VOICES FROM THE FINANCE SECTOR
What are the risks and opportunities for the Lebanese economy this year?
2018 was definitely a challenging year. The first quarter of 2019 has already seen the formation of a new government that is embarking on using the funds provided by the CEDRE conference to enhance infrastructure throughout Lebanon. I would add that the challenge here is that every penny spent needs to be scrutinized. Despite all this, Lebanon did manage to grow in 2018. Some sectors showed higher than expected growth, with air transport growing by 7.4%, international tourism by 5.8%, and total exports and imports by 3.8% and 2.0%, respectively. The Lebanese finance sector has and will always show resilience, as it has a multitude of options laid out before it. The Lebanese Central Bank remains a crucial pillar in the economy, and in 2018 alone total deposits grew by 9.6%.
What are the ripest sectors for investment?
Look no further than the finance sector. This is because we have one of the highest interest rates in the region regarding deposits, simply because we require cash. The electricity and telecommunication sectors are also extremely interesting avenues, since the demand for electricity and better technology is always there.
Can you give us an overview of Amana Capital?
Amana Capital is a financial group focusing on online brokerage with offices in Dubai, London, Cyprus, Malaysia, Mauritius, and Beirut. Its main focus is on the Middle East. We have been operating since 2010, though we are part of a bigger group called 180 Capital, which has business lines in technology, software solutions, asset management, digital assets, and risk management. Our geographical distribution depends on the needs of our clients. Each jurisdiction follows a different type of regulation, and our different licenses offer us more flexibility and allow us to offer our clients more products and specifications.
What are your strengths?
Our main strength is the quality of our staff and our close communication with our customers. While the environment we focus on is online trading, we place great emphasis on understanding the needs of our clients, with an eye on different cultures and practices in the region. We have a multicultural staff to cater to the variety of our clients. Our products suit different types of traders: long-term, day traders, algo-traders, and more. Online trading gives us access to a wide range of clients, from retail to institutional clients and high-net-worth individuals.
What are the pillars of Trust Capital?
Founded in 2011, Trust Capital is a financial intermediary that provides clients with an online platform to trade various asset classes including foreign exchange, precious metals, CFDs, and commodities. Utilizing bridge technology, all our clients' trades are executed and cleared directly with our liquidity providers. As our name indicates, our involvement with and responsiveness to clients' demands have always been at the core of our activities. Every week we offer our clients and potential customers several training courses and workshops with different degrees of specialization to educate them before they open accounts with us. Since we do not hold any risk, our profit is derived from the volume of transactions made, which in turn depends on the success of our clients' transactions. It is in our interest that clients learn to use this tool properly and invest cautiously. We now stand as one of the leading financial intermediary institutions in Lebanon.
Who is your main target?
The CMA has recently increased the minimum initial capital to open accounts to USD15,000 to safeguard customers' interests and attract only those clients who have a risk capital to invest. Our target has therefore become medium to high net-worth individuals, rather than the broader retail category.
How would you rate investor confidence in the market in 2019?
To continue attracting deposits and halt the flow of capital this past year, banks kept increasing interest rates. Now, even though we are no longer facing the same pressures, the economy cannot pick up quickly enough in the presence of such high rates. On the one hand, depositors are reluctant to shift their money to invest in projects that might not be as lucrative as 8%-10%; on the other, investors are unwilling to borrow money from banks at a cost of around 12-14% to invest in projects when they are uncertain that those projects will generate a high enough return.
Do you think we will see interest rates decline?
All banks have decided to begin reducing the interest rate on new deposits, but high interest rates will remain applicable until the maturity of funds already deposited during the critical period. Meanwhile, the banking sector will retain the responsibility of standing beside the government and public sector to overcome this difficult situation. However, it alone cannot stimulate the economy, which is why we are counting on CEDRE to jump-start economic growth over the coming years. Once we reach that phase, things will greatly improve.
What is Money and how does it differentiate from other financial lenders?
Money SAL is one of the leading financial services companies in Lebanon. It is regulated by the Central Bank. Established in 2012, it targets the needs of small consumers. What makes Money different from other contenders and enables us to compete with financial institutions is that we are targeting Point of Sale (POS) by giving small personal loans from a minimum of USD500 to a maximum of USD6,000. Our main competitive advantage is speed: fast approval and quick responses. Within 24 hours, our loans are disbursed and issued to the client. And as we have begun to offer fast loans, the banks have also shown an interest in speeding up their processes. Thus, Money started to target a niche in the market and an untapped opportunity; now we are pleased to be leading the way. With high speed comes high risk, so the interest rate that we take as a financial counter is slightly higher than the banks. Since our focus is on small loans, the monthly payment will only differ by USD2-4, which clients are willing to pay especially when they witness the added value they are receiving for the additional amount they paid. This is why we are succeeding. Another important element is our door-to-door collection. Instead of having clients coming to our office or go to the bank to pay their monthly installments, we send our drivers to collect the monthly payments from any location, making it as smooth as possible for the client. The second main business we provide is with retailers and shops. We noticed a basic need for these POS in installment service to increase their sales without having any accounts receivables.
Can you tell us about the history of OMT and its shift in strategy?
Since its founding in 1998, OMT has gone through two distinct phases and is now embarking upon a third phase of innovation. The first, lasting until 2008, was mainly built on reinforcing our position as the agent for Western Union in Lebanon. There were many doubts about how receptive the Lebanese would be to this new system of money transfer. This required a huge investment in marketing, retail, and network building. Nevertheless, we were the first company to offer local money transfer services and soon succeeded in becoming market leaders. In 2008, we decided to shift our strategy and target additional market needs, while retaining money transfer services as our core strength. We analyzed different ways to capitalize on our rich 1,000-branch network and solid market position to provide value-added services. In collaboration with the government, we started to offer a range of services required by citizens, such as payment of utilities, telecoms, fines, and work permits, among others. Today, the government is one of our key business partners.
Does the digital transition represent a challenge for OMT?
While banking does not represent a challenge—since we have operated alongside banks throughout our history—there is an undeniable challenge from fintech, digital banking, and universal internet penetration, all of which empower people to transact without an intermediary. For this reason, in 2018 we launched a new 10-year-strategy that will enable us to face upcoming threats and competition.
VOICES FROM THE FINANCE SECTOR
TABLE OF CONTENTS
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Growth in Sight
As reform efforts ramp up, the country can rely on these stewards to keep the ship steady. The nation's financial institutions are some of the most consistent and stable actors in a fast-moving and often unstable political and economic landscape. As a result, foreign donors and creditors, on whose contributions Lebanon's near future depends, have a special interest in the health of the nation's banks and regulators. The Business Year has compiled the thoughts of a number of the key players whose actions are especially important in 2019 as the nation makes a sincere attempt at reform.
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