Abu Dhabi Islamic Bank (ADIB) is coming into its own in Egypt. After successfully completing a long-term restructuring process following the 2007 acquisition of a sizable stake (49%) in Egypt’s National Bank for Development (NBD), ADIB Egypt is claiming its place at the head of the pack of a small number of rapidly growing fully Shariah compliant banks operating in the Egyptian market.
Currently, ADIB Egypt is among the largest Shariah compliant financial institutions operating in Egypt. It employs a team of over 2,000 experts, providing a comprehensive range of banking and financial services through a nationwide network of 70 branches, 39 microfinance units and 68 ATMs across 19 governorates. The bank this year won two prestigious awards from Islamic Finance
news including Best Islamic Bank in Egypt (for the third consecutive year) and Best Islamic Private Bank (for the second year running).
If numbers are any indication, 2013 looks to be the bank’s most successful year yet. Despite the economic, political and social uncertainty Egypt has witnessed, ADIB Egypt has stayed focused and committed to making good on its promise to provide ethical, reliable and affordable Shariah compliant financial services while expanding and integrating into the broader financial sector. ADIB Egypt’s most noteworthy accomplishments in the first nine months of 2013 include posting a net profit, for the first time since the NBD acquisition, of EGP68.8 million (US$9.97 million); increasing its capital adequacy ratio to 11.28%, which has helped the bank meet the Basel II criteria; and increasing the bank’s financing portfolio by EGP880 million (US$127.54 million) to reach EGP6.2 billion (US$898.56 million), marking a growth margin of 16.5%. The growth in ADIB Egypt’s financing portfolio was largely achieved as a result of large corporate customers and public sector companies including two landmark syndicated financing deals for East Delta Electricity Production Company and Maridive & Oil Services SAE.
In February, ADIB Egypt announced the signing of the first Shariah compliant financing agreement for the public sector segment in Egypt. The US$110 million syndicated financing agreement with East Delta Electricity Production Company (EDEPC) – the flagship name and arm responsible for electricity production in strategic governorates including Damietta, Port Said, Ismailia, Suez, North Sinai, South Sinai, and Red Sea – came as part of the bank’s commitment to support the national economy despite the economic uncertainty at the time. The bank participated with 18.5% of the total financing amount equaling US$110 million, which was provided through a Shariah compliant Mudarabah product over five years with the participation of Banque Misr, Egyptian Gulf Bank, Baraka Bank, Bank Audi and United Bank.
The EDEPC deal reflected the bank’s strategy to expand into infrastructure projects vital to the continued prosperity of the Egyptian economy. This groundbreaking syndicated financing agreement represents the beginning of ADIB Egypt’s ongoing efforts to increase partnerships with core industries of the public sector by providing the financing necessary for projects. At the forefront of the strategy is supporting the energy sector, which in the words of Nevine Loutfy, CEO and managing director of ADIB Egypt, is: “Supporting the energy sector stands at the forefront of our strategy, as it is a driving force for the entire economy and a prime example of how Islamic finance can be implemented to provide the needs of development projects.”
This is particularly relevant given the importance of electricity and power sector as one of the main industries driving the expansion of industrial projects and catering to the continuous increase in power consumption, both on the household and the mega project levels which, in turn, largely contributes to GDP growth. The EDEPC transaction has opened the door to new financing instruments that can cater to corporate financing needs while introducing the concept of Shariah compliant syndicated finance to the market.
This transaction marked a significant milestone in Shariah compliant finance, being the first syndicated finance compliant with Shariah principles In addition, the innovative EDEPC agreement fostered strategic relationships with public sector entities as well as other banks. This was particularly critical in this period, since it also fostered the confidence in the Egyptian government and the public sector which was essential given the local and regional conditions. This transaction has also positioned ADIB, as one of the primary banks supporting the crucial and strategic electricity sector. The Egyptian banking market is large, with more than 35 banks: however prior to the EDEPC deal, Islamic finance had been limited to bilateral transactions with retail and corporate customers.
Reflecting the bank’s strategy to expand into finance infrastructure projects that are vital to the continued prosperity of the country, in May of this year ADIB Egypt arranged and signed the first Ijarah structure syndication worth US$150 million for Maridive & Oil Services SAE, which is one of the most prominent offshore oil and services company in the Middle East and North Africa, offering integrated business model serving wide spectrum of blue chip oil and gas services companies worldwide. ADIB Egypt, as Initial Mandated Lead Arranger (IMLA) and the Global Coordinator, signed the syndicated facility with its head office; ADIB-Emirates. Arab African International Bank, Banque Du Caire and the Arab International Bank also served as IMLAs, while ADIB Egypt assumed the facility and security agent roles.
Banks received final approvals for US$235 million (a coverage of 160%) however, the company decided to keep the facility at US$150 million, with a top up option to finance the existing capital expenditure (mainly vessels) to meet the increasing demand on its services, especially in Latin America where Maridive & Oil Services SAE had at time won contracts with World Class oil exploration companies.
The Maridive deal was the first Ijarah syndicated deal to ever happen in Egypt and is the second for ADIB Egypt after that of EDEPC.
These innovative syndicated financing agreements are just one way in which ADIB Edypt is making a name for itself as an industry leader. With the objective of being the top tier Islamic bank in Egypt by providing Shariah compliant financial solutions to the Egyptian community, ADIB Egypt’s three-pillar approach to achieving those goals is based on a solid foundation supported by ADIB Emirates: build market leadership, create an integrated financial services group and pursue growth opportunities.
Following the remarkable turnaround in the bank’s achievements in 2013, ADIB Egypt is looking forward to become the pre-eminent modern universal wholesale bank providing a full fledge Shariah compliant product offering and first rate service to various clients segments.
Abu Dhabi Islamic Bank – Egypt
9 Rostom Street, Garden City,Cairo, Egypt.
Hotline: 19951
Website:
www.adib.eg