For more than 18 months, the management team of this institution has been preoccupied with technology. How will it help us reach new customers — and better-serve the long-term corporate and consumer clients who are the backbone of this institution? How can it make us more efficient, whether in cross-selling products or in helping our clients acquire new businesses, manage payrolls, and remit customs payments? How can we harness it to drive financial inclusion and sharply raise the banking penetration rate in a market that remains exceptionally under-banked, regardless of the metric or methodology underpinning the study?
In thinking about technology, it has become vogue to consider not just the opportunity, but the threat: What does artificial intelligence (AI) mean to industries of all forms? Will it replace bankers? Will self-driving cars directed by AI replace whole classes of jobs, from taxi drivers to corporate logistics fleets? Extend the logic and you have a whole new field of economics and punditry about what the “rise of the robots” and declining global populations mean for humanity in a future in which we will need fewer people and fewer resources to deliver products and services.
Our belief in the transformative power of technology is one of the lynch pins of our short- and long-term strategies alike. Our awareness of its limits underpin the visual theme of our 2016 Annual Report: The amazing natural, historical and religious wonders that comprise our tourism industry.
This great nation’s tourism industry has been hard-hit by the events that have unfolded since 2011, but the Pyramids are still standing, as is the Sphinx. Our white, sandy beaches and crystal-clear waters are still among the most attractive in the globe. The only changes desert adventurers will find are those that have been wrought by time and winds. Coptic Cairo is still thriving, as are Old Cairo and the historic Citadel district. Alexandria still throngs with the energy of an ancient seaport.
This holds true today, and with good stewardship it will stand true for generations to come. Technology and changing global demographics may erode jobs in traditional manufacturing and resource industries, but technology will never supplant the experience of physically going on a real holiday to a destination. Our nation is presently undergoing an aggressive economic reform program. Our economic future is increasingly clear: Domestic consumption will be powered by a large, young and fast-growing population — and the twin imperatives of import substitution and export-led growth will fuel a resurgence in manufacturing. As that unfolds, it is critical that we remember that tourism is, in many ways, not just the ultimate export, but a competitive edge that will turbocharge the growth of countless other industries.
Across decades, tourism will prove to be the ultimate counter-cyclical play. From the well-known to the relatively undiscovered, our annual report this year highlights the many destinations and activities that will back economic growth in the decades to come — and which CIB has made a core part of its strategy. It is an industry that will be changed by technology, but not made obsolete by it. It demands upgrades of existing skill sets, and above all, it demands careful planning.
It will also demand continued vigilance on the security front and robust investment in education. Our population of nearly 100 million people is not a liability, but a renewable resource whose value will be unlocked by education. The same vision and critical approach that allows us to see around the corner to what’s next for the tourism industry informed our approach to 2016, a year that can only be said to have been replete with business surprises — positive and negative alike. Our management team thus remained appropriately conservative in its approach to risk management. This approach is not new: We have long argued that the higher risk cliff associated with doing business in an emerging market demands a conservative, preemptive and counter-cyclical approach. I am pleased to report that this same approach allowed us to turn in a record bottom-line performance despite the challenges of the year.
That said, we are not content to celebrate a single year’s results: Our operating model prizes sustainability, and the bedrock on which our long-standing conviction that every single CIB employee is a risk manager as we look to achieve a judicious balance between growing the bottom line and preserving the interests of our shareholders over the long term. Going forward, we are increasingly optimistic about the macro picture, but cognizant that short-term volatility will be the order of the day. If the shock to the system in 2016 was the welcome float of the Egyptian pound, change will come in 2017 from both the adjustment to this new reality and from the ongoing drive to reform the subsidy system. It is clear that having 80% of the value of the subsidy program disproportionately benefit the 20% of the society that needs it least was the wrong formula. This year, every business — from the single-person micro-businesses to the largest corporations — will have to re-examine how they do business, from expenses to pricing. As they do so, they will uncover weaknesses — and brilliant new opportunities.
That’s why our 2017 focus will be on transformation: From our business banking segment to our largest corporate clients, we will be laser-focused on helping our small business clients become medium-sized enterprises, turning mid-sized businesses into large corporations, and helping large corporations unlock new value through organic and inorganic growth alike. The transformation of businesses from one stage to the next will be at the heart of building a sustainable, growing economy.
As we do, one thing will remain constant on the expense side here at CIB: The best investment of shareholder money that we can make is to invest in our people to ensure our own sustainability for generations to come.
Hisham Ezz Al-Arab
Chairman and Managing Director