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 ($11.5 billion) 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.

"Our focus really is using our resources organically for the time being," he said at the Reuters Middle East Investment Summit.

CIB broke off talks in 2008 on a merger with Cairo-based Arab African International Bank.

"So far, we can't see something that is screaming cheap and has a low integration cost. Pre-2008, we were seeing the world differently," Ezz al-Arab said, adding that the bank had since reassessed priorities and how to target its financial resources.

Speaking about the bank's corporate business, Ezz al-Arab said appetite for borrowing by Egyptian firms was returning.

"The financial crisis stopped corporates from making investments in late 2008 and early part of 2009," he said.

"Now we see them back ... Loan applications are growing. This means they feel much more confident about the future, but not like back in 2007," he said, adding that non-performing loans at his bank had decreased and companies had rarely sought delays in loan repayments.

Ezz al-Arab said CIB planned to distribute at least part of its earnings to shareholders in shares rather than cash dividends and had applied to the regulator to increase its authorised 500 million shares to do so.

"I think we will put it up to 2 billion shares. We don't want to go back every five years. We want to do something for 10 years from now," he said.

The bank now has 292.5 million shares outstanding with a nominal value of 10 pounds each. On Sunday, CIB's share closed at 56.56 pounds on the Egyptian Exchange. (Reuters) 

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