The Business Year

Tarek J. Khalife

LEBANON - Finance

Banking Inside Out

Chairman of the Board, Creditbank

Bio

Tarek J. Khalife joined Creditbank as an Executive Managing Director in 1992, before becoming CEO in 2003 and Chairman in 2009. Ever since first joining, he has actively contributed to the bank’s growth from a five-branch network with $60 million turnover in 1992, to a 22-branch network with (a balance sheet of) over $2.5 billion by the end of 2013.

Founded in 1981, Creditbank today ranks among Lebanon’s largest banks. Could you briefly give us an idea about the bank’s rapid growth? When I first joined the bank in 1992, […]

Founded in 1981, Creditbank today ranks among Lebanon’s largest banks. Could you briefly give us an idea about the bank’s rapid growth?

When I first joined the bank in 1992, Creditbank was one of the Lebanon’s smallest banks. It had a total balance sheet of some $50 million, four domestic branches, and a $500,000 bottom line. Today, we have over $2.5 billion on the balance sheet, 22 branches, and a $25 million bottom line.

What was Creditbank’s increase in deposits YoY in 2013?

In 2013, we witnessed a 20% increase in deposits. Over the last eight years, this key growth indicator has consistently hovered between 20% and 25%, which is significantly higher than the sector’s benchmark average of between 7% and 10%.

What have been the main reasons for this increase?

The main reason is that, from the outset, Creditbank has embraced a business strategy that caters to the private sector. In fact, we have the highest loans-to-deposits ratio in the country, which currently stands at over 56%.

Do you have any idea how much of your deposits come from the Lebanese diaspora?

It is close to 20% to 25%. There are many ethnic Lebanese living all over the world and to cater to their needs we need to establish a presence outside Lebanon. Our next challenge is to set up a network of representative offices and branches outside the country to further attract members of the diaspora.

In 2013, you completed your expansion into Armenia and Russia. What was the strategy behind this?

We started investing in Armenia in 2008. Now, we have acquired full ownership of Armenian Anelik Bank and its subsidiary bank in Moscow, Anelik RU. Anelik has a network of 15 branches in Armenia and a full banking license already operational in Russia. In addition, the Armenian market has a significant potential in terms of human capital with a high education level and sound work ethic. I believe Armenia can serve as a services hub for the region.

Are you planning to further expand the number of branches domestically?

We plan to open a couple of branches per year. I would estimate that our domestic market share requires a maximum of 35 branches to cover the whole country. I believe we will achieve this in the next four to five years. However, in the near future internet and mobile banking will carve out a larger market share and naturally this will shift management attention away from the further expansion of branches.

How do you diversify your range of products and services?

We believe the market is too small to solely operate as a niche bank. Basically, in Lebanon, you have to serve everyone and, therefore, you have to offer a wide range of products. Corporate clients normally need credit cards and retail loans. SMEs need, among other things, advisory services. I think Creditbank more significantly invests in new technologies than the sector as a whole. For example, we have recently introduced a mobile solution, MasterCard’s PayPass technology, which allows you to pay with your mobile phone at any point of sale.

What are the main indicators of transparency at Creditbank, and in what ways do you try to maintain high transparency standards?

Our key structures are completely transparent. For example, we are transparent on fees. We do not have hidden charges. We are also transparent in our policies and ways of processing. Clients know exactly what parameters we use to grant a loan. And if we decline they know for what reason. Our employees understand the rules of engagement and are able to give clear, direct answers. This basic principle simplifies the chain of command internally and offers the client a direct and efficient interaction.

Finally, what are the main areas for future growth?

What we need to further develop is private banking, in the broadest sense of the word, as in asset management. Our other main challenge is to set up a network of representative offices and branches outside the country to cater to the Lebanese diaspora.

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