Housing and Development Bank (HDB) is awaiting for the approval of the Central Bank of Egypt (CBE) to separate HDB into the commercial bank and the real estate and investment business, according to Chairperson and managing director of the bank, Fathy Sebaey. The HDB board of directors gave preliminary approval in February 2017 to assess the possibility of splitting the bank into a real estate company and a commercial bank. Sebaey said that there are three advisory bodies that submitted bids to advise on the separation, but no decision has been made, pending CBE approval. He explained that once the separation is completed, the bank will be limited to offering commercial banking services, while the assets, lands, and investment companies owned by the bank will be transferred to an investment company formed with the same shareholders of the bank. Sebaey expects the process to be completed within 9-12 months. Sebaey said that investors have always been keen on investing in HDB, but would refrain due to the real estate business. Sebaey said that each shareholder in the bank will own the same stake in the new company. Sebaey said that the contribution of the separated business is less than 25% of the bank’s earnings, and the effect on the bank’s performance should not be significant. He pointed out that the bank postponed the acquisition of an exchange bureau until the separation is completed. He also stated that the bank’s financial leasing company will be revived soon. On a separate note, the financing granted by HDB as part of the CBE’s mortgage initiative amounted to EGP2.2bn. The bank is considering 4,000 more requests for mortgage. HDB aims to open 13 new branches in 2017—most of which will be small branches—to boost the number of its branches to 83, up from 71.

Housing & Dev. Bank: EGP34.99 as of 2 Apr. 2017, Rating: Buy, TP: EGP34.00/share, MCap: USD243mn, HDBK EY/HDBK.CA