Chairperson of the Agricultural Bank of Egypt (ABE), ElSayed ElKosayer, said that the SME portfolio accounts for 61% of the total loan portfolio of the bank.
In his interview with Daily News Egypt, ElKosayer explained that the bank’s credit portfolio reached EGP 30.6bn at the end of June 2019. “SME portfolio amounted to about EGP 19bn and were granted to about 900,000 customers. It is the third-largest Egyptian banks financing portfolio for small and medium enterprises,” he told Daily News Egypt.
In regards to the development of the bank’s restructuring plan, he said that a major company has been contracted to facilitate technical infrastructure development and to establish electronic banking.
Daily News Egypt interviewed ABE chairperson to find out the bank’s latest updates, farmers’ debt, and plans.
The Central Bank of Egypt (CBE) is interested in SMEs finance, to assure that banks reach the goals of the initiative launched four years ago, what is ABE’s stance on these projects?
The SME portfolio accounts for 61% of the Bank’s total loan portfolio, even though the CBE’s initiative provides 20%, so the bank was able to achieve the CBE’s goals and surpass it.
The bank’s credit portfolio reached EGP 30.6bn by the end of June 2019, of which about EGP 19bn was for small and medium enterprises, granted to about 900,000 customers. It is the third-largest financing portfolio in an Egyptian bank for SMEs.
While crop loans amount to about 30% of our total loan portfolio, equivalent to about EGP 8bn, which has been pumped to about 700,000 customers.
I would also like to point out that the majority of ABE’s clients belong to microfinance segment, as the financing provided, either from the credit portfolio or through CBE and the Micro, Small and Medium Enterprises Development Agency (MSMEDA), are directed mainly towards micro-enterprise clients.
A few days ago, the bank signed a cooperation protocol with the World Food Programme (WFP) to support and develop agricultural development projects with economic returns and provide the necessary financing for the owners of these projects in the Egyptian countryside.
Accordingly, the bank will provide financing services to entrepreneurs, to contribute to the financing of their projects, within the framework of multiple financing programmes in the Bank, and under the terms and conditions specified in each financing programme.
ABE will also raise bank awareness by participating in the WFP training seminars for beneficiaries, as well as providing small farmers with electronic solutions that will facilitate their integration into markets and achieve greater financial inclusion.
What about the national veal project?
The total funding granted by the bank under the national veal project amounted to about EGP 730m, which was granted to 5,141 customers, to finance the purchase of 52,000 cattle. The funding was provided by the Ministry of Finance as part of CBE’s initiative to fund SMEs.
What about the bank’s efforts to help the country achieve the goal of digital transformation and shift to e-payments?
The first pillar of the strategy of the ABE focuses on restructuring and developing the technological infrastructure. This will be in line with the state’s vision of a digital economy, the CBE’s transformation into a cashless society, and create digital products and services that address the youth.
To achieve this, the bank contracted with a major company to facilitate the project’s technological infrastructure development and the establishment of the banking system. Ernst & Young won the tender of the bank, competing with four companies, to be a financial advisor for development.
In parallel with the implementation of the restructuring project, the bank’s management sought to develop a set of technological factors to develop banking operations, without waiting for the completion of the technological infrastructure project.
Networks, communication lines, and computer systems have been increased to launch the bank’s business, with the help of electronic payment companies such as Fawry and e-Finance.
Moreover, the bank issued 620,000 Meeza cards, which have been activated, and the bank aims to issue 2.5m cards within three years, in line with the state’s policy to shift towards a digital society and support electronic payments.
It is also preparing to issue a smart wallet to enable customers to pay their bills through their smartphones, which would help the bank spread its services through its network of branches across the country, which now amount to 1,210 branches.
In terms of the bank’s assets, what are the latest developments?
Accounting for the assets of the ABE in Egypt is also at the forefront of the bank’s concerns and has been finalised accurately, whether these assets are owned, leased, exploited, or unused.
The proceeds from the sale of some of these assets will be used to cover the costs of the bank’s development and restructuring project that requires financial resources for expenditure.
What are the management’s main priorities in the time being?
The bank’s management is working on changing the bank’s image within the client’s mind as a bank specialised in agricultural loans only. Therefore a strategy has been developed to introduce and provide new banking products and services as well as develop existing products.
The Bank has succeeded in adding new customers as a result of diversifying its services, such as the irrigation and drainage development projects, in addition to participating in various programmes in the CBE’s initiative for small and medium enterprises, and the launch of “Bint Misr” to finance female entrepreneurs.
Also, we have developed new frameworks to update the current work systems, restructure departments and establish specialised departments and sectors such as inspection and control sectors.
The bank has also made human capital a top priority through its new training courses involving all the bank’s staff. We are hoping that the training helps us cultivate the second row of staff to work with the Bank’s management in development projects.
The budget for training has reached EGP 35m this year, with a flexible margin allowing increases depending on training needs.
What about the problem of farmers’ debt, what will be the bank’s policy in dealing with this issue?
A team has been assigned to follow up the work of non-performing loans settlements with defaulted clients, depending on the nature of each case.
Settlements were made for 421,000 customers worth EGP 2.9bn during the fiscal year ending June 2019, including EGP 1.1bn worth of settlements for 13,600 customers within the CBE’s initiative.
These settlements were reflected in the decline to 12% in the rate of non-performing debts of the bank’s total credit portfolio, compared to 20% before we started managing the bank in April 2016.
What is your vision for ABE?
With the completion of the technological infrastructure development project of the bank. ABE, with its network of branches, will be preparing for a new future.
We will start to reap the benefits of development in all areas of the bank’s business soon, and clients will feel the impact of what has been achieved.
The bank, with its 1,210 branches, representing 27% of the banking units in the banking sector, and a customer base of more than three million customers, is a key partner in all financial inclusion activities launched by the CBE, as the bank adds thousands of targeted customers to its customer base. The state’s approach to integrating their activities into the formal economy is achieved through their dealings with the bank.