Oct 26, 2009

CAIRO (Reuters) - Commercial International Bank (CIB) said on Monday that Egypt could be approaching a "breakthrough" in consumer banking demand within five years and that the bank was expanding its capacity to capitalise on it.

CIB Chairman Hisham Ezz al-Arab, said that Egypt's biggest private bank by assets would focus on organic growth, not acquisitions for now, as it expanded its modest retail business and met renewed corporate demand for borrowing.

CIB, which has long focussed on corporate customers, has been building up its retail business, although consumer lending still makes up only about 10 percent of total assets, reported as 63 billion Egyptian pounds as of June 30.

Household debt was equivalent to just 10 percent of Egypt's gross domestic product, while some comparable emerging markets which had already been through an expansion in retail banking had levels of 40 to 60 percent, Ezz al-Arab said.

"If the breakthrough happens today, in three to five years' time we could have 20 percent. But it takes time," he said.

"The natural progression that happened in other emerging markets and in mature markets in consumer lending is happening here," he said, adding that the bank was investing in technology and training to have new retail processes in place by late 2010.

Analysts say Egypt, with 77 million people and a cash-dominated economy, is ripe for expanding retail banking.

Ezz al-Arab said Egypt had very few targets for acquisition on which it was worth spending his bank's limited resources.