QNB ALAHLI Enjoys a Blend of Local Experience, Based on Years of Confidence in the Egyptian Market, and the International Expertise of QNB Group

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QNB ALAHLI Enjoys a Blend of Local Experience, Based on Years of Confidence in the Egyptian Market, and the International Expertise of QNB Group QNB ALAHLI enjoys a blend of local experience, based on years of confidence in the Egyptian market, and the international expertise of QNB Group. 2 — QNB ALAHLI Annual Report 20192018 Overview As part of QNB Group, we at QNB ALAHLI, Strategic Report seek to contribute to the group’s aspiration to become a leading bank in MEASEA by 2020 and a global icon in 2030. Read more about our Strategy on page 12 Performance Operational Contents Corporate Social Responsibility Overview 4 QNB ALAHLI Chairman and Managing Director’s Statement Assets Net profit 6 Board of Directors EGP 273,014 m EGP 8,522 m Strategic Report 10 QNB ALAHLI at a glance Risk Management Net Profit YOY Earnings Per Governance and 12 QNB ALAHLI’s Strategy growth share Corporate 16 Delivering sustainable results 18 Creating and delivering value 18% EGP 7.63 Operational Performance Read more in our Financial statements section on page 44 22 Wholesale and Commercial banking Separate Financial 23 Retail banking Statements 25 Small and Medium Enterprises Corporate Social Responsibility 28 QNB ALAHLI’s corporate social responsibility Corporate Governance and Risk Consolidated Statements Management Financial 32 Corporate Governance 38 Internal Audit 40 Compliance 42 Risk Management Financial Statements Branches Network 44 Separate Financial Statements 110 Consolidated Financial Statements 184 QNB ALAHLI’s Branches Network QNB ALAHLI Annual Report 2019 — 3 QNB ALAHLI During 2020, we will continue to provide the best Chairman & Managing and most innovative digital banking products Director’s Statement and services to meet our customers’ needs while ensuring speed of service and full compliance with safety standards. On behalf of the Board of Directors, I am pleased to share with you QNB ALAHLI’s annual report for 2019. Last year was an exceptional year for us, with remarkable achievements on many levels, including financial and business results that showed a robust growth and stability. The year also witnessed continuous increase in our business volume, which positively impacted our results throughout the year. Our effective strategy, which is based on a solid foundation, was complemented by QNB ALAHLI’s uninterrupted commitment to offer best-in-class banking services to our customer base. We are committed to the highest standard of governance, transparency and disclosure requirements. These guiding principles will empower us to continue our success in achieving what is in the best interest of our shareholders, customers and employees. Exceptional Growth QNB ALAHLI’s standalone net profit increased by 20% compared to 2018 reaching a total of EGP 8.32 billion, while consolidated net profit increased by 18% compared to last year totaling EGP 8.52 billion. Non-performing loans reached 2.79% as of 31st December 2019, one of the best rates in the Egyptian banking sector. As for asset quality, QNB ALAHLI achieved remarkable results, particularly after applying Mr. Mohamed Osman El-Dib > Chairman & Managing Director IFRS standards at the beginning of 2019 making financial technology accessible to Financial Telecommunication (SWIFT). in line with CBE instructions. The capital everyone. This cooperation aims to help bank efficiency rate reached 20.65%, due to the One of the bank’s initiatives to achieve customers (both individuals and implementation of the most efficient these goals was the launch of the PAYnGO corporates) track down remittances in real credit policies supported by the bank’s app, a digital alternative to conventional time, starting from the time of issuance strong investment portfolio. payment cards and POS. The new app is a until the money is deposited into the These impressive results reaffirm the convenient and easy way for both beneficiary account. The initiative efficiency and reliability of QNB consumers and merchants to make accelerates remittances through a ALAHLI’s policies and operational payments only through smart phones. The network of corresponding banks and excellence, which helped us maintain our new app boosts the bank’s leading position offers full transparency for every leading position in the banking sector in innovative and digital services, transaction, making the new service a with a healthy balance sheet and a strong particularly among smart phone users in game changer for international capital base. The bank was able to build a the local market, giving them an remittances. high quality and diversified loan portfolio, opportunity to facilitate financial Serious Initiatives and we look forward to achieving transactions with merchants. Stemming from our commitment to exceptional growth in loans, by carefully QNB ALAHLI also announced the launch support and develop SMEs under the managing risk on all levels. In addition, of the “Ma’ak online” service, as the first umbrella of the CBE’s initiatives, as a the bank has the highest deposit step in expanding internet banking, leading Egyptian bank, QNB ALAHLI utilization rate, with a loan-to-deposit enabling new customers to open accounts focuses extensively on this sector through ratio of 77%, compared to prevailing rate online and begin their online banking our newly established department of the sector at just 44%. To achieve this experience. dedicated to the study of SMEs’ needs and remarkable rate, we focus on principal The launch of these services aligns with comprehensive development of the sector. banking operations, while maintaining CBE initiatives to promote electronic The bank also established two centers high liquidity. banking culture among Egyptian citizens that not only provide banking services to Innovative Services and to attract new customers, particularly startups, but also offer tailor-made SME In 2019, QNB ALAHLI strived to offer the younger generation, and cater to their services, including consultancies on seed exceptional banking experiences to banking needs by offering products and capital, initiating businesses and other customers by launching a number of services that save time and effort. SME-related topics. These ambitious initiatives focusing on digitalized services Additionally, QNB ALAHLI launched the programs align with QNB strategic plan to that provide easier, more convenient latest innovative SWIFT GPI services for finance and support SMEs. banking experiences and achieve the international payments in cooperation It is worth noting that credit facilities highest level of customer satisfaction by with The Society for Worldwide Interbank offered to SMEs amounted to 21% of total 4 — QNB ALAHLI Annual Report 2019 QNB ALAHLI facilities in September 2019, application, and explained how to use it impairment and loss in 16 governorates as compared to 20% dictated by CBE guidance including the features that save time a first stage. The bank also donated a for 2019. and effort and facilitate their daily number of important medical devices to Overview To further help SMEs in Egypt, QNB transactions, whether personal or several hospitals and medical centers that ALAHLI sponsored a business incubator for commercial through a wide range of provide free services to help eliminate furniture design at Nile University. The electronic products such as E-Banking, waiting lists and to provide the best incubator aimed to support the innovative E-Wallet, and PAYnGO. medical services to those in the neediest ideas of new designers and startups in Signs of Excellence areas. furniture industry, while offering Confirming the bank’s success in The bank has also paid great attention to technical, managerial and financial providing the best to its customers, social welfare, and we sought to donate assistance to new businesses, in order to QNB ALAHLI won six awards this year and contribute to a number of development Strategic Report unleash the full potential of the younger from Global Banking and Finance projects that support deprived villages and generation, create new growth magazine including Best Retail Bank improve the living conditions of low opportunities for the Egyptian economy - Egypt 2019, Best Corporate Bank income families in cooperation with and new jobs for youth. Egypt, Best SME Bank Egypt, Best non-governmental institutions. To further promote financial inclusion and Bank for Treasury Activities Egypt, QNB ALAHLI is always seeking to support support startups, QNB ALAHLI Best Trade Finance Bank Egypt, Best and develop the education sector to build a participated in many programs within the Digital Banking Products and Services creative generation for the future. In this CBE‘s initiative dedicated to financial Egypt. context, the bank has contributed to the inclusion. For the second year in a row, the bank “Nile Entrepreneurs” initiative, under the Performance The bank also took part in the CBE’s has earned two awards from Capital auspices of The Central Bank of Egypt and Operational low-income mortgage finance initiative, Finance International, London for the in partnership with Nile University, by which supports the national strategy for Best Retail Bank in Egypt and the Best sponsoring the “creativity incubator” at social development by providing low- SME Bank - Egypt in 2019. In addition, the headquarters of Nile University for five income citizens new opportunities to the bank won the STP Excellence years. In addition, the bank has purchase their own homes, accordingly, Payments Award from Deutsche Bank, participated in many educational projects QNB ALAHLI signed a cooperation protocol and an award from the European Bank in needy areas. with the Social Housing and
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