Nevine Loutfy not only has the strong, to the point and charismatic personality needed to lead Abu Dhabi Islamic Bank’s acquisition of the National Bank of Development (NBD) but also 32 years of international experience under her belt to ward off any potential stumbling blocks.

The banking world, filled with dry figures, tough deals and sharp, financial minds, isn’t the easiest of career choices. Even more difficult than being a female banker was making the transition into an Islamic bank through an acquisition of a local indebted bank. Managing to turn the figures around in only a few years while maintaining an effortless attitude is nothing short of remarkable.

“Sharia is nothing but a set of laws, when you move around from one country to the other, every time you land somewhere you have to understand the laws of this jurisdiction,” says Loutfy. “So it was just the new set of laws that I had to learn in addition to the banking laws. It isn’t that difficult.”

Loutfy, the Managing Director and CEO of NBD since 2007, previously held the posts of Chief Operating Officer, Managing Director and Business Senior Credit Officer at Citigroup’s EMEA Commercial Bank in London. With vast experience across Europe, the US, the Middle East and Africa, she has been engrossed within several areas of the banking industry.

Composed and elegantly selecting her words, Loutfy perhaps embodies a true banker, though not conventional. The image of an uptight senior corporate manager dressed in plain black and white doesn’t quite fit this CEO. On this occasion, the executive was dressed in a red pantsuit, expressing her views sharply and wittingly. She maintains the perfect balance between approachable and professional, attentive as she searches her desk and explains in detail how interest rates on foreign currencies work.

A banker since 1976 when she joined Citibank after graduating from the School of Economics at the American University in Cairo, Loutfy shares some of her banking insight with Business Today.

Before January 25

Loutfy is happy with the banking sector’s overall performance in the second half of 2010, not to mention NBD’s performance.

“We were very close as far as the financial results were concerned to our objectives,” says Loutfy.

It isn’t just NBD that performed well, Loutfy calls the 2010 banking performance “fantastic, excellent. It was very solid.”

Despite 2010 being only two years past the financial crisis, Loutfy believes the banking sector remained intact, and managed to enhance its performance in 2010.

“A lot of the banks were making a lot of money and there was a lot of competition going on,” says Loutfy. “There was growth and all these syndications that you saw. There were a lot of infrastructure projects as well and banks were contributing very positively [to these projects].”

She adds that these syndications were often over-subscribed, and consumer banking and deposits were growing steadily. More customers adopted banking services and the sector continued to grow, including in the use of ATMs and credit cards.

Robbery in Egypt

But things didn’t go as planned, not for NBD, not for other banks.

“This year we were really ready to take off, it was the take off year and in January we were on great trajectory,” says Loutfy. “Then there were interruptions for about two months. March was really slow, April was slow and sort of struggling to inch up, and then May was good.”

Loutfy tells it like it is — she explains that NBD, like other banks, had to tweak its objectives for 2011, not only to accommodate for the days of shutdown, but also due to the overall economic slowdown.

Banks will not pick up where they left off prior to January 25. “Banks are intermediary, they don’t start the economy, they are enablers. A lot of things didn’t pick up, a lot of loans are being re-scheduled out in the market so a lot of the banks are distracted by this.”

Loutfy explains that there are many other obstacles facing the banking sector now, including the on-going investigations coupled with an overall state of cautiousness in an attempt to see the status of each sector in the medium term. She adds that the performance of the banking sector slowed down in relation to the economy while other sectors came to a complete halt.

“Real estate stopped completely, banks are no longer doing any real estate until things [are] clear and we have new laws and see what the guidelines will look like and so on,” says Loutfy.

Another sector that has been hurt was industrial production, having dropped by 50% and exports, decreasing by 40%.

“All this has to have an impact on how much growth there is,” says Loutfy. “This impacts on the turnover you can have, because you are an enabler, [therefore] the activity has to happen first.”

It isn’t all bad though, Loutfy explains, consumers have almost returned to the pre-revolutionary banking and financial activities, but they aren’t quite yet there. She expects that it will take a year before things can go back to normal.

She posits that policies adopted by the Central Bank prevented a financial disaster from occurring. The ceiling of $100,000 (LE 596,000) put on money safeguarded banks and the economy in general from “frenzied and irrational behavior” where people withdraw or transfer their money out of Egypt in a state of panic, says Loutfy.

What January 25 meant to banks

For years customers opted to save in Egyptian pounds as it yielded higher interest rates than foreign currency deposits.

But after January 25, this changed, with patterns evolving in customers’ habits.

“After the events of January 25, there was a surge of dollarization. Some savers in Egypt felt safer to put their money in dollars in Egypt to preserve the value of their savings in fear of the depreciation of the pound,” says Loutfy. “We have seen that trend in March and April, it decreased in May and it [has] started to subside.”

After the global financial crisis, there was a lot of talk on why Islamic banks were affected the least, due to the principles of Sharia denouncing derivatives. After January 25, and with the rise of Islamists, some predict a rise in popularity for Islamic banking to fit the trend, but Loutfy disagrees.

“I don’t see this. You have to never forget that the consumer is at the end, rational; they want good service and return,” says Loutfy. “That there is a revival [in Islamic banking,] no I don’t see it.”

The flip side of January 25 was that customers finally realized the importance, as well as convenience, of the internet in the finance world. Loutfy explains that because of Facebook and other online social media outlets, more people have became familiar with computers and the internet.

“There is an increasing demand [for] internet banking […],” says Loutfy. “Now there is more and more demand. The Central Bank has also approved mobile banking. This will also help increase the banking penetration among the Egyptian population.”

Overall, Loutfy believes that January 25 will leave a toll on many banks, in regards to their activities and choices. Banks who are affected the most are those who were overexposed to real estate or to companies that are now in trouble.

“This means a lot more provisions, rescheduling, negotiations and that [banks] have to be a lot more selective in the target market and the kind of clients they pursue,” says Loutfy. “It means a lot of stress tests and portfolio reviews to see how the overall portfolio has [been] affected and is [expected to be] affected by slowdowns, so maybe [there will be a] change in directions.”

Although Loutfy knows banks are yet to heal from the consequences of the revolution, she believes the sector was generally on the right track in 2010. And while she emphasizes that it will be more than a year before the effects wear off, when they do, the sector will again boom. bt