Housing & Development Bank Investor Presentation Half Year 2019 9 Month-2019 November 2019
Disclaimer • In this presentation Housing and Development Bank (HDB) may make forward looking statements, including, for example, statements about management’s expectations, strategic objectives, growth opportunities and business prospects. Such forward looking statements by their nature may involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by these statements. Examples may include financial market volatility; actions and initiatives taken by current and potential competitors; general economic conditions; and the effect of current, pending and future legislation, regulations and regulatory actions. Furthermore, forward looking statements contained in this document that reference past trends or activities should not be taken as a representation that such trends or activities will continue. • Housing and Development Bank (HDB) does not undertake any obligation to update or revise any forward looking statements. Accordingly, readers are cautioned not to place undue reliance on forward looking statements, which speak only as of the date on which they are made. • This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any securities or interests described within it in any jurisdiction. We strongly advise potential investors to seek financial guidance when determining whether an investment is appropriate to their needs. Note: Rounding differences and figures may appear through out the presentation. 2
Content • Historical overview • Business review • Financial review Stand Alone • Stock • Coverage • Contact Us 3
A progressing commercial bank with an attractive real estate flavor; your window on two sectors 4
Historical overview 5
Our Start • Egypt’s Housing & Development Bank was established 40 years ago; in 1979, as an arm of the Ministry of Housing. At the time of its launch it had a clear mandate to finance moderate housing units for Egyptians, while also bridging the gap between supply and demand in the nation’s real estate market. • By the late 1980s & 1990’s HD Bank had already successfully concluded many flagship developments, which brought new housing units to many urban communities and strategic investments in the country’s northern coastal resorts. 6
Ownership Structure Shareholders Structure 24.4800% 29.81% 9.74% 5.03% 5.03% 6.32% 8.92% 7.41% 8.29% New Urban Communities Authority (NUCA) Egyptian Endowment Authority Misr Life Insurance Company Misr Insurance Company Housing Projects Fund Ali Ben Hassan El Dayekh REMCO Egypt - Abdel Moneim El Rashed Free Float 7
Our Transformation • In 2003, Egyptian banking law 88 prohibited the existence of specialized banks in Egypt, and HDB was restructured to become a conventional Commercial bank, with a new management appointed. The bank nevertheless still owns several plots of land which will be developed into commercial and residential projects for sale. • The New Management implemented a five-year plan to turnaround the bank that started in 2003 till 2008 and in 2009 a new 5 year plan was set in place till 2013. However, due to the political & economic situation the implementation time line was extended till 2017. Then a new 5 year plan focused on heavily investing in new IT systems, renovating its branch network and increasing its marketing efforts. HDB currently has a branch network of 88 branches based on Full Year Q3-2019. Plus, a new 5 year Strategic plan from 2018 till 2022 was set in action. As a result we became: • A growing commercial bank in the Egyptian market. • Upgraded the human capital of quality to support the growth of both the banking and real estate businesses and capitalizing on strong ICT Platform. • New Bank products and Real Estate Projects continue to be the key at increasing our growing client base & performance based on top notch IT. 8
Our Journey 1979 1993 2003 2006 2010 2013 2014 Participation in Introduction of Founded in 2003: Paid-in capital Continued the CBE 1979 as a stage I of the Introduction increased to growth of In 2006 Mortgage specialized new IT system of new provided an EGP 1.2bn real estate Finance Initiative entity for integrated to streamline banking through a investments for Medium & banking real estate performance private law 1993: raised Low Income system to development placement and cater to the Housing paid-in Bank & retail sector portion through Increased capital restructured, provision of HDB`s ESOP street visibility increased Increased street housing units to EGP Raised: paid- through First time non- to different focus on visibility through 54mn in capital increased Egyptians sectors of the increased growth of core increased to economy allowed branches, branches, ATMs banking EGP 500mn 2000: raised and POS through ATMs and ownership of business paid-in existing HDB shares; POS Initial capital Further shareholders capital to their ownership of Started the expansion in EGP reached 20% restructuring of EGP 18mn real estate Increased real In 2009 122.3mn Hyde Park Vitalized the development investment in estate through Development Hyde Park corporate to be carried activities, Registered existing after using the Development identity on out through investment shareholders Equity Associate campaign subsidiaries EGX in 1983 reached method EGP 912 mn 9
Our Journey 9 Month 2018 2015 2016 2017 2019 Participation in Participation in Participation in the CBE SME’s the CBE the CBE lending initiative Mortgage SME’s lending that lends loans Finance initiative that with a 5% Allotted another Initiative for lends loans Allotted another interest that have EGP 300 Medium & Low with a EGP 1,3 Billion reached 12% out million under Income Housing under the CBE subsidized 5% of the 20% the CBE and becoming interest rate. Mortgage required by 2019. Mortgage number 1 Finance Finance market share Initiative Market Leader Initiative among peers. reaching a total Allotted another in CBE reaching a total of EGP 4,9 EGP 1 Billion Mortgage of EGP 5,340 Billion to more under the CBE Increased street Finance Billion to more than 54,309 Mortgage visibility through Initiative with than 58,620 clients. Finance Initiative increased EGP 2,0 Billion clients. reaching a total branches, ATMs as of Full Year of EGP 3,6 and POS 2016 Billion. 10
Board of Directors Chairman Fathy El Sebai Vice Chairman & Managing New Urban Egyptian Housing Misr Independent Director Communities Misr For Life Awkaf Financing Insurance Board (Executive) Organization Insurance Organization Fund Company Member Hassan Ghanem 4 Members 1 Member 1 Member 1 Member 1 Member 1 Member Total Number of 11 Board Members 11
Corporate Governance • Board composition: 1 Executives and 10 Non-Executives • 9 Board Committees meeting on a regular basis, namely: Ø Audit Committee Ø Risk Committee Ø Remuneration Committee Ø Governance & Nomination Committee Ø Executive & Operational Committee Ø Investment Committee Ø Engineering Committee Ø IT Enhancement Committee Ø CSR & Donations Committee • Remuneration Committee comprised of the main shareholders and independent Board Members • Independence of Compliance, Internal Audit and Risk Management functions • Functioning Committees ensure that HDB Management fully complies with all regulatory requirements as well as internal policies ensuring strict adherence to best practices with respect to our Stake holders like clients, employees and third parties dealings. 12
Our Organization Chart Chairman Technical Office Board Affairs Board Of Directors Vice Chairman & Audit Committee Managing Director Risk Committee Remuneration Committee Assistant Managing Assistant Managing Assistant Managing Head of Legal CRO Director for Corporate Director for Retail Director for Banking Department Governance & Banking, Treasury & Banking Operations Nomination Committee Syndications Assistant Managing Director Executive Committee for Engineering & Planning & KPI Security Mortgage Finance Investments National Housing Investment Department Department Department Projects Department Committee IT Security & Governance Engineering Human Financial National projects PR & Marketing Committee Resources Department Digital Reservations Department Department Internal Audit IT Enhancement Department Committee Customer Investor Relation Support & Follow Financial Control CSR & Donations Corporate Protection Department Up Department Department Committee Governance Department 13
What We Aim For Our Vision To be within the top 10 ranked commercial banks in Egypt, while maintaining the current high operational efficiency. Our Mission Search for excellence in providing our commercial & real estate products through the continuous upgrade of our human capital and we strive to excel in providing our services to meet our clients and shareholders expectations. 14
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