2016—an increase of 42.56% from 2015.
The total net profit after tax deduction was worth EGP 540m by the end of 2016, compared to EGP 372m by the end of 2015—an increase of 45.16%.
According to Metwally, the bank’s return on equity reached 31.2% by the end of 2016, compared to 24.6% by the end of 2015. This yield is considered one of the highest rates among the banks operating in the Egyptian banking sector, and the return on total assets amounted to 2.3% in 2016, compared to 2.1% in 2015, while net revenue activities increased at the end of 2016 by 35.6% compared to 2015.
Ozalp revealed that the General Extraordinary Assembly of the bank approved on 22 March 2017 the using of EGP 450m from the profits achieved by the bank at the end of 2016 to increase the bank’s capital from EGP 1.25bn to EGP 1.7bn—an increase of 36%—and it also approved increasing the authorised capital to EGP 1.5bn to EGP 5bn.
Ozalp noted that the bank has acquired BLOM Bank Lebanon and Al Mahgar, and Banque Misr Romania, which follows BLOM’s profit policy of increasing capital to support the bank’s financial position and increase its capital adequacy ratio and capital base.
Increasing the bank’s capital raised the capital adequacy ratio to 18.39% in 2016, compared to 13.85% in 2015.
Ozalp noted that corporate loans portfolio increased by EGP 3.151bn by the end of 2016—an increase of 51% compared to 2015—while the retail portfolio increased by 30.8%, despite the lending controls set by the Central Bank of Egypt (CBE) and the price hikes following the flotation of the pound in November.
As for the real estate finance activity, Ozalp explained that the bank activated a unit specialised in marketing for the real estate financing products, and the bank is focusing on implementing the CBE’s initiative for financing low and middle-income people—increasing the size of the loans directed to the sector during 2016 by 86% compared to 2015.
He added that the bank expanded the activation of the CBE’s initiative to support young people and the promotion of SMEs. The loans that are provided to finance SMEs represented a 14% ratio from the total direct and indirect credit portfolio by the end of 2016.
He added that the amendments made by the CBE on the definition of these projects in March 2017 raised the percentage to 24% of the total of the loans portfolio.
In terms of the growth rates in 2017, Metwally said that the bank was capable of specifying a growth ratio of more than 15%, but it follows a balanced plan in light of the circumstances of the market following the flotation of the pound and the many successive variables—noting that the plan will be reviewed moment by moment.
In terms of the bank’s plan on the level of geographic expansion, Ozalp said that the number of bank branches reached 34 by the end of 2016, and the bank plans to open eight new ones by the end of this year in Smouha in Alexandria, Mostafa El Nahhas, Mit Ghamr, Sheraton Buildings, 6th of October City, El Shams Club, Giza, and New Cairo.
BLOM Bank Egypt received the approval of the CBE to operate as a national agency to the Arab Trade Financing Program (ATFP), a joint Arab financial institution that targets the development of Arab trade. This service has been activated, and the funding has already been provided to the bank’s customers in light of this programme, said Ozalp.
The bank so far attracted $100m following the liberalisation of the exchange price on 3 November 2016, and this amount was injected to finance the import operations of essential goods.
The bank gave priority to providing the foreign exchange for goods stacked in ports, then the importation of the essential goods. The bank was the first bank to inject dollar liquidity in the interbank market, which pumped roughly $10m in that market.
Metwally said that the bank resolved the problem of the temporary facilities obtained by its customers in foreign currency before the flotation of the pound. He explained that debts of only six customers are more than $4m, and they have covered those debts in local currency at a 110% ratio according to an exchange price of EGP 18 per dollar.
The bank possessed open centres in dollars worth about $3.5m, and the flotation of the pound led to the bank’s loss of EGP 30m due to closing these open centres. The bank offset the loss with the foreign exchange profits achieved by the bank, which reached more than EGP 30m.
According to Halabi, the bank has implemented the strategy approved by the bank earlier for the development of computer systems in terms of devices and software. He noted that they established and equipped the information security management, which aims to secure the bank from any fraud attempts on top of its role in securing the bank’s data.
He added that the bank continued to update network protection devices and systems from intrusion for the purpose of securing customer information and data from any possible electronic attack. The bank also cares about updating its equipment to enhance the efficiency and the ability to deal with the modern software, in addition to providing all branches with backup communication lines, updating the internal communications system, and updating the hotline systems to improve the quality of work and to resolve customers’ queries as fast as possible.
BLOM Bank Egypt updated the software used for the retail banking sector in collaboration with Microsoft Corporation and is also preparing to issue prepaid cards and to activate the internal deposit transfers through ATMs.
The bank will launch the transfer service through internet banking and will launch the bank portfolio in June.
According Ozalp, the bank’s management cares about the human resources and considers it one of the basic pillars of the banking industry. In 2016, several specialised training programmes were implemented to enhance the efficiency of the employees and to develop their skills in various fields—through specialised training centres in Egypt and abroad, in addition to continuous internal training at the bank.
A training programme was also held for members of the board of directors by a foreign expert through the Egyptian banking Institute.
In terms of social responsibility, Ozalp said that the bank took part in supporting some of the various activities that target the development of the local community at a value of EGP 6.375m.