Gulf Deutsche Finance: strategy to increase the market share to 10% by 2018

Naif Abdulmohsin Al-Baz, CEO of Deutsche Gulf Finance talks about the strategy of Gulf Deutsche Finance.

How would you describe your performance in this market? Are you happy with your performance and the amount of mortgages that you are able to originate?

Today we are originating but we have limited capacity with respect to originating given the circumstances in the market and the liquidity of course. We are not like the banks, we don’t have deposits from clients so we depend on our capital and we depend on the standby warehouse facility from banks and the sale of assets to investors. We are also exploring the issuance of SUKOK (corporate bonds).

The shareholders so far have been satisfied with our performance however, there are some issues that need to be cleared up in the industry with respect to the Zakat treatment. This is a pressing issue in the industry and SAMA is now getting in and trying to resolve it.
However the outlook is bright for the future and as we increase our originations and we build a portfolio, the return on the equity should be satisfactory to the shareholders and we anticipate going IPO in the near future.

Your major shareholder is Deutsche Bank which is one of the largest banks in the world. What sort of advantage does that give you over other companies?

Deutsche Bank has contributed a lot to the company, especially at the beginning when the company was established, for example the infrastructure of the company, the technical service and the knowhow were brought by Deutsche Bank.

Of course when you go with Deutsche as a major shareholder in Saudi Arabia it can add value with respect to many stakeholders such as the banks because we depend on bank financing and so having Deutsche Bank as one of our shareholders can add credibility to the company. Of course they contribute to the credit and performance of the portfolio.

What are your strategic priorities? Where would you like to see the company? Would you like to be the market leader or would you like to focus on profitability?

Deutsche Gulf Finance has been able to increase the market share to 5% in 2015. The plan is to increase it to 10% by 2018. The business development strategy is to open new branches, to date the company is present in the major cities such as Riyadh, Jeddah and Khobar. Long term plan is to go public and attract some public shareholders. There is an ongoing discussion with SAMA regarding floating the company and soon we will approach the CMA to get the licence to get into the Saudi stock market.