Fatma Lotfy, vice chairman and managing director of Bank Audi – Egypt, believes that Islamic banking will have a larger share in the upcoming period through the expansion of Islamic finance for companies as well as small and medium enterprises and retail banking.
Lotfy told Amwal Al Ghad that Audi bank is considering a range of funds corresponding to the regulations of Islamic law, in several sectors such as steel, fertilizers, petroleum, pharmaceutical and education. She added that the bank is awaiting the approval of both Financial Supervisory Authority (FSA) and the Central Bank (CBE) to launch Islamic investment fund “Mizan” or “Balance”.
Firstly, what are the main features of Audi – Egypt’s strategy?
Bank’s strategy focuses on expanding within the Egyptian market through two main categories; First, the Islamic banking, which we seek to support in the coming years amid all sectors, whether related to large companies’ credit or small and medium enterprises (SMEs), as well as offering new banking products complied to Islamic rules & sharia such as Murabaha, Ijara and Istisnaa.
Second trend is resuming with supporting all business services to clients through expanding in syndicated loans to large companies as well as small businesses and retail banking, so we can meet all the needs of customers and also to attract more segments. The bank’s strategy also focus on funding a range of sectors, most notably is steel, petroleum, food, and medical sector.
Do you expect Central Bank will activate new Islamic financing instruments?
Central Bank is currently reviewing some of Laws related to the mechanisms of Islamic finance especially Sukuk, several workshops are being held to reach an optimum way to issue such instruments. The Financial Supervisory Authority (FSA) finalized all related procedures, and I expect a positive response from customers. Central Bank of Egypt is expected to issue those instruments in the Egyptian pound as the first phase then it will be issued in major foreign currencies.
Do you study new Islamic investment instruments?
Bank Audi targets in the coming period to launch an Islamic Fund entitled “Mizan” “Balance”, which is expected to obtain approval from both FSA and central bank during the next few days. “Islamic funds” is seen as the financial instrument which succeeded to balance between the capital market and direct investment.
Central Bank allows banks with Islamic license to provide many products that are compliant with Sharia, most notably Istisnaa, Murabaha and Mudaraba, as well as Ijara.
We have a strategy to expand in corporate finance, in accordance with the provisions of Islamic laws through our specialized department. Also we study supporting many companies operating in major sectors.
Do you plan for new saving schemes?
We are already studying the launch of a range of saving products with different terms, in addition to products in retail banking; compliant with Islamic sharia. Those products will be provided to clients with an attractive return which may exceed the return on commercial banks’ savings products.
We also launched Muraha on Auto finance which is expected to meet high demand during that period.
Highlight the main features of Audi’s estimated 2012 budget?
Estimated budget aims to focus on financing small and medium enterprises in all sectors, most notably in the oil & gas leasing, and to double the size of this sector’s portfolio especially after the bank has recently signed a number of contracts with the Social Fund for Development (SFD) to support such projects.
Budget targets the activation of mortgage department in the bank to enhance service offered to customers based on long and competitive terms up to twenty years, as well as supporting real estate financing for low-income people, which has been agreed up on with a number of developers.
Will Decreasing credit rating of Egypt affect your investment in government debt instruments?
Reducing the credit rating of Egyptian economy is a natural progress of the current political fluctuations that followed the 25 January revolution which greatly affected the volume of foreign banks and institutions investments in Egypt. This will lead banks to face difficulties in issuing many funding instruments such as letters of credit (LC) and letters of guarantee (LG).
All of those factors are not enough to drive us or any bank to retreat from government debt instruments, particularly as it is considered one of the aspects of investment used by banks in most countries of the world.
Add to this that the rating of banks with major investments in government debts instruments will be highly affected, Although I believe that Egyptian economy will regain its position once political status witnesses stability, especially that International Monetary Fund $ 3.2 billion loan will lead to a gradual improvement in credit rating.