ِArab Finance: Banque du Caire (BQDC) has attracted strong foreign investor interest in its planned initial public offering (IPO) on the Egyptian Exchange (EGX), according to Hussein Abaza, the bank’s Managing Director and CEO.
Speaking on Enterprise's Making It podcast, Abaza said pre-IPO meetings had drawn interest from institutions and investors in the US, the UK, South Africa, Saudi Arabia, and other Gulf Cooperation Council (GCC) countries.
The engagement extended beyond initial discussions, with investors requesting follow-up meetings and asking detailed questions about the bank’s performance and strategy. Abaza viewed that level of scrutiny as an encouraging indication of serious interest.
Discussions also covered developments in Egypt’s economy, particularly the exchange rate mechanism and businesses’ access to foreign currency. Abaza explained that the availability of dollars to companies and importers mattered beyond the dollar’s exchange rate against the Egyptian pound.
Businesses need foreign currency to import raw materials and production inputs and sustain their operations, he said. The continued availability of dollars through the banking market at different exchange rates had helped strengthen investor confidence, in his view.
Turning to the bank’s performance, Abaza outlined its efforts to lower funding costs by attracting EGP deposits and expanding its base of current and savings accounts (CASA). These low-cost accounts represented 57.5% of total deposits at the time of the interview, up from 30% five years earlier.
EGP deposits grew by 28% in the year preceding the interview, while CASA deposits increased by 44%. Growth in CASA deposits exceeded 53% at branches in rural areas.
That momentum continued during the first six months of the year discussed in the interview, when total deposits rose by 9%. CASA accounted for 86% of the increase, while branches outside Cairo contributed more than 55% of overall deposit growth.
Abaza emphasized the direct effect of lower funding costs on profitability. Using an illustrative deposit base of EGP 300 billion, he explained that a one-percentage-point reduction in deposit costs would generate approximately EGP 3 billion in savings.
Alongside its deposit strategy, the bank redesigned its microfinance product to strengthen risk management and reduce losses. Its microfinance non-performing loan ratio fell to below 3%, compared with approximately 10% a year and a half earlier, according to Abaza.
Microfinance is a profitable business that requires close oversight, given the potential for substantial losses when lending and collection are poorly managed, he said. The revised approach relies on local expertise, regular contact with borrowers, and an understanding of their circumstances and repayment capacity.
The bank also changed its staff incentive system, withholding the commission of the employee who originates a loan until the final collection is completed. Abaza said this makes employees accountable for following up on repayments and maintaining portfolio quality.
He cited a microfinance lending ceiling of EGP 1 million, with typical loan terms ranging from 12 to 18 months.
Looking beyond the offering, Abaza argued that success after 12 months should be assessed through more than the share price. Maintaining regular communication with shareholders, answering their questions, and sustaining trust through disclosure and transparency were also essential.
The bank aims to build lasting investor relationships by clearly explaining its strategy and openly addressing challenges, he said, supporting shareholders’ long-term confidence in the institution.
