Cairo-based Arab African International Bank (AAIB) is heading for a sharp recovery in profits in 1997 after a provisions-affected fall in earnings last year. The bank is also planning several new initiatives to expand its investment banking activities, including plans to set up Egypt’s first index fund.
The bank, which has special offshore status in Egypt, has announced unaudited net profits of $6.7 million for the first half of 1997, compared with $5.6 million audited net earnings for the whole of 1996. Last year’s profits were affected by $17.2 million in provisions, which managing director Ahmed Elbardai says were necessary to strengthen the balance sheet. Total assets increased by 18 per cent to $966 million in January-June 1997, although net loans and advances fell slightly to $328 million. Analysts say the bank is in a good position to increase its lending in the coming period following its issue of £E 300 million ($88.5 million) in five-year bonds in March. Elbardai says the bank is looking in particular at increasing its corporate lending, taking advantage of its strong capital base.
Elbardai says he wants AAIB to take a much more active role in the capital market. The bank is soon to launch an index fund, expected to track either the EFG or the Hermes stock market indexes. AAIB has also applied for a portfolio management licence, and is setting up a custodian unit.
Elbardai moved to AAIB from Citibank at the end of 1996. He attracted some controversy in the local press by making radical changes to the staffing structure. Elbardai says the aim was to strip away bureaucracy, promote talented staff and hire top rate new recruits. Salary scales have been increased to close to the highest levels in the sector. He adds that the labour courts have ruled that the bank acted lawfully in this matter.
AAIB is owned by the Central Bank of Egypt and the Kuwaiti Finance Ministry (49.37 per cent each) and other Arab interests. It was founded in 1964 according to a special Egyptian law.