International Finance
Banking and Finance Magazine September-October 2019 Issue

Solid finances drives Bayt El Khebra’s growth in Egypt

Bayt El Khebra’s growth
With a commanding leadership in Egypt’s financial services market, Bayt El Khebra eyes overseas opportunities

Initiative and national commitment were the principles on which the founder of the Bayt El Khebra Group, the late Abdullah Salam, founded the company when he issued the first commercial register in 1949, after some years of starting his business. The group later diversified its activities. Bayt El Khebra made several investments in infrastructure including contributing to steel structure works for power plants and providing equipment for the launch of the agricultural mechanisation project in Egypt’s countryside. The investment in agricultural equipment was based on Abdullah Salam’s belief that agricultural mechanisation is essential for the community.

In Abdullah Salam’s opinion, energy security was a critical factor for the growth of the national industry and he initiated a plan to provide all the necessary steel structures for the power plant of a major Egyptian iron and steel giant company in cooperation with the German company AIG. He also joined the efforts of businessmen and companies that developed projects to contribute to the requirements of war in 1973.

He continued to be committed to the society till the end of his seventies through charitable and social affairs until he passed away in 2006. Abdullah Salam set an example for Bayt El Khebra to follow and Bayt Al Khebra today follows the model that he established. The current leaders of Bayt El Khebra tell International Finance that they are always aware of the present opportunities and challenges, and respond to them based on the company’s founding principles.

So, each generation transfers its expertise to the next to remain strongly in the forefront of the economic advancement of Egypt. Bayt El Khebra’s leaders tell International Finance in an exclusive interview how the company with its unique way of dealing with each customer, has established its current leadership position in Egypt’s financial services sector.

International Finance: What is the contribution of non-banking financial companies in Egypt’s economy and how did Bayt El Khebra achieve leadership in this segment?

Bayt El Khebra: Compared with the financial services provided by the banks, the contribution of the non-banking financial companies is not so big in Egypt. This is due to the nascent nature of these companies in the financial services field and this is why their contribution to Egypt’s economy is still modest. On the other hand, these companies show high growth rates compared to established companies.

Bayt El Khebra achieved leadership in this segment because of its specialised policies for the sector compared to the other companies operating in the same segment. Bayt El Khebra follows a policy of providing financial services to its customers in the shortest time, besides being ever ready with liquidity, whatever the value of the credit facilities needed by its customers.

International Finance: Bayt El Khebra is known for its solid financial position. How did achieve this position?

Bayt El Khebra: Bayt El Khebra does not deal with all kinds of customers. We choose to deal with the elite customers. Bayt El Khebra engages these customers after comprehensively investigating their financial position, reputation, the back log of their financial activities, and their dealings with other banking and non-banking institutions.

Bayt El Khebra deeply studies each credit case covering all aspects of the case. We do not take a credit decision before knowing well that the repayment of the credit facilities are fully guaranteed. This is the reason why there are no non-performing loans at all on our books, and we never had to enter into legal action with anyone of our customers. However, if any of our customers are facing a financial problem, we help them recover their position by helping them solve the crises and difficulties they are facing. The integrated services that Bayt El Khebra provides for its customers helps differentiate us in facing all the financial needs of our customers including leasing, factoring, mortgage, economic consultation, project management, and crisis management.

International Finance: Could you please provide us some examples of the tailored and customised financial solutions that you provide to customers?

Bayt El Khebra: If we refer to the factoring financing sector, you will find that we offer tailored and customised diversified financial solutions to our customers. We have three customised programmes under the factoring business that fit to the needs of each customer. The first is techno factoring which is provided to customers with high volumes of credit cases. The second is easy factoring for lowest volumes with other conditions that fit with this is kind of factoring programme. The third programme is the fast factoring programme that targets other kinds of customers by holding protocols with their clients using a certain amount that helps them deal with guaranteed suppliers.

International Finance: What are the range of services that Bayt El Khebra provides in engineering consultation and project management?

Bayt El Khebra: Bayt El Khebra has two financial and investment arms. The financial arm consists of three companies: leasing, factoring, and mortgage businesses through diversified financial programmes. The investment arm also consists of three companies that specialises in economic and engineering consultation besides project management and crisis management.

We provide diversified and integrated financial services to our customers – the needs of our customers do not stop with the financial solution. So, we extend services to fulfill all their other needs as well. This is why besides dealing in financial instruments, we provide engineering consultation and project management services to our clients.

Bayt El Khebra is committed to a strong partnership with all its customers from full support through evaluation and analysis to offer solutions and alternatives to helping promising projects to take off and adding to the list of successful projects in Egypt. We try to help the pioneering entrepreneurs succeed in their fields.

International Finance: The contribution of the real estate finance system to the real estate industry in Egypt is low compared to other countries. How does Bayt El Khebra plan to revitalise the real estate finance sector in Egypt?

Bayt El Khebra: Bayt El Khebra is currently studying the way to activate services in real estate financing through the company that it established for this purpose. This type of financial solution currently faces legal obstacles such as the percentage limit of the investor revenue compared to the value of the installment that the investor has to commit to pay periodically. On the other hand, the Bayt El Khebra’s policy is to deal with a certain volume in each financing case, and by following the legal limit, we will obliged to deal with very small volumes of credit cases, which goes against our policy. We are expecting changes to some of the recent laws that are considered to be obstacles to activating mortgage financing in Egypt.

International Finance: What is your outlook for the factoring business in Egypt? How has Bayt El Khebra Technofactoring performed in the Egyptian Market?

Bayt El Khebra: The factoring business is growing day by day in Egypt, and at Bayt El Khebra we are expecting a substantial growth rate in factoring this year. We are targeting our existing leasing customers and covering factoring activities for them by providing them more liquidity through factoring their financial rights against others. The factoring business at Bayt El Khebra grew by at a 100 percent rate in 2018 compared to 2017.

We offer integrated financial services including working capital financing, credit risk protection, and receivables management and collection, by equipping sellers and the buyers to deal with open accounts in export and import operations without the need to open bank letters of credit. We do this by providing a liquidity ratio of up to a similar amount of the value of financial rights in certain cases.

International Finance: What is your outlook for the real estate development market in Egypt?

Bayt El Khebra: As we said before, we are waiting for the removal of the legal obstacles facing real estate financing through a new mortgage law. At the same time, we are studying proposals to activate the real estate financing business. One of the proposals is to establish protocols with real estate promoters who offer programmes to their customers in short term finance, and we then offer longest term finance to them in collaboration with the promoters.

International Finance: Egypt’s central bank has decided to provide mortgage finance to mid-income homes to drive more real estate development in Egypt-will Bayt El Khebra’s real estate development business benefit from this move and how?

Bayt El Khebra: No, we did not benefit from this move as this privilege is directed to low and mid-income customers who are not our targeted customers, as it is our policy is to deal with a minimum number of customers with high volumes of credit cases.

International Finance: Will the government’s new initiatives help expand Egypt’s tourism sector and what are the positives that Bayt El Khebra Technotour’s business sees?

Bayt El Khebra: Certainly, the government’s new initiatives will help expand Egypt’s tourism sector. One of Bayt El Khebra’s unit companies is working in the field of planning, and establishing residential communities as well as establishing and managing tourist villages and hotels. We believe that the future of Bayt El Khebra’s Technotour’s business is promising in Egypt after it achieved a very high growth rate last year.

International Finance: Could you please us more about Bayt El Khebra’s new EasyLease Programme?

Bayt El Khebra: Bayt El Khebra Group has a launched the EasyLease programme targeting smaller finance lease contracts with a maximum value of EGP50 million ($ 3 million) per contract in response to the expectations of many customers who wish to deal with Bayt El Khebra Group. This shows the group’s commitment to developing new and integrated financial tools to deal with customers, whether for fixed assets or current assets and also our commitment to financial inclusion, which is one of Egypt’s priorities as a nation.

International Finance: What are Bayt El Khebra’s plans for innovation in the payments and microfinance space?

Bayt El Khebra: With regard to the payments space, Bayt El Khebra is following the new non-cash instruments payments law No. 18 issued in 2019, which stipulates payments to be by non-cash transactions if the transaction is within a limit that the law will fix when it is issued. As for the microfinance space, Bayt El Khebra Group is analysing the proposal to establish a company for microfinance and payments, this shows the group’s commitment to developing new and integrated financial tools for its customers, whether for fixed assets or current assets, to drive financial inclusion in Egypt. This will be achieved through the financing of small and medium enterprises (SMEs) and microfinance.

International Finance: What are your future expansion plans for the MENA region and Asia?

Bayt El Khebra: We are planning a major launch on the national, regional, and international levels, with new ideas to increase the scope of the group’s contributions. This will be done by investing in successful global companies to increase market share in their business segments. The aim of such a step is to strengthen the group’s share of the national and international markets in those segments.

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