Bank Audi plans to
expand foreign footprint

Eyes UK and sub-Saharan countries

Bank Audi is planning to have its foreign entities constitute 60 percent of its consolidated activity. Around half of the bank’s activity has been derived from its entities outside the local market.

Freddie Baz, Group Strategy Director and Vice Chairman, said: “Our aim is to make Audi’s share in the local market between one third and 40 percent of the total group profile.” The goal behind this is to expand the bank’s portfolio outside and reduce the impact of the local bank’s results on its total activity.

The implementation of the strategy has begun, as the latest accumulated results till the end of September have shown. Total assets amounted to $42.4 billion, almost half of which come from outside the country and 32 percent from investment grade countries. Total customers' deposits reached $35.8 billion, 45 percent of which are from entities outside the local market. Out of the $17 billion in loans to customers, around 65 percent is from entities outside the local market. Net profits in the first nine months grew by 8.7 percent to $304 million, 46 percent of which came from other countries.

Turkey and Egypt branches are considered Audi’s challenger bank profiles, according to Baz. A challenger bank profile is a bank that has very little means deployed in the market but is over efficient in acquiring more customers and accounts than its peers. “Our operating expenses as a percentage of average assets are 1.9 percent, whereas the average for the industry and our peers is 3.5 percent.”

Audi’s total assets in Egypt are valued at over $5 billion and in Turkey, at close to $10 billion. The size of the Gross Domestic Product (GDP) and the growth recorded in Turkey and Egypt have helped widen the bank’s profile there tremendously. “Turkey’s GDP is estimated at around $800 billion and Egypt’s is at around $270 billion, compared to Lebanon’s, which is $50 billion,” he said. Even though Turkey has been facing some challenges in the past two years, real GDP growth reached three percent. Considering the inflation rate, nominal growth in Turkey reached $100 billion. “Even in a difficult year in Turkey, achieving a mere one percent growth would add several hundred million to our portfolio there,” he said.

According to Baz, after achieving Audi’s market share in these challenger profile countries within the next two to three years, the bank will target the opening of new branches in northern Iraq. “Some 25 percent of Turkey’s trade balance with the Arab world, amounting to $50 billion, is with northern Iraq,” he said. Bank Audi is also planning to go to the UK and sub-Saharan countries. “We don’t have a physical presence there but we operate in 30 countries through our local desks,” he said. The cumulative turnover from the sub-Sahara is $2 billion, according to Baz. Bank Audi is eying an expansion to Senegal, Ivory Coast, Nigeria, Gabon, and Angola. “These five countries have been a main pillar of our business in Africa and we plan to expand our presence there in the future,” he said.

A few years ago, Bank Audi was planning to split its activity equally between its local and foreign presence, according to a previous interview with Baz.