Strategic Audit of NBE
National
Bank of
Egypt
[STRATEGIC AUDIT OF
NBE]
Presented by:
Sheta
Ahmed Mahmoud Ali kuraem
Hazem Mahmoud Elsadek
Class # 48A
National Bank Of Egypt
Neveen Faried
Page 1
supervised by: Dr/ Ashraf
Strategic Audit of NBE
Executive summary
The aim of this paper is to define the NBE strategic and what we will need to
ensure the successful strategy
This audit analyses the strategies of the largest bank in Egypt ( NBE ) as well
as its competitive positioning to get a better understanding of its strategic
decisions made over the past 5 years and how effectively it should respond to
changes in their business environment. The overarching predictions that
guide this audit are that the banks have comparable domestic but very
different international strategies, and that the banks have well-defined
strategic plans, which they implement successfully with the long-term goal of
profit maximization.
National Bank of Egypt (NBE) was established on June 25, 1898 and is the
oldest commercial bank in Egypt. NBE is the largest domestic bank in Egypt
in terms of assets, branches, deposits and loans, employees and capital.
Throughout its long history, NBE's functions and roles have continually
adapted to the different economic and political conditions in Egypt. In the past,
NBE has functioned as the central bank of Egypt and continues to perform
certain quasi-governmental support activities. NBE provides direct funding to
the government through its extensive holdings of government securities.
The literature reviewed to conduct this audit consists of corporate strategy,
strategy analysis and competitive analysis literature, which provides insight
into a variety of frameworks and tools that are used to analyze the individual
strategies of each bank as well as their operating environment. The basic
strategic management framework utilized for this audit consists of three steps:
1) perform industry analysis,
2) conduct business strategy analysis, and
3) evaluate strategies and present conclusion.
Some of the more recognized frameworks applied in this audit are Porter’s
Five Forces of Competition and the SWOT analysis diagram ,BCG
MATRIX,SPACE MATRIX, Balance Scorecard & QSPM matrix.
National Bank Of Egypt
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Strategic Audit of NBE
Contents
Table of Contents
1....................................................................................................... Executive summary
2...................................................................................................................... Contents
4.................................................................................................................. Bank profile
9................................................................................................................... Our vision
9................................................................................................................ Our Mission
10........................................................................................................ Board of directors
11........................................................................................... NBE's Board of Directors
11.................................................................................................... BOD Composition
12............................................................................ Responsibilities of the chairman
13........................................................................ BOD’s Duties and Responsibilities
14.............................................................................................................. Core values
15............................................................ Environmental scanning (Task environment)
15.......................................................................... Scan of the external environment
15.................................................................................................. STEEP analysis))
16.............................................................................................. Stakeholders’ analysis
17.......................................................................................... S five forces analysis’Porter
20................................................................................................... Issue priority matrix
21.......................................................................................... Banking on Sustainability
22................................................................................................... Societal Environment
23............................................................................................................ Strategic group
23............................................................................... NBE strategic

24............................................................................................ NBE INDUSTRY MATRIX
24.................................................................................................................................
25........................................................................................................................... EFAS
26..................................................................................................... Core Competencies
28............................................................................................. A Competitive Advantage
29........................................................................................................ Business Model
34.................................................................................................... Value Chain Analysis
36..................................................................................................... Corporate Structure
37........................................................................................................ Corporate Culture
37...................................................... Our progress on strengthening corporate culture
What are the corporation’s current marketing objectives, strategies, policies, and
37................................................................................................................ programs?
National Bank Of Egypt
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Strategic Audit of NBE
37..................................................................................................... Marketing Plan
38...................................................................................................... Target Market
38................................................................................................ Services/Products
38.................................................................................................... Pricing Strategy
39.......................................................................................... Sales/Distribution Plan
39........................................................................... Advertising and Promotions Plan
39............................................................................................................................. HR
40........................................................................................................................... IFAS
40......................................................................................................................... SWOT
41........................................................................................................................... SFAS
41................................................................................... Review of mission and objective
41.............................................................................................................. Our Mission
44....................................................................................................... Growth strategies:
44............................................................................................................. TOWS MATRIX
45............................................................................................................ SPACE MARTIX
45............................................................................................................... BCG MATRIX
46........................................................................................................................ QSPM
47....................................................................................................... Balance Scorecard
48.............................................................................. Strategy implementation problems:
National Bank Of Egypt
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Strategic Audit of NBE
Bank profile

NBE is the oldest commercial bank in Egypt. It was established on June 25,
1898 with a capital of £ 1 million. Throughout its long history, NBE's functions
and roles have continually developed to square with the different economic
and political stages in Egypt. During the 1950s, NBE assumed the central
bank's duties. After its nationalization in the 1960s, it acted as a pure
commercial bank besides carrying out the functions of the central bank in the
areas where the latter had no branches. Moreover, since mid-1960s, NBE
has been in charge of issuing and managing saving certificates on behalf of
the government.

During the FY 2013/14, NBE managed to achieve positive performance
indicators. Total financial position in June 2014 recorded EGP 456.5 bn.,
growing 24.7% yoy. Accordingly, NBE's total assets accounted for 25.1% of
the total banking system assets.

Total deposits reached EGP 393.3 bn., with a growth rate of 25.8% yoy,
accounting for 27.5% of the total banking system deposits. Such leap was
driven by the introduction of a diversified package of saving pools in local and
foreign currencies at competitively lucrative rates.

Net cumulative balance of NBE's saving certificates, the largest household
saving pool in Egypt, rose in June 2014 to EGP 108.4 bn., up by 6.1% yoy.

NBE has further provided a set of distinguished finance schemes that meet
the needs of key economic sectors. The total retail loan portfolio reached
EGP 26.2 bn. as at the end of June 2014, growing 17.6%.

NBE had also assumed an active role in funding key strategic economic
sectors including oil, power, electricity, gas, telecommunications, air
transportation, tourism and contracting. Total large corporate loan portfolio
surged 3% to reach EGP 85 bn. as at June 2014.

Total loans have thus risen 8.6% to reach EGP 124.6 bn. accounting for
21.2% of total banking system loans. NBE, hence, commands 25.4% of the
banking market growth. Accordingly, net loans reached EGP 116.3 bn.,
growing 9% yoy.

All such efforts resulted in achieving profit (before income taxes) of EGP 8.5
bn., increasing 18.3% yoy. Net profits rose 23.2% to record EGP 3.7 bn.
National Bank Of Egypt
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Strategic Audit of NBE

NBE held equity participation in 182 projects, as at the end of June 2014,
covering all the fields of economic activity with total capital of EGP 51.7 bn.
The Bank's holdings amounted to EGP 13.8 bn. representing 27% of such
projects' total capital.

In line with its role in supporting state policies on an ongoing basis, NBE
provided direct funding for the government by purchasing T-bills and
government bonds. Average T-bill balance accounted for EGP 116.5 bn. as at
June 2014 with an increase of 33.2% yoy.

The Automated Clearing House (ACH) system for payments and collections
was introduced by NBE as an integrated financial solution for all the
payments and collections of companies/bodies to exchange and
automatically settle credit and debit payment orders. ACH service, thus,
saves time and effort and provides ease of use via a fully secured and safe
system.

Developing its services and products to provide customers with distinctive
services, NBE increased the number of ATMs and improved their deployment
nationwide to reach 1,735 with a growth rate of 13% yoy; thus NBE
commands around one third of the market. The POS network expanded by
entering into agreement with the largest and most important merchants in
Egypt to amount to 11,172 machines, up by 22% yoy.

Realizing the significant role played by human resources in the
implementation and achievement of strategic initiatives, NBE has assigned
great importance to human capital management with an eye to improving the
work environment and fostering employee satisfaction. NBE further courts
highly-qualified candidates and, at the same time, develops the management
and leadership skills of its staff to create a new breed of managers.

In July 2014 issue, The Banker ranked NBE the 259th ahead of all Egyptian
banks, among the largest 1,000 banks worldwide and the 10thamong Arab
banks, by total assets.

NBE continued to boost its role in social responsibility by making donations in
the amount of EGP 150 MM. in FY 2013/14, mainly directed to health care,
education, combating poverty and slums development. Accordingly, NBE’s
donations over the last five years totaled EGP 480 MM.

To strengthen and boost stock investments and securities market, NBE
created a distinct number of mutual funds that support the Egyptian capital
market and deliver services to a distinguished segment of customers. NBE
offers investment services by expanding the central depositary and trading
services.
National Bank Of Egypt
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Strategic Audit of NBE

NBE has an extensive network of 325 branches, offices and banking units
nation-wide. To this may be added NBE's effective international presence
through the National Bank of Egypt (UK) Limited, National Bank of Egypt
(Khartoum) – Sudan, New York and Shanghai branches (in USA and China),
and representative offices in Johannesburg – South Africa, Dubai – UAE and
Addis Ababa – Ethiopia, plus NBE (DIFC) Limited for financial advice. This is
in addition to a vast correspondent network around the globe (Europe – USA
– Australia – Canada- the Far East – Africa – the Arabian Gulf).
Current performance
National bank of Egypt S.A.E
Separate balance sheet on June 30,2014
Assets
June 30, 2014
June 30, 2013
19565327
42104951
116476135
30147
477491
116349301
22501
16740213
20103269
87419012
6905
692288
106785979
57965
116855065
11138351
99205458
459026
Cash and balance with central bank
Due from banks
Treasury bills and governmental notes
Trading financial assets
Loan and advances to banks
Loan and advances to customers
Derivatives financial instruments
Financial investments
- Available for sale
- Held to maturity
National Bank Of Egypt
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Strategic Audit of NBE
Investments in subsidiaries and
associates
Other assets
Investment property
Deferred tax assets
Property, plant and equipment
Total assets
Liabilities and shareholders’ equity
Liabilities
Due to banks
Due to customers
Derivatives financial instruments
Other loans
Other liabilities
Current income tax liabilities
Dividends payable
Other provisions
Pension benefits’ liabilities
Total liabilities
Equity
Issued and paid-up capital
Reserves
Retained earnings
Total equity
Total liabilities and equity
8193660
8172313
22518640
84074
754826
1949434
456519903
23633045
198815
803453
1809447
366087188
4846303
393251561
44010
14560656
12702185
44763
4117379
1721326
431288183
6821216
312714059
47479
14468091
9541089
213374
463866
3341127
1496797
349107098
9247320
12064256
3920144
25231720
456519903
9247320
7732770
16980090
366087188
National bank of Egypt S.A.E
Separate income statement for the year ended on june 30,2014
Interest and similar income
Interest and similar
expenses
Net interest income
Fees and commissions
income
Fees and commissions
expenses
Net income from fees and
commissions
Dividend income
Net trading income
Profit (loss) from financial
investments
Impairment (charge)
National Bank Of Egypt
June 30, 2014
June 30,2013
36019934
(24860116)
31813692
(20792167)
11159818
2256220
11021525
2054864
(10310)
(6812)
2245910
2048052
329144
475442
733546
295870
456383
168296
(458396)
(556293)
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Strategic Audit of NBE
release for credit loss
Administrative expenses
Other operating (expenses)
income
Earnings before income
tax
Income tax (expenses)
Net profit of the year
Earnings per share during
period
(5551141)
(478844)
(4858060)
(1425713)
8455479
7150060
(4707662)
3747817
0.35
(4108431)
3041629
0.29
Critique:
 The Bank maintains sufficient liquidity to meet all known and likely demands which
could be made upon it by its clients and ensures that such liquidity is available on a dayto-day basis in accordance with the liquidity guidelines and rules as set out
 Systematically most developed financial markets improved during the year and as the
year progresses, confidence in emerging markets began to wane particularly.
 The Bank regards itself as a stand-alone entity, not relying on any related party for
future liquidity support in the event of stress. Liquidity is managed by the Bank’s Treasury
operation, overseen and guided by Senior Management and reporting to the
Management Committee and the Board of Directors.
 The market risk the Bank has is kept to a minimum, with careful monitoring of our
investment portfolio, and fixed rate investments are hedged with interest rate swaps.
 Future Developments
 The Directors expect the general activity to increase in the coming year. It is expected
that our loan books are rebuilt, our assets and liabilities diversified to other geographic
region, however, our risks continued to be controlled and monitored, and our regulatory
requirements fulfilled. It is also expected that staffing levels are reviewed and resources
realigned with the future needs to meet the Banks strategy and plans. It is not foreseen
that the balance sheet will grow substantially, but gradually the Bank takes on more
profitable assets.
NBE international ratings:
Foreign
Currency:
Local
currency:
Long-Term
liabilities: B-
Long-Term
liabilities: B-
Short-Term
liabilities: C
Short-Term
liabilities: C
Long-Term
liabilities: B
Long-Term
liabilities: AA
( egy )
Standard &
Poor's Ratings
National Bank Of Egypt
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notes
extra
Outlook: Stable.
Standalone credit profile
of NBE is b-
Outlook: Stable Support
Rating: 4

Viability Rating: b

Support Rating
Strategic Audit of NBE
Floor: B
Short-Term
liabilities: B
Fitch Ratings
Short-Term
liabilities: F1+ (
egy )

Senior unsecured
debt: B

Foreign Currency:
Capital Intelligence
Ratings:-
Long-Term
Liabilities: Caa1
Moody's Ratings
Short-Term
Liabilities: Not
prime
Long-Term
liabilities: B3
Short-Term
liabilities: Not
Prime

Financial
Strength: E

Outlook: Stable

Long-Term
Liabilities: B-

Short-Term
Liabilities: B

Financial Strength:
BB-

Outlook: Stable

Support Rating: 3

Senior unsecured
debt: B3
Standalone credit
assessment of NBE
is Caa1

Critique:
NBE's ratings reflect:
1. The bank's dominant franchise as the largest bank in Egypt and its stable deposit based
funding structure (at 91% of non-equity funding);
2. the improvement in the bank's asset quality, which is mainly driven by the restructuring
and write-offs of legacy problem loans (as of June 2014, NBE's non-performing loans
(NPLs)-to-gross loans ratio declined to 5.0% from 9.0% in June 2011); and
3. Various associations’ assumption of a very high probability of government support given
the bank's 100% government ownership and its systemic importance, reflecting its 27%
market share in deposits.
Nonetheless, the rating agencies believe asset risk remains elevated. Despite good
diversification of the loan book across different sectors and improvement in the bank's risk
management capabilities in the last few years, NBE's asset risk remains elevated because of
the bank's high asset concentrations, and still developing risk-management tools. NBE's
ratings also capture its weaker-than-peers' capital buffers, with a Tier 1 ratio of 7.0% as of
June 2014 and a Moody's adjusted tangible common equity (TCE) to risk-weighted assets
(RWAs) ratio of 4.6% as of June 2014.
As part of its standard global adjustments to make banks' financial statements more
comparable, many associations adjust the Egyptian banks RWAs by assigning a 100% risk
weight to government securities, which are zero-risk-weighted in the banks' calculations.
Our vision
To be a trusted leader bank delivering innovative financial solutions to
enhance the quality of life everywhere.
Our Mission
National Bank Of Egypt
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Strategic Audit of NBE
To be the most successful bank admired for its innovative service, people and
technology both locally and in the Middle East and North Africa region.
Critique:
 Mission statements are supposed to model what business you are in, what
competition you face, and your core values.
 The ultimate test is that it should serve as a recruiting device leading
applicants to say” That is the kind of business I want to be in and that is
the kind of company I want to work for!”
 What remains then is to examine ways to improve the process and the
product so that they are aligned and versions of each other—almost in a
cause and effect partnership.
Our Objectives
The Bank’s approved three year strategic business plan 2015-2017 sets out
the key financial objectives to restore the Bank’s historical interest income
trend and improve the overall profitability and earnings. According to the
approved strategy, NBE’s mission is to provide world class international
banking services to Egyptian and Middle Eastern related businesses and
governmental agencies and in doing so, become the first choice for Egyptian
counterparties and other relationships from the Gulf region and North Africa.
With our strong base of experience and market presence, we aim to grow
each of our various strategic business lines in both market and product
extensions.
The Bank's primary business objective is to provide a range of banking
services to both its Egyptian and international customers. Its strategy for
doing so is as follows:
• protect the Banks capital and liquidity, and within internal risk management
policies, with minimal exposure to market risk;
• To provide lending in trade finance to both financial institutions and large
commodity corporate clients involved in trade predominantly to or from the
Middle East and growing emerging markets;
• Increase loans and advances including syndicated facilities and to be used
as a penetrating tool for the purpose of future enhancement of trade
relationships with NBEs existing counterparties and other future targeted
relationships;
• To provide treasury services to customers and counterparties; and
• To maintain asset quality whereby the overall investment grade of the
balance sheet will be around 80%.
The strategy drivers are based on the strength of our parent in our home
market, Egypt, combined with our historical experience in emerging markets
in terms of sourcing business and accepting risk. In addition we are intent on
building our funding base to be diversified, whilst maintaining liquidity and
meeting all Regulatory requirements.
National Bank Of Egypt
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Strategic Audit of NBE
Board of directors
Mr. Hisham Ahmed Mahmoud Okasha
Chairman
National Bank Of Egypt
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Strategic Audit of NBE
NBE's Board of Directors
BOD Composition

Maintaining Balance and Independence The BOD is fully responsible for
governance at NBE starting from establishing the culture of governance and
approving a Code of Ethics for NBE's employees and senior management that
will serve as a guide for performing their daily duties, up to taking the
necessary steps to communicate the objectives and conduct that should be
followed at NBE.

At the same time, the best interest of shareholders and depositors should be
protected. The BOD also approves the standards and values which reflect
NBE's policies that should be followed by all employees, senior management
and directors.

This comprises NBE's strategic orientation. In addition, the BOD sets general
objectives for executive officers and oversees the realization of such
objectives. Furthermore, the BOD verifies the effectiveness of internal controls
and risk management to ensure maintaining NBE's reputation.

The chairman and directors shall be appointed by decree of the Prime
Minister, after consulting the CBE's Governor, for a renewable three-year
term, as shall be determined in the Executive Regulations of this Law.

The two deputy chairmen shall be appointed by decree of the Prime Minister
after consulting the chairman of the board of directors of the bank. The
salaries, allowances, and remuneration of the chairman and his/her two
deputies, the remuneration of specialized directors who are non-executive
members and the board attendance allowances shall be determined by
decree of the Prime Minister.

The BOD meets at NBE's Head Office at least once every month, and as
dictated by NBE's best interest. BOD meetings are held upon an invitation
from the chairman or his/her substitute in case of his /her absence or upon a
request by at least one third of the BOD.

Meetings are valid if the majority of members attend, provided that the
chairman, or his/her substitute in case of his/her absence, attend the meeting.

BOD's decisions are passed by majority of votes of the attendees. In case of a
tie, the chairman, or his/her substitute, shall have a casting vote. - NBE's
chairman also undertakes the duties of the Chief Executive Officer (CEO).
NBE explains the grounds for occupying this position in the annual report.
NBE applies and practices governance, and ensures the presence of effective
audit and budgeting functions, and forms objective opinions regarding NBE's
activities and the decisions made by the BOD.

This can be achieved through maintaining the balance, independence and
objectivity of its BOD by dividing directors to executives and nonexecutives
who shall have the skills and experience that qualify each of them to express
his/her opinion during BoD's discussions independently, resulting in valid
decision-making. Non-executive directors are directors who are not full-time
employees at NBE, do not receive any monthly or annual salary from NBE,
and do not provide any paid counseling. .

The BOD discloses in its annual report the names of all non-executive
directors who are deemed independent from management and do not have
any kind of relationship that may prejudice their objectivity in decision making.
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Strategic Audit of NBE
Responsibilities of the chairman
(Or his substitute) legally represent NBE before courts and third parties;
(Or his substitute or any director delegated by the BOD for this purpose) has
the authority to sign individually for the Bank;
 Ensure that decisions are duly taken based on a full awareness of the
subject matter and that a proper mechanism is available so that decisions can
be effectively and timely implemented and followed up;
 Encourage discussion and criticism and make sure that opposing opinions
have an avenue to be voiced and discussed within the framework of the
decision making process;
 Check that the BOD functions effectively to serve the best interests of NBE
and for avoidance of any potential conflict of interest;
 Maintain confidence among all directors in general and between executive
and non-executive directors in particular, fostering the relationship between
the BOD as a whole and the senior management;
 Ensure the flow of adequate and accurate information on a timely basis to
both directors and shareholders;
 Verify the effectiveness of the governance system applicable at NBE as well
as the efficiency of BOD committee’s performance
 Ensure that all directors conduct a self-assessment which includes
determining each member's compliance with the responsibilities of his/her job
and the necessary requirements to boost efficiency; and
 Call for a BOD meeting at least once per month and set its agenda.
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Strategic Audit of NBE
BOD’s Duties and Responsibilities
The Board has full powers to achieve NBE objectives and management,
taking all necessary actions in this respect, except as otherwise stipulated by
law or NBE's Articles of Association, with due regard to the powers assigned
by law to the General Assembly.

The BOD plays a vital role in internal control by:
1. Approving an organizational structure with specific responsibilities that
ensures efficient internal control based on segregation of duties;
2. Avoiding any conflict of interest;
3. Adopting strategies and policies that best serve internal control; and
4. Following up the execution of the set strategic objectives, the most
significant of which are: The Bank's strategy, its employees and the
oversight role played by the BOD with the possibility of delegating
some responsibilities to one of its committees.
Critique:
 The Bank’s performance is measured against a number of Key
Performance Indicators (KPI’s): profit, cost income ratio and return on
Equity. The principal measurement is profitability against a predetermined
budget which is set annually. Income results for the business are
distributed daily, monthly and annually and are monitored closely by the
Bank’s senior management. The Directors of the bank receive profitability
results at each board meeting, where a comprehensive review is
undertaken. Other KPIs are also reported regularly, such as Capital
Adequacy, net interest income and Liquidity. Regular stress tests (quarterly
and with the capacity to increase the frequency of these tests in special
circumstances, such as volatile market conditions or where requested by
the regulatory body or by Senior Management and Board of Directors) are
performed and reviewed on Capital positions and Liquidity by senior
management. Risk and Audits reports are prepared quarterly for Audit and
Risk Committee to review.
 All exposures are managed within risk appetite parameters and policies
agreed by the Board of Directors. Day to-day exposure is monitored by
Credit Control (for credit risk), and Financial Control (Capital and Liquidity)
reporting any findings to the Risk Management Officer. The Board of
Directors and Management continue to promote and maintain an effective
corporate governance structure in compliance with the applicable
regulatory requirements.
 Expense payments follow guidelines set out in the Expense policy, and are
regularly reviewed.
National Bank Of Egypt
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Strategic Audit of NBE
Core values






Integrity : be ethical
Social commitment : NBE ”the people’s bank”
Transparency : leads to the top of the pyramid of trust
Loyalty : one of the main elements of our bank’s safeguards
Customer focus : customers are the main reason of our existence
Creativity: due to our close connection with our customers they from
our source of inspiration to the future.
Environmental scanning (Task environment)
Scan of the external environment
(STEEP analysis)
National Bank Of Egypt
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Strategic Audit of NBE
Critique:
 political factors:
The government affects the performance of the banking sector most by
legislature and framing policy, government through its budget affects the
banking activities
 economic factors:
the economic measures affects the banking sector to boost the economy by
giving certain concessions or facilities if in the savings are encouraged, then
more deposits will be attracted towards the bank and in turn it can lend more
money therefore booming the economy
There is a serious problem faced nowadays by banks concerning high interest
rates and high inflation rates which needs to be procured by active legislative
actions
 socio-cultural factors:
Life style in Egypt is changing rapidly in Egypt. It is demanding high class
products. People needs and wants are increasing day by day which have
opened more opportunities for the banking sector to tap this change.
Increasing population has emerged the need for launching more branches to
face these increasing needs of new populations.
 Technological factors:
Technology plays a very important role in the internal control process as well
as services offered by them.
Through the use of technology new products and services are introduced
which include aspects such as R&D, automation, incentives and the rate of
technological change.
 Legal factors:
This part was discussed earlier in the BOD responsibilities and its various
roles concerning compliance with different legal issues.
 Environmental factors:
This part was discussed earlier concerning the sustainability issue.
National Bank Of Egypt
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Strategic Audit of NBE
Stakeholders’ analysis
Stakeholders are those who may be affected by or have an effect on an
effort. They may also include people who have a strong interest in the effort
for academic, philosophical, or political reasons, even though they and their
families, friends, and associates are not directly affected by it.
 Primary stakeholders are the people or groups that stand to be directly
affected, either positively or negatively, by an effort or the actions of an
agency, institution, or organization. In some cases, there are primary
stakeholders on both sides of the equation: a regulation that benefits one
group may have a negative effect on another. A rent control policy, for
example, benefits tenants, but may hurt landlords.
 Secondary stakeholders are people or groups that are indirectly affected,
either positively or negatively, by an effort or the actions of an agency,
institution, or organization. A program to reduce domestic violence, for
instance, could have a positive effect on emergency room personnel by
reducing the number of cases they see. It might require more training for
police to help them handle domestic violence calls in a different way. Both
of these groups would be secondary stakeholders.
 Key stakeholders, who might belong to either or neither of the first two
groups, are those who can have a positive or negative effect on an effort,
or who are important within or to an organization, agency, or institution
engaged in an effort. The director of an organization might be an obvious
key stakeholder, but so might the line staff – those who work directly with
participants – who carry out the work of the effort. If they don’t believe in
what they’re doing or don’t do it well, it might as well not have begun.
Other examples of key stakeholders might be funders, elected or
appointed government officials, heads of businesses, or clergy and other
community figures who wield a significant amount of influence.
Critique:
 Stakeholders’ interests can be many and varied. A few of the more
common points which are not covered by bank’s strategy concerning
them:
 Economics. An employment training program might improve economic
prospects for low-income people, for example. Zoning regulations may
also have economic consequences for various groups
 Social change. An effort to improve racial harmony could alter the
social climate for members of both the racial or ethnic minority and the
majority.
National Bank Of Egypt
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Strategic Audit of NBE
Work. Involving workers in decision-making can enhance work life and
make people more satisfied with their jobs.
Time. Flexible work hours, relief programs for caregivers, parental
leave, and other efforts that provide people with time for leisure or
taking care of the business of life can relieve stress and increase
productivity.
Environment. Protection of open space, conservation of resources,
attention to climate change, and other environmental efforts can add to
everyday life. These can also be seen as harmful to business and
private ownership.
Physical health. Free or sliding-scale medical facilities and other similar
programs provide a clear benefit for low-income people and can
improve community health.
Safety and security. Neighborhood watch or patrol programs, better
policing in high-crime neighborhoods, work safety initiatives – all of
these and many other efforts can improve safety for specific
populations or for the community as a whole.
Mental health. Community mental health centers and adult day care
can be extremely important not only to people with mental health
issues but, also to their families and to the community as a whole.






S five forces analysis’Porter
1)
Threat of New Entrants:
With so many new banks entering the market each year the threat of new
entrants should be extremely high. However, due to mergers and bank
failures the average number of total banks decreases a core reason for this is,
what is arguably, the biggest barrier of entry for the banking industry, trust.
Because the industry deals with other people's money and financial
information new banks find it difficult to start up.
Due to the nature of the industry people are more willing to place their trust in
big name, well known, major banks who they consider to be trustworthy.
Critique:
 Due to the nature of the industry people are more willing to place their
trust in big name, well known, major banks who they consider to be
trustworthy just like NBE.
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Strategic Audit of NBE
2) Power of Suppliers:
Capital is the primary resource on any bank and there are four major suppliers
(various other suppliers [like fees] contribute to a lesser degree) of capital in
the industry:
1. Customer deposits.
2. Mortgages and loans.
3. mortgage-backed securities.
4. Loans from other financial institutions.
By utilizing these four major suppliers, the bank can be sure that they have
the necessary resources required to service their customers' borrowing needs
while maintaining enough capital to meet withdrawal expectations.
Critique:
 The power of the suppliers is largely based on the market, their power
is often considered to fluctuate between medium to high.
 The individual doesn't pose much of a threat to the banking industry,
but one major factor affecting the power of buyers is relatively high
switching costs. If a person has one bank that services their banking
needs, mortgage, savings, checking, etc., it can be a huge hassle for
that person to switch to another bank.
 To try and convince customers to switch to their bank they will often
times lower the price of switching, though most people still prefer to
stick with their current bank?
3) Availability of Substitutes:
Some of the banking industry's largest threats of substitution are not from rival
banks but from non-financial competitors.
The industry does not suffer any real threat of substitutes as far as deposits or
withdrawals; however insurances, mutual funds, and fixed income securities
are some of the many banking services that are also offered by non-banking
companies.
Critique:
 There is also the threat of payment method substitutes and loans are
relatively high for the industry. For example, big name electronics,
jewelers, car dealers, and more tend to offer preferred financing on "big
ticket" items. Often times these non-banking companies offer a lower
interest rates on payments then the consumer would otherwise get
from a traditional bank loan.
4) Competitive Rivalry:
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Strategic Audit of NBE
The banking industry is considered highly competitive. The financial services
industry has been around for hundreds of years and just about everyone who
needs banking services already has them.
Because of this, banks must attempt to lure clients away from competitor
banks. They do this by offering lower financing, higher rates, investment
services, and greater conveniences than their rivals.
Critique:
 The banking competition is often a race to determine which bank can
offer both the best and fastest services, but has caused banks to
experience a lower ROA (Return on Assets).
 Given the nature of the industry it is more likely to see further
consolidation in the banking industry. Major Banks tend to prefer to
acquire or merge with other banks than to spend money marketing and
advertising.
Issue priority matrix
National Bank Of Egypt
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Strategic Audit of NBE
Low
Low
Probability
Of
occurrence
Medium
High
Probable impact
Medium
high
Foreign
currency
Shortages.
Employee
Turnover.
Product
Differentiation
.
Unexpected
Interest
Rates
fluctuations.
Regulatory
Compliance.
Cooping
With new
Tech.
Competing
Firms.
Customer
Retention.
Customer
satisfaction.
Critique:
 According to the above issue priority matrix we can conclude that:
The most important part to give attention is to keep a high rate of customer
satisfaction levels while providing the various products and services
otherwise liquidity and profitability problem will occur according to
customers’ shifting to another competing firm in the market.
 The second stage priority issue includes competition which should be
taken into consideration to keep and grow current market share while
compelling with the regulatory requirements.
 The less important part is considering foreign currency shortages and
unexpected interest rates fluctuations which is done in a co-operative
way with the CBE
 Finally in the NBE there is a moderate employee turnover rates but
with low impact on its performance.
Banking on Sustainability
NBE is and continues to be committed to a perceptive longer term vision of
the future that strikes a sound balance between the strategic goal of
increased profitability as well as serving broader socioeconomic and
environmental interests; the backbone of any sustainable success and
National Bank Of Egypt
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Strategic Audit of NBE
distinction. Environmental sustainability, corporate social responsibility and
corporate governance are therefore the key factors in measuring
sustainability.
 Environmental Sustainability:
NBE has achieved several milestones on the environmental sustainability
front during the past eighteen months:
• Reinforced our resource-efficient efforts, decreased our carbon foot print and
are expanding “quick wins,” engaging staff at every level. The Bank
decreased its astronomical paper consumption — which was almost the
height of our great pyramid — through the practical expedient of ensuring
double-sided printing and replacing personal laser printers and relying more
on digital platforms such as archiving and email. NBE also planted organic
rooftop gardens in several head offices and installed green walls. The Bank is
developing an integrated solid waste management system and smoking
restrictions continue to be more stringently enforced.
• Worked diligently in the field of water conservation through the principle of
“reduce for use.” This decreased water consumption by about 20%.
• Enhanced energy efficiency. LED lamps are in the process of installment at
all the head offices and branches. This will cut back on the Bank’s electricity
bill by about 25%. NBE is concurrently moving forward on an air-conditioning
initiative to maintain a cool environment, and again, reduce costs. This mega
project will be completed in 2015.
• Developed its first Social and Environmental Management System (SEMS),
which is a risk management framework that includes a set of actions and
procedures enabling us to avoid exposure to credit, compliance and other
detrimental risks as well as advance durable business opportunities.
• Developed its first Sustainability Report, aligned with international best
practices. It is based on the Global Reporting Initiative (GRI), a globallyrecognized initiative that provides a comprehensive sustainability reporting
structure that is widely used around the world.
• NBE also participated in the second pollution abatement project (EPAP II).
This project provides a financial package to support public and private
industries to improve their environmental status.
• Also on the Economic and Finance side, NBE is committed to continuously
and significantly increase its facilities to a number of environmental friendly
projects from the Corporate Banking side. Such projects include but are not
limited to: NBE granted International Water Treatment “IWTC” facility amount
of EGP 147 million. The company’s main objective is to design and implement
all types of tools, machinery, equipment and specialty water treatment
chemicals used in the waste water treatment process. Moreover, NBE
provided facilities to power services companies such as Middle East
Engineering & Telecommunication Co.
 Corporate Social Responsibility:
We at NBE feel strongly about our country and giving back to our community
is, and has always been, atop of the list of priorities and at the heart of our
responsibilities. At NBE, we turn commitments into actions, with the ultimate
goal of ensuring that our efforts are having a profound impact on people’s
lives. Through our CSR programs, the NBE team is firmly dedicated to
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Strategic Audit of NBE
supporting Egypt; where we live and operate, and is proud of its
achievements.
 Community Development:
During the course of 2014, NBE took concrete steps towards achieving
meaningful Corporate Social Responsibility (CSR) activities, and continued
with its endeavors to give back to the community. At NBE, the concept of CSR
has sprung up and is steadily becoming an important facet of its business’s
strategy.
NBE’s steadfast commitment has been clearly evidenced by adverse range of
CSR accomplishments that the Bank has embarked on during the past 12
months.
Societal Environment

The growing importance of environmental or ecological factors in the first
decade of the 21st century have given rise to green business and
encouraged widespread use of an updated version of the PEST
framework.
Political factors regard how and to what degree a government intervenes
in the economy. Specifically, political factors include areas such as tax
policy, labor law, environmental law, trade restrictions, tariffs, and political
stability. Political factors may also include goods and services which the
government wants to provide or be provided (merit goods) and those that
the government does not want to be provided (demerit goods or merit
bads). Furthermore, governments have great influence on the health,
education, and infrastructure of a nation.
Critique:
 These political factors act as a severe threat on the bank’s
performance as concerning the existing circumstances.


Economic factors include economic growth, interest rates, exchange
rates and the inflation rate. These factors have major impacts on how
businesses operate and make decisions. For example, interest rates affect
a firm's cost of capital and therefore to what extent a business grows and
expands. Exchange rates affect the costs of exporting goods and the
supply and price of imported goods in an economy.

Social-cultural factors include the cultural aspects and include health
consciousness, population growth rate, age distribution, career attitudes
and emphasis on safety. Trends in social factors affect the demand for a
company's products and how that company operates. For example, an
aging population may imply a smaller and less-willing workforce (thus
National Bank Of Egypt
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Strategic Audit of NBE
increasing the cost of labor). Furthermore, companies may change various
management strategies to adapt to these social trends (such as recruiting
older workers).
Critique:
 This point is nowadays taken into consideration as there is a
specialized sections located in every branch to maintain key customers’
operations and to apply a customer retention plan.

Technological factors include technological aspects such as R&D
activity, automation, technology incentives and the rate of technological
change. They can determine barriers to entry, minimum efficient
production level and influence outsourcing decisions. Furthermore,
technological shifts can affect costs, quality, and lead to innovation.
Critique:
 As technological factors have a great effect on the bank’s performance
this section should have a great attention in considering future
customers’ welfare solutions.
Strategic group

NBE strategic
Critique:
 According to the above figure which illustrates the strategies
groups according to its commitment to technological
advancements we can classify the working banks in Egypt into 3
categories and the NBE stands in the middle green area with CIB
& QNB (which is can be easily improved) as it takes technology as
a business and should aim to reach the in which digital is a core
value.
NBE INDUSTRY MATRIX
Key success
Weight
National Bank Of Egypt
NBE rating
Page 25
NBE’s
QNB rating
QNB’s
Strategic Audit of NBE
factors
Number of
branches
Fees & charges
Digital banking
Ease of
approvals
Staffs’
professionalism
Products breadth
Total
0.2
4
weighted
score
0.8
0.2
0.1
0.2
4
3
2
0.8
0.3
0.4
3
2
3
0.6
0.2
0.6
0.2
3
0.6
3
0.6
0.3
3.2
3
0.3
2.9
0.1
1
Products breadth
Number of
3 branches
1
0.5
3
weighted
score
0.6
Fees & charges
Critique:

NBE should focus on factors that have a great effect on
QNB
0 factors such as low fees &
customers’ loyalty and not to rely on
NBE
charges and the high number of branches if it intends to compete
aggressively in nowadays market and in order to keep its market
share.
Staffs’ professionalism
Digital banking
Ease of approvals
EFAS
External Strategic
Factors
National Bank Of Egypt
Rating
Weight
Page 26
Score
Strategic Audit of NBE
OPPORTUNITIES
New products
and services
New acquisitions
Global markets
Venture capital
Income level is at
a constant increase
Growing economy
.14
3
.42
.06
.07
.08
.10
2
3
2
3
.12
.21
.16
.30
.11
3
.33
Threats
Unexpected problems
Increasing rates
of interest
Increasing costs
Financial capacity
Price changes
.09
.10
2
4
.18
.40
.08
.08
.09
2
3
3
.16
.24
.27
TOTAL
1
2.79
Critique:
 NBE have a variety in its products, services, branches and the
ability to expansion all over Egypt which give them the
opportunities to make more profit and growth but the
management should have a division responsible for research and
development to be responsible about the innovation of the new
products & developing the current product and also developing
the processes and procedures to make it smoothly and easily
which will lead to cost reduction.
Core Competencies

In line with NBE's support to small and medium sized enterprises (SMEs),
the total SME loan portfolio reached EGP 13.5 bn., and growing 36% yoy via
National Bank Of Egypt
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Strategic Audit of NBE
extending finance to more than 37,000 SME customers. Total finance
injected to SMEs amounted to EGP 6 bn. during FY 2013/14 whether in the
form of extending loans to new customers or scaling up finance to existing
ones. NBE also relent an amount of EGP 1.3 bn. from the Social Fund for
Development (SFD) to its customers. The number of agreements made with
the SFD since its establishment in 1992 amounted to 95, totaling EGP 8.3
bn.

NBE is the only bank who runs authorities estimated important accounts such
as the state petroleum and electricity sector a give them loans.

NBE is always keen to render up-to-date banking services and products that
are perfectly developed for its esteemed customers so that the Bank can
maintain their precious confidence and continue its leadership in the local
banking market.

The Payroll Services:
NBE provides this service to companies and their employees via
transferring their salaries to the Bank whereby they may benefit from
NBE's diversified banking services and products (personal cash loans,
auto loans, credit cards, deposits and certificates); and
 NBE offers state-of-the-art integrated and well-secured electronic systems
to pay salaries to corporate employees via two salary payment systems
which are tailored to cater for all our customers’ needs:
 Al Ahly Payroll Card: Al Ahly Payroll card: a card is issued for
cashing the salary which is directly transferred to such card without
having to open personal current accounts for employees at NBE
branches; and
 Al Ahly Payroll Current account: a fully-fledged product is made
available to companies/bodies which enter into Payroll agreements
with NBE to automatically transfer their employees’ salaries to bank
accounts opened with NBE branches and obtain debit cards for
such customers to enjoy NBE’s distinguished and diversified
services.
Salary Advance Flyer



A new credit facility introduced to Al Ahly Payroll Card customers and
government contract employees whose salaries are regularly
transferred to NBE by providing a credit limit to cards and credit limit
ceiling is EGP 20,000 without opening a current account to meet
customers' needs for short term periods.
With Salary Advance Service:
 You may disburse 80% over your salary in advance;
 No administrative fees;
 No membership fees;
 Use the service locally and internationally for cash and
purchases;
 1.8% interest rate monthly.
National Bank Of Egypt
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Strategic Audit of NBE
Al Ahly Payment & Collection Service via EG-ACH

NBE
offers
an
integr
ated
finan
cial
soluti
on for
all
the
paym
ents
of
comp
anies
/bodi
es to
enabl
e
custo
mer
to
transf
er
paym
ents
to
indivi
dual
or
corpo
rate
acco
unts
or
cards
with
NBE
or
other
bank
s
inside
Egypt
by
the
comp
anies
/bodi
es
National Bank Of Egypt
Page 29
Strategic Audit of NBE


them
selve
s,
such
as
the
paym
ent of
salari
es
and
pensi
ons
to
empl
oyee
s and
repay
ment
of
suppli
ers'
due
paym
ents
to
their
bank
acco
unts
direct
ly.
This
servic
es
uses
cuttin
g
edge
fully
secur
ed
electr
onic
syste
ms.
The
Direc
t
Credi
t
Servi
ce

National Bank Of Egypt
Page 30
Strategic Audit of NBE
Direct
Cr
ed
it
en
ab
le
s
m
ak
in
g
ge
ne
ral
pa
y
m
en
ts
su
ch
as
sa
lar
ie
s,
su
pp
lie
r
pa
y
m
en
ts,
go
ve
rn
m
en
t
pa
y
m
en
ts
an
d
pe
ns
io
ns
an
National Bank Of Egypt
Page 31
Strategic Audit of NBE
d
go
ve
rn
m
en
t
an
d
un
io
n
pe
ns
io
ns
;

Paym
en
ts
ar
e
m
ad
e
int
o
ac
co
un
ts
of
be
ne
fic
iar
ie
s
wi
th
N
B
E
an
d
all
th
e
ot
he
r
ba
nk
National Bank Of Egypt
Page 32
Strategic Audit of NBE
s
(3
8
ba
nk
s)
in
E
gy
pt
as
w
ell
as
E
gy
pt
P
os
t
an
d
th
e
Pr
in
ci
pa
l
B
an
k
fo
r
D
ev
el
op
m
en
t
an
d
A
gri
cu
ltu
ral
Cr
ed
it;
an
d

National Bank Of Egypt
Page 33
Strategic Audit of NBE
It is
us
ed
to
m
ak
e
du
e
pa
y
m
en
ts
to
su
pp
lie
rs
de
ali
ng
wi
th
th
e
co
m
pa
ni
es
.

Benef
its
:
1.
Mini
m
a
l
o
p
e
r
a
ti
o
n
a
l
r
i
National Bank Of Egypt
Page 34
Strategic Audit of NBE
s
k
(
h
a
n
d
li
n
g
c
a
s
h
,
f
o
r
g
e
d
c
h
e
q
u
e
s
,
…
)
;
2.
Rec
u
r
r
i
n
g
p
a
y
m
e
n
t
s
a
r
e
National Bank Of Egypt
Page 35
Strategic Audit of NBE
s
e
n
t
o
n
c
e
;
3.
Go
p
a
p
e
r
l
e
s
s
v
i
a
r
e
p
l
a
c
i
n
g
p
a
p
e
r
t
r
a
n
s
f
e
r
s
w
it
h
e
National Bank Of Egypt
Page 36
Strategic Audit of NBE
l
e
c
t
r
o
n
i
c
o
n
e
s
;
4.
It
s
a
v
e
s
ti
m
e
a
n
d
e
ff
o
r
t
a
n
d
p
r
o
v
i
d
e
s
e
a
s
e
o
f
u
National Bank Of Egypt
Page 37
Strategic Audit of NBE
s
e
;
5.
Pro
c
e
s
s
m
u
lt
i
p
l
e
t
r
a
n
s
a
c
ti
o
n
s
a
t
o
n
e
ti
m
e
t
h
r
o
u
g
h
t
h
e
s
u
b
m
National Bank Of Egypt
Page 38
Strategic Audit of NBE
i
s
s
i
o
n
o
f
a
s
i
n
g
l
e
fi
l
e
(
B
a
t
c
h
p
r
o
c
e
s
s
i
n
g
)
;
6.
Low
c
o
s
t
f
o
r
l
o
c
a
National Bank Of Egypt
Page 39
Strategic Audit of NBE
l
t
r
a
n
s
a
c
ti
o
n
s
;
7.
A
s
a
f
e
a
n
d
f
u
ll
y
s
e
c
u
r
e
d
s
y
s
t
e
m
;
8.
A
c
o
m
p
l
e
t
e
National Bank Of Egypt
Page 40
Strategic Audit of NBE
s
e
t
o
f
d
a
il
y
,
m
o
n
t
h
l
y
a
n
d
a
n
n
u
a
l
r
e
p
o
r
t
s
;
9.
Syst
e
m
u
s
e
r
s
c
a
n
b
e
s
p
National Bank Of Egypt
Page 41
Strategic Audit of NBE
e
c
if
i
e
d
a
n
d
i
d
e
n
ti
fi
e
d
b
y
s
e
c
r
e
t
c
o
d
e
s
t
h
a
t
c
h
a
n
g
e
e
v
e
r
y
m
i
n
u
t
National Bank Of Egypt
Page 42
Strategic Audit of NBE
e
;
a
n
d
10.
Syst
e
m
i
s
e
a
s
y
t
o
i
n
t
r
o
d
u
c
e
a
n
d
t
r
a
i
n
i
n
.
National Bank Of Egypt
Page 43
Strategic Audit of NBE
A Competitive Advantage

The state-owned National Bank of Egypt (NBE) has prepared a mediumterm strategy, with a period of three years starting from 2014, in order to
better face the market competition, deputy chairman of the bank Sherif
Elwy.

The strategy involved growing the retail banking and small and medium
enterprises (SMEs) sectors due to the fact that the growth rate of these
sectors is faster than of the big companies’, according to Elwy.

NBE added the strategy included reducing the relative weight of financing
large companies from 70% of the bank’s loan portfolio to 40%, besides
diversifying the remained share on financing individuals and SMEs.

NBE stated that the bank’s deposits are growing with robust rates during
the 2013/2014 fiscal year (FY) and are expected to reach EGP 387bn by
the end of June, compared to EGP 313bn during the same period last
year. This represents an EGP 74bn increase.

NBE revealed that the bank is targeting the launch of 50 new branches
during the coming three years, indicating that the demand on Islamic
branches is the controlling standard for such a move. This will sum the
bank’s branches to 417 by the end of 2017.
National Bank Of Egypt
Page 44
Strategic Audit of NBE

The deputy chairman of NBE automated teller machines (ATMs) reached
1,750 by the end of April, adding that the bank is aiming to increase them
by 500 new ones and exchange 400 old ones by the end of 2015.

NBE also adopted an approach to activate the role of non-governmental
organizations (NGOs) in offering microcredit services via allocating an
EGP 1 bn. tranche of loans to NGOs to be relent to micro enterprises.
Total facilities amounted to EGP 850 MM. and were extended to 15 NGOs
and businessmen.

NBE stated that the number of ATMs will reach 2,350 by 2015, an increase
of 34%. Elwy pointed out that the bank relies on sophisticated and
equipped machines that allow banking services, such as phone cash.

NBE added that the bank will increase the Point of Sale machines (POS)
to reach 15,000 machines by the end of 2015, compared to 11,000 which
will be registered by the end of 2014.
Business Model
National Bank Of Egypt
Page 45
Strategic Audit of NBE
Business Model
The Bank operates a number of business lines which are described below:
Customer Services:
The bank offers banking services in/out Egypt to Egyptian nationals,
foreigners and various corporate customers operating in or outside Egypt. The
Customer Services area is able to offer fixed term deposits, plus current
account services.
Lending:
Syndicated loans are provided for general funding requirements to banks,
corporates and sovereign entities. Bilateral and direct loans to customers are
to support working capital financing, capital expenditure and trading activities.
The bank is looking to rebuild this business in 2014/15 after the financial
crisis. The Bank also offers corporate and institutional banking facilities to
correspondent banks.
Treasury:
Treasury activity focused primarily on liquidity management, including the
management of a portfolio of investments to assist with liquidity and enhance
income, despite the previous difficult interest rate market conditions. The
Treasury team operates a non- trading book. Foreign exchange services in all
major currencies are also offered through traditional interbank channels within
pre-determined risk limits. The Treasury team also manages the banks
interest rate exposure, under set internal policies.
Documentary Credits:
These activities have continued to be expanded internationally from the
traditional Egyptian markets over the last few years, and there are both
corporate and financial institutions as customers.
The business includes issuing, advising and confirming letters of credit and
guarantees.
Principal Risks and Uncertainties
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Within our simple business model, there are a number of potential risks and
uncertainties that could have a severe impact on the Bank’s performance and
could cause actual results to differ materially from expected and historical
achievements. NBE has a responsibility to identify these risks, understand the
risks through analysis and put measures in place to mitigate these risks. This
is to ensure that there are processes in place to minimize its impact.
The Board of Directors and Executive Management promote a responsible
approach to risk, whereby the overall risk appetite is established by the Board
and reviewed on a regular basis. Such appetite for risk is always governed by
high quality risk assets, diverse lending portfolio, and central oversight of risk
across the Bank to ensure that the full spectrum of risks NBE is exposed to
are adequately identified, measured, assessed, monitored, controlled and
reported.
The Risk Management function is complemented by all departments,
business units and Board Committees in the process and management of
certain categories of risks as detailed below.
The responsibility of Risk Management is fully vested in the Board of
Directors, which in turn delegates this to Senior Management and the Board’s
Committees. NBE’s management ensures that risk and risk management
awareness is fully adhered to at all times. NBE avoids any business where
associated risks cannot be objectively assessed, measured or managed.
Various investment strategies and derivatives are used to mitigate the risks
the Bank is exposed to and optimize investment performance.
The key risks inherent in our business model are:
 Credit Risk:
The Bank is exposed to credit risk, in that counterparty will fail to fulfill their
obligations. Where the lending is unsecured, collateral is requested to
minimize the risk of default by a customer. Credit risk is managed proactively
by a robust Credit department and a Credit Committee comprised of senior
management. Under the Capital Requirements Directive, the Company has
adopted the Standardized Approach to credit risk.
Credit risk is defined as the likelihood that a customer or counterparty is
unable to meet the contracted financial obligations resulting in a default
situation and loss event. This risk is the main category of risk
NBE is exposed to. Credit risk comprises counterparty risk, settlement risk
and concentration risk.
These risks arise in the Bank’s normal course of business.
The approach to credit risk management is based on the foundation to
preserve the independence and integrity of the credit risk assessment,
management and reporting processes combined with clear policies, limits and
approval structure which guide the day-to-day initiation and management of
the Bank’s credit risk exposures. This approach comprises credit limits which
are established for all customers after a careful assessment of their credit
standing. This has enabled a greater understanding of the risks involved
within the existing portfolios, while making sure an in-depth analysis and
review is undertaken of new and existing transactions. Conscious efforts have
also been made to increase staff awareness on risk factors within
transactions.
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Critique:
Over the last year, NBE has focused on operating within an environment and
with counterparties with which it is not only familiar, but also comfortable. The
focus has been on familiarizing the business with its existing customers while
continuing to gradually increase its market share within growing emerging
markets - particularly for trade finance business.

Market Risk
Market risk is the risk of a change in the market value, earnings or future cash
flows of a portfolio of financial instruments, caused by the movements in
market variables such as bond equity or commodity prices, interest and
exchange rates.
Market risk exists for NBE where it holds securities that are affected by
market fluctuations. Its investment and debt securities are held to maturity and
therefore GDR’s and other securities prices are of less concern. NBE is
exposed through daily currency open positions, but this is mitigated by the
restrictions placed on the maximum position allowed on each currency and
enforced stop-loss positions.
Critique:
 NBE does not undertake proprietary trading activities therefore no
trading book is maintained.
 The interest rate risk is managed as part of the daily monitoring within
predetermined limits approved by the Board. The majority of our
interest bearing liabilities and assets are based on floating rates, and
so any interest rate mismatch is removed. Also, the majority of assets
and liabilities are short dated, and therefore not subject to interest rate
risk.

Liquidity Risk:
Liquidity risk is when NBE is unable to retain or create sufficient cash
resources to meet its commitment. This happens when there is a shortfall in
the amount available to NBE and the amount due to be paid out, which could
either be due to a mismatch in funding versus deposits or a lack of liquid
assets.
Liquidity risk is covered under the Banks “Individual Liquidity Adequacy
Assessment (“ILAA”) policy and regular stress tests are undertaken to ensure
that we remain liquid at all times. Under the liquidity regulations the Company
has fully implemented the requirements for liquidity risk management
including systems and controls. During the year under review the Company’s
approach to the liquidity risk management was reviewed and documented in a
revised comprehensive “Individual Liquidity Adequacy Assessment (“ILAA”)
document, drawn up in accordance with the regulatory requirements.
This document describes the Company’s liquidity risk tolerance, including the
methodologies for ensuring that risk is restricted within that tolerance. It
analyses the sources of liquidity risk, and describes the assumptions and
approach taken to stress testing in light of those risks.
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Strategic Audit of NBE
It also incorporates the Company’s liquidity contingency funding plans, liquid
asset buffer and identifies those risks which have the potential to cause the
Company to fail (reverse stress tests), as demanded by regulatory
requirements
Critique:
 Daily monitoring is undertaken to make sure there is a good mix of
wholesale and retail deposits coupled with the support of a strong stock
of high quality liquid assets including Liquid Asset Buffer (“LAB”) which
has been a dependable source of liquidity.

Operational Risk:
Operational risk is defined as the “risk of direct or indirect loss resulting from
inadequate or failed internal processes, people and systems, or from external
events”. However, a defined operational risk management framework is
effectively applied within the Bank, coupled with a high awareness of the
underlying causes of operational risk at all levels within the business units,
results in a control environment which is able to evolve with changing
business needs, thereby ensuring operational losses within the business are
kept to a minimum.
Critique:
 NBE has placed particular emphasis on improving in this area in recent
years and has put in place both the structure and personnel to ensure
steady and continual movement towards meeting this objective.
 Operational risk is managed by all operational areas of the Bank on a
day-to-day basis, but with oversight from Financial Control, Risk, and
Internal Audit.

Regulatory Risk:
Regulatory risk is the risk to earnings, capital and reputation associated with a
failure to comply with an increasing array of regulatory requirements and
expectations from banking regulators.
Regulatory risk governance must begin at the Board level and cascade
throughout the Bank.
The Bank operates in a highly regulated environment and is therefore subject
to regulatory risk in that it may find it does not comply with some aspect of the
regulations, or wrongly reports figures to the regulators. Changes to the
regulations are made frequently, and the Banks Financial Control and Risk
areas ensure that the Bank is compliant with the rules at all times. This risk is
also mitigated by regular contact with the company’s auditor, membership of
trade organizations and various professional bodies.
Critique:
 NBE ensures there is governance through its compliance and audit
functions, which in turn ensures there is discipline and adherence
towards maintaining regulatory requirements, while also deploying the
effective resources needed to achieve them. In this way regulatory risk
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Strategic Audit of NBE
is minimized whilst the objective of NBE is taken into consideration and
not hindered.

IT System and Control Risk:
IT/Systems risk is the risk of a failure or an issue arising within a bank’s
primary systems, which might hinder the functionality of the business with
unforeseeable consequences and eventually lead to a loss of revenue to the
business.
The Bank has an established integrated Risk Management Function that
clearly assigns ownership and management of specific risks to business units
heads and senior management. This ensures that all of the principal risks are
defined and recognized and that policies and procedures are in place to
mitigate any such risk. The Company’s risks are managed taking into account
several main principles including management responsibilities for the
management of risk and controls, assessment and measurement of all
identified risks with acceptable balance between risk versus return, and
undertaking an annual review of risk policies and the control framework to
ensure optimal capital allocation and utilization for relevant risks.
Critique:
 NBE understands the risk and reputation risk addresses the issues and
maintains the most up to date systems and anti-virus software to
ensure a high level of IT security is sustained. The Bank has internal
controls and monitoring systems in place around operations and IT
related projects and enhancements.
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Value Chain Analysis
Porter’s value chain describes the activities a company engages in and
divides them into two broad categories:
 Primary activities (those involving the physical creation, sale, and service
of the product), and:
 Support activities (those functions constituting the company’s
infrastructure).
 When considering the NBE strategy we can find that risk management is
distinctive because it interacts with and influences both primary and
support activities. Risk management overlays the four support activities
and spans the five primary activities, as illustrated below.
The four support activities are corporate infrastructure – including finance and
treasury – human resources, technology, and procurement. Each is involved
in developing and defining strategic risk management.
Risk management returns the favor by helping shape and defines the four
support activities. Likewise, the nature of the primary activities – the inbound
supply chain, operations and production, the outbound supply chain,
marketing and sales, and after-sales service – help determine the risk
management strategies required, while risk management shapes the
execution of the activities themselves.
Risk management is a strategic concern for any corporation. The influence
risk management has on shaping the configuration and execution of activities
defining the company’s value chain demonstrates risk management’s role in
the firm’s competitive advantage.
Critique:
 It should be evident that there is a distinct benefit to corporations
ensuring that few, if any; activities are beyond the purview of risk
management. This benefit accrues through the enhancements risk
management provides to value creation and their competitive
advantage. It is not enough to think value is created by talking about
risk management in a strategic context, as some business
consultancies suggest. Risk management creates value as part of the
strategic context through competitive advantage and the value chain.
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A corporate risk management culture is necessary for an effective ERM. All
corporate culture begins at the top of the organization, with chief officers and
the board. If risk management is to fulfill its strategic role, that is to permeate
all primary and support activities that define the organization and enhance its
competitive advantage, the direction must come from the highest levels.
It is not necessary for every company to have a chief risk officer, but someone
at the top must be accountable for risk management activities throughout the
organization. The Board must be educated in risk management issues
pertinent to the particular industry (see Porter’s Five Forces Model), and a risk
committee, composed of officers, staff, and directors, needs to write up a
guiding set of risk policies and make sure they are implemented and modified
as necessary.
Most importantly, all employees and staff up and down the corporate structure
must understand that risk management is part of their job descriptions and
that they must help manage the risks they encounter as part of their work. It
cannot be otherwise, since all employees, from top to bottom, have some
responsibility for competitive advantage.
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Corporate Structure
1.
How is the corporation structured at present?
It is essential for the banking industry to restore a firm of trust with the
communities we serve. That applies to National Bank Of Egypt as well as the
entire industry. We have set ourselves the goal of taking on a pioneering role
in the change that is indispensable in the business sector: Cultural change
was therefore an essential part of our Strategy 2015+ and corporate culture
remains one of the key levers in our Strategy 2020. From 2012 onwards,
Senior Management initiated a comprehensive dialogue with employees and
managers. One crucial step is to bring the attitudes and goals of our staff in
line with the needs of our clients and the overall economy.
Since 2014, we have integrated our corporate values and beliefs into people
management tools such as objective setting, performance management,
leadership, management assessment and people development tools. We are
developing organizational metrics and systems to support the measurement
and adoption of desired behaviors. This will be achieved through the use of
client management information systems, client satisfaction metrics and
performance measurement systems, including the creation of a scorecard
with financial and nonfinancial metrics.
2. Is the structure clearly understood by everyone in the corporation?
3. Is the present structure consistent with current corporate objectives,
strategies, policies, and programs, as well as with the firm’s
international operations?
We have embedded our values and beliefs in our recruiting, interviewing, and
on-boarding processes as well as development activities. In 2014, we focused
on engaging employees throughout National Bank of Egypt with what these
values mean in practice. We encourage visible and measurable changes in
behavior as well as in policies, processes and practices. Workshops across
the bank aim to
engage small groups and reinforce the need for alignment and change, while
also identifying opportunities to drive business performance.
In the past, we may have underestimated the potential emotional effects of
change. We have therefore developed a series of measures to support
leaders and employees throughout the transformation. These include:
guidelines on managing change; surveys to assess how employees are
processing the change both mentally and emotionally; and coaching,
workshops and trainings on how to increase efficiency.
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Corporate Culture
1. Is there a well-defined or emerging culture composed of shared beliefs,
expectations, and values?
In 2013, our Supervisory Board intensified its oversight of ethics through the
creation of an Integrity Committee. The committee advises and monitors the
Management Board on its measures to ensure the economically sound,
sustainable development of the company while protecting the resources of the
natural environment, maintaining social responsibility and observing the
principles of sound, responsible management and corporate governance. It is
also concerned with the integration of these aspects into corporate culture.

In particular, the committee deals with:
Monitoring the Management Board’s measures to ensure the bank’s
compliance with legal requirements, authorities’ regulations and the
company’s own in-house policies.

Regular review of the bank’s Code of Business Conduct and Ethics
with a view to fostering ethical and moral conduct within and outside the bank.

Precautionary monitoring and strategic analysis of the bank’s legal
and reputational risks that could place the entire bank at risk or lead to
material claims for damages against current or former Management Board
members and regularly advising and monitoring the Management Board with
a view to avoiding such risks.
Our progress on strengthening corporate culture
Since we launched our strategy, we have worked intensively on our corporate
culture. We introduced the process of deep, longer-term cultural change and
established our new corporate values.
What are the corporation’s current marketing objectives, strategies, policies,
and programs?
Marketing Plan
Our Marketing Plan includes everything we do to get your customers to buy
your product or service. This is often the weakest part of a business plan so it
is important we spend enough time to get all of the research we need to
complete it successfully. our Marketing Plan include both our strategies for
growing sales as well as the tactics we will employ to get there along with an
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Strategic Audit of NBE
overview of the competition in our market. The Marketing Plan section is
made up of five subsections:
Target Market
Services/Products
Pricing Strategy
Sales/Distribution Plan
Advertising and Promotions Plan





Target Market
We have an understanding of the size of the target market for our product and
the niche we are trying to carve out for your business. Explain the type of
person or business that is likely to buy y\our product or service and how large
this market is. We are sure to describe our direct competition & indirect
competition. our indirect competitors are the businesses that sell a product
that is not the same as ours but could be used as an alternative by your
customer.
The Target Market section covers the following :
1.
Our target market. Including demographics statistics such as their age,
gender, where they live, income etc. Also the psychographics of our
target market. What do they have in common? What motivates them?
2. Estimating the total size of the target market for our product or service
in terms of gross sales and units of product or service sold.
3. What trends are affecting the target market for our product or service?
Consider industry trends, socioeconomic trends, government policy, and
demographic shifts.
4. Summarizing our competition. Include estimates of their market share,
and our sense of their financial health. Comparing their product or
service to ours in terms of quality, price, service, warranties, image, etc.
Include both our direct competition and indirect competition.
Services/Products
Our marketing strategy communicates what makes our product or service
unique. It is important to describe both the features and the benefits of our
product or service. Features are descriptive attributes of our products. The
benefits describe what good things the customer will enjoy by using your
product or service (e.g. save time, save money, feel better etc.).
Our Services/Products section covers the following:
1.
What is the one thing above all else that makes our product or service
unique?
2. What other features does our product or services have? Consider
quality, price, service, etc.
3. What benefits will our customers enjoy by buying your product or
service? Will they save money, feel better, be smarter, etc.?
Pricing Strategy
An important part of our strategy is determining how we will price our product
or service. The secret here is to establish a reasonable base price that will
enable us to make a fair profit. We may believe the easiest route is simply to
set your prices in accordance with those of your competitors. That's not
always wise. Before we set a base price, we have to look at our own
objectives and special considerations.
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The Pricing Strategy section covers the following:
1.
What is our base price and how did we arrive at this figure? Provide a
brief summary of our fixed and variable costs.
2. How are similar products and services priced? Explain how the price of
our product or service will compete with market prices. If our price is
higher, why would a customer choose your product? Do we offer
superior service or a higher quality product? If our price is lower, how are we
able to charge less - is the quality different, is our production process
more efficient, do you sell in large volumes?
3. What do our costs include?
4. What kind of a return are we looking for in our investment and how
soon are you anticipating recouping our investment?
Sales/Distribution Plan
Our Sales/Distribution Plan details how the transaction between us and our
customer will take place. It includes a discussion about how our plan on
selling our product or service and it outlines all of the different people and
companies involved in getting our product into the hands of our customer. We
explain in detail what type of distribution channels are available to us (account
representatives, sales people, Internet, delivery services, other companies
that will carry our product) what benefits we will have by choosing them and
the length of time it will take to get our product to our customer.
Advertising and Promotions Plan
Our Advertising and Promotions Plan details how we are going to
communicate to our customers and prospects. There are many ways our
business may communicate including advertising, public relations, brochures,
a Website, trade shows, etc.
HR
The HR function in NBE is primarily concerned with the “staffing” component
of the five management processes, namely, planning, organizing, staffing,
leading, and controlling. The key elements of staffing include:
•
Job analysis
•
Planning labor needs
•
Recruiting
•
Orienting and training new employees
•
Compensation, incentives and benefits
•
Performance appraisal
•
Communicating
•
Training and development, and
•
Employee commitment
In addition, HR is responsible for compliance laws, safety, and handling
grievances and labor relations.
So,,,, the “people” or personnel aspects of management jobs involve
conducting job analyses; planning labor needs and recruiting job candidates;
selecting job candidates; orienting and training new employees; managing
wages and salaries; providing incentives and benefits; appraising
performance; communicating; training and developing managers; building
employee commitment; being knowledgeable about equal opportunity,
affirmative action, and employee health and safety; and handling grievances
and labor relations.
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IFAS
Internal Strategic
Factors
Strengths
High Growth Rate
Reduced Labor Costs
Monetary Assistance Provide
High Profitability and Revenue
Domestic Market
Weight
Rating
Score
.15
.10
.10
.15
.10
4
3
3
4
3
.6
.3
.3
.6
.3
.05
.10
.10
.10
.05
1
3
4
4
2
2
.15
.4
.4
.2
.1
3.35
Weaknesses
Future Competition
Competitive Market
High Loan Rates Are Possible
Small Business Units Costs
Tax Structure
TOTAL
Critique:
 NBE has the strongest centers of power due to the centers of
power that it has a source of confidence of customer and the
diversity of products and services, it should to focus on the
weaknesses for control of the competitors and to be that it has
the ability to transform weaknesses to strengths.
SWOT
SWOT analysis:
Strengths
Opportunities
high growth rate
reduced labor costs
monetary assistance provided
high profitability and revenue
domestic market
new products and services
new acquisitions
global markets
venture capital
income level is at a constant increase
growing economy
growing demand
Weaknesses
Threats
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Strategic Audit of NBE
future competition
competitive market
high loan rates are possible
small business units costs
tax structure
unexpected problems
increasing rates of interest
rising cost of raw materials
increasing costs
financial capacity
price changes
SFAS
Factors
O1 - New Products
& Service
O4 - Venture Capital
O5 - Income level is at
a constant increase
O6 - Growing economy
T2 - Increasing Rates of
Interest
T5 - Price Changes
S1 - High Growth Rate
S2 - Reduced Labor
Costs
S4 - High Profitability
and Revenue
W3 - High Loan Rates
Are Possible
Total Scores
Weight
Rating
.20
4
Weighted
Score
.8
.10
.15
3
3.5
.3
.525
.05
.15
2.5
3
.125
.45
.10
.05
.05
3
2.5
2.5
.3
.125
.125
.10
3
.3
.05
3
.15
1
3.2
Review of mission and objective
Our Mission
To be the most successful bank admired for its innovative service, people and
technology both locally and in the Middle East and North Africa region.
Critique:
 Mission statements are supposed to model what business you are in, what
competition you face, and your core values.
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Strategic Audit of NBE


The ultimate test is that it should serve as a recruiting device leading
applicants to say” That is the kind of business I want to be in and that is
the kind of company I want to work for!”
What remains then is to examine ways to improve the process and the
product so that they are aligned and versions of each other—almost in a
cause and effect partnership.
Our Objectives
The Bank’s approved three year strategic business plan 2015-2017 sets out
the key financial objectives to restore the Bank’s historical interest income
trend and improve the overall profitability and earnings. According to the
approved strategy, NBE’s mission is to provide world class international
banking services to Egyptian and Middle Eastern related businesses and
governmental agencies and in doing so, become the first choice for Egyptian
counterparties and other relationships from the Gulf region and North Africa.
With our strong base of experience and market presence, we aim to grow
each of our various strategic business lines in both market and product
extensions.
The Bank's primary business objective is to provide a range of banking
services to both its Egyptian and international customers. Its strategy for
doing so is as follows:
• protect the Banks capital and liquidity, and within internal risk management
policies, with minimal exposure to market risk;
• To provide lending in trade finance to both financial institutions and large
commodity corporate clients involved in trade predominantly to or from the
Middle East and growing emerging markets;
• Increase loans and advances including syndicated facilities and to be used
as a penetrating tool for the purpose of future enhancement of trade
relationships with NBEs existing counterparties and other future targeted
relationships;
• To provide treasury services to customers and counterparties; and
• To maintain asset quality whereby the overall investment grade of the
balance sheet will be around 80%.
The strategy drivers are based on the strength of our parent in our home
market, Egypt, combined with our historical experience in emerging markets
in terms of sourcing business and accepting risk. In addition we are intent on
building our funding base to be diversified, whilst maintaining liquidity and
meeting all Regulatory requirements.
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And we need to add this objective to the NBE:
Our purpose is to be where the growth is, connecting customers to
opportunities. We enable businesses to thrive and economies to prosper,
helping people fulfill their hopes and dreams and realize their ambitions. We
have developed a two-part strategy that reflects our purpose and competitive
advantages:

A network of businesses connecting the world: NBE is well positioned
to capture the growing international trade and capital flows. Our global
reach and range of services place us in a strong position to serve
clients as they grow from small enterprises into large multinationals

Wealth management and retail with local scale: we aim to capture
opportunities arising from social mobility and wealth creation in our
priority growth markets, through our Premier proposition and Global
Banking business. We will invest in full scale retail businesses only in
markets where we can achieve profitable scale
The world economy is becoming ever more connected, with growth in world
trade and cross-border capital flows continuing to outstrip growth in average
gross domestic product. Over the next decade we expect 35 markets to
generate 85 per cent of world trade growth with a similar degree of
concentration in cross-border capital flows.
Of the world’s top 30 economies, we expect those in Asia, the Middle East
and North Africa to increase in size approximately four-fold by 2050,
benefiting from demographics and urbanization. By this time they will be
larger than those of Europe and North America combined. We expect Asia to
contribute nearly 50 per cent of global GDP growth between now and 2050.
NBE is one of the few truly international banks. We have an unrivalled global
presence with access to more than 85 per cent of global trade and capital
flows. Our network connects faster-growing and developed markets. We have
a diversified universal banking model that provides stable funding, liquidity
and a low risk profile. Strong capital generation supports our ability to pay
industry-leading dividends and helps us to meet capital requirements. These
are distinct competitive advantages.
Since 2011, we have materially transformed our business in line with our
strategy. At our Investor Update in June 2015, we outlined plans to further
reshape our business. We will redeploy resources to capture expected future
growth opportunities and adapt to structural changes in the operating
environment.
We have set out a series of actions to be completed by 2017:

Reduce risk-weighted assets across the Group by 25 per cent or more
and reinvest the capital in higher-performing businesses. Reducing
risk-weighted assets will help our Global Banking and Markets
business reach profitability targets
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Strategic Audit of NBE

Continue to optimize our global network and reduce complexity through
the ongoing application of the six-filter process that guides our
decisions on where we do business.

Set up a UK ring-fenced bank

Deliver revenue growth above GDP growth from our international
network

Capture growth opportunities in Asia including in China’s Pearl River
Delta, in the Association of Southeast Asian Nations (ASEAN), and in
our Asset Management and Insurance businesses

Grow business from our global leadership position in the
internationalization of the Chinese currency, the RMB

Complete the implementation of Global Standards, our globally
consistent and rigorous financial crime controls.
Targets
We aim to achieve a return on equity of more than 10 per cent by 2017, with
momentum for higher returns in the future. We aim to grow business revenues
faster than operating expenses on an adjusted basis. We are also committed
to delivering a progressive dividend. The progression of our dividend should
be consistent with the growth of the overall profitability of the Group and is
predicated on our ability to meet regulatory capital requirements in a timely
manner.
Delivering these priorities will create value for our customers and
shareholders and contribute to the long-term sustainability of NBE. In the
process, we shall maintain a robust, resilient and environmentally sustainable
business in which our customers can have confidence, our employees can
take pride and our communities can trust.
Acquisition:
Growth strategies:
In 2004 NBE had followed growth strategy based on more vertical expansion
through the full acquisition of 2 other banks (The engineering and the
commercial bank).
TOWS MATRIX
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SPACE MARTIX
Internal strategic position
Competitive advantage (CA)
(-6 worst, -1 best)
Product quality
Market share
Brand & image
Customer service
AVERAGE
Financial strength (FS)
(+1 worst, +6 best)
ROA
Liquidity
Cash flow
Leverage
AVERAGE
National Bank Of Egypt
-1
-1
-3
-2
1.75-
+5
+6
+5
+4
5+
External strategic position
Industry stability (IS)
(+1 worst, +6 best)
Barriers to entry
Growth potential
Access to financing
Industry profit
AVERAGE
Total
3
Environmental stability (ES)
(-6 worst, -1 best)
Inflation
Technology
Demand elasticity
Taxation
AVERAGE
Total
2.75
Page 62
+6
+4
+4
+5
4.75+
-2
-1
-2
-4
2.25-
Strategic Audit of NBE
BCG MATRIX
STAR


QUESTIAN MARK
Certificates
Savings


Current accounts
Loans
CASH COW


DOG
Credit cards
Expatriates transfers


Debit cards
Prepaid cards
QSPM
STRATEGIC ALTERNATIVES
Key internal factors
Internal strengths
Market share acquisition
Financial position
Marketing & advertisement
Information systems
Retail department
Training &development
Employee capital
Internal weaknesses
Operating expenses
Low profit per share
Old design branches
Old staff unfamiliar to IT
Market development
Market penetration
0.15
0.10
0.15
0.15
0.05
0.05
0.05
AS
2
3
3
2
3
4
2
TAS
0.30
0.30
0.45
0.30
0.15
0.20
0.10
AS
3
3
4
2
4
3
3
TAS
0.45
0.30
0.60
0.30
0.20
0.15
0.15
0.10
0.05
0.10
0.05
1
--1
0.10
--0.05
2
--2
0.20
--0.10
Weight
1.00
Key external factors
OPPORTUNITIES
Globalization
Penetration
Deregulation
Upstream/downstream integration
0.05
0.25
0.10
0.15
2
-2
3
0.10
-0.20
0.45
3
4
2
4
0.15
1.00
0.20
0.60
THREATS
Strong competition
Product substitution
Induction of new players
Government policies
0.20
0.10
0.05
0.10
3
3
3
1
0.60
0.30
0.15
0.10
2
2
1
1
0.40
0.20
0.05
0.10
3.85
<
4.7
Total
National Bank Of Egypt
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Strategic Audit of NBE
Critique:
 According to the above analytical methods we can conclude that using the
NBE resources and capabilities in order to make the best use of its
strengths and to avoid weaknesses this can be done through new markets
penetration as there is a huge gap in the market which is needed to be
covered ( especially in the SME’s market )
Balance Scorecard
Strategic
Prioritie
s
Financial
Perspectiv
e
Customer
Perspectiv
e
Internal
Perspectiv
e
Objectives
Targets
Initiatives
 Net income
 Cash flow
 Volume
growth
 Cost
reduction
 10 %
increase
 20 %
increase
 Increase
number of
branches
 Implement
CRM
 Assets
disposition
program
 Personalized
quality service
 Competitive
products
 Attract &
retain more
customers
 # of new
customers
 # of customer
complaints
 Level of
customer
satisfaction
 Revenue from
existing
customers
 Increase No.
of Branches &
ATMs
 Implement
Quality
system
 Mystery
Shopper
Program
 Increase
Customer
Value
 Operational
Excellence
 Create
Innovation
Products
 Cross-Sell
Products
 Share of
Market
 Revenue from
new products
 Cross-Sell
ratio
 Level of
customer
satisfaction
 Brand Quality
measure
 Increase
customer
loyalty
 Low fees
using bank's
services
 No time
limitation
for the use
of Bank's
services
 Efficient
Operations
 From 3 to 4
New product
& Services
 Minimize
No. of
complaints
 Reduce the
time of the
transactions




Increase profit
Grow revenues
Asset growth
Efficiency ratio
Measures
National Bank Of Egypt
Page 64
Create Market
intelligence
knowledgeba
se
 Cycle time
optimization
program
Strategic Audit of NBE
Learning
& Growth
 Train the staf
 Empowering
Employees
 Incentives &
Participation
 Employee
Turnover
 Employee
Satisfaction
 Hours of
employee
training
 Training
Programs to
all the
employees
 Implement
an appraisal
and
compensatio
n system
 Develop
succession
plans
 Encourage
staf
training/cer
tification
 Develop
communica
tions plan
 Essential
job
knowledge
manual
Critique:
 The BSC measure contains multi‐dimensional indicators that examine four
perspectives of organizational performance; financial perspective,
customer perspective, internal process perspective and learning and
growth perspective. From our point of view NBE management has to work
in developing the learning & growth perspective and customer perspective
to serve the future of the oldest organization in Egypt.
Strategy implementation problems:



Organizational structure
Organizational design
Culture
Strategy implementation can pose a number of challenges. The challenges
arise from sources that are internal and external to the organization. The
particular challenges that will face strategy implementation will depend on the
type of strategy, type of organization and prevailing circumstances. Many
challenges in strategy implementation can be avoided if strategy development
is coupled with implementation. Involving key people especially those who will
play a role in implementation in the development stage is important so that
critical implementation issues are not left out of consideration during
development or formulation.
Challenges to strategy implementation that can arise from sources that are
internal to the organization may include; behavioral challenges such as
resistance to change that can be reduced through effective communication,
effective reward system, good leadership and a participatory strategy
development process. Proper change management approach can also
drastically reduce resistance to change. Another internal source of strategy
implementation challenge is inadequate resources such as funds, equipment
and facilities, human resource skills and experience. This can be reduced
through proper and appropriate policies and adoption of proper control system
National Bank Of Egypt
Page 65
Strategic Audit of NBE
during strategy development. Also inappropriate systems of structure, culture,
leadership, policies, support and reward can be a source of internal
challenges to strategy implementation. Proper planning and control systems
can be useful in reducing problems of inappropriate systems.
Challenges to strategy implementation can also arise from sources that are
external to the organization. The forces can be macro-environmental forces.
Such forces include; economic forces, political-legal forces, socio-cultural
forces, technological and ecological forces. Thorough understanding of these
forces and good planning can help reduce challenges associated with the
macro-environmental forces. Another external source of challenge to strategy
implementation is industry forces. Here effort to implement strategy can be
greatly impaired by challenges arising from, powerful buyers and suppliers
and stiff competition from rivals.
Thorough understanding of these forces and good planning is important and
also effective communication with buyers and suppliers. The last external
source is operative environmental forces. Pressure arising from stakeholders
such as creditors, suppliers, customers, government, shareholders and the
local community can impose challenges to strategy development.
Stakeholder’s challenges can be introduced though, understanding the forces
and planning for them, effective communication with stakeholders and
involving key stakeholders during formulation phase.
Once strategies have been developed they need to be implemented. Strategy
implementation happens to be a more challenging and delicate task than that
of strategy formulation. Unlike strategy formulation, here strategists cannot
afford to be abstract or desk work oriented. Delicate and sensitive issues are
involved in strategy implementation such as resource mobilization,
restructuring, culture changes, technological changes, process changes,
policy and leadership changes. If implementation is not effectively managed,
the strategic plan may amount to being a mere white elephant and nothing
more. A strategy may be good, but if its implementation is poor, the strategic
objective for which it was intended may not be achieved.
Critique:
 While implementation of strategy is such an important activity, is not easy.
Strategy should be effectively operationalized in the organization for
effective implementation. Operationalization of strategy is concerned with
working out the strategy by ensuring that the organizations daily activities,
work efforts and resources are directed as much as possible toward
implementing the strategy. Operationalizing strategy involves developing
operational plans and tactics though which otherwise abstract strategy will
be implemented. The plans and tactics are developed at operational and
functional level of strategic management. It is more specific, concrete and
short term in nature.
National Bank Of Egypt
Page 66