Presentation Contents Introduction & Mission Statement

I-Score and IFC

I-Score data repository & Membership status

Impact of I-Score

Power of the Bureau Data

Potential Growth – Private Sector

Mortgage Finance Sector

Mobile Sector

Micro Finance Sector

Credit Scoring

SME Rating Agency

Collateral Registry

Way Forward

Full Bureau –Negative info

–Positive info

World Class Bureau –Negative info

–Positive info

–Public domain data

–Risk management

–Fraud prevention

–Consulting services

Basic Bureau -Negative info

Banks and Non-Banks Credit Bureau

Consumer and Commercial Credit Bureau

I-Score and Forms of a Credit Bureau

Customers segment (Individuals with no limits)

SME Consumer segment (Business/ Company borrowers with up to 1 million LE)

– Information

• Positive Data

• Negative Data

• Legal Suits Filed

• Bankruptcy and Protestors

Recently, including SME Data in the Credit Bureaus has

assumed significance given the strong contribution of small

businesses towards the economy, especially in EGYPT.

I-Score as a World-Class Credit Bureau

will deal with:

I-Score Fundamental Operating Principles

Reciprocity

Provide data = Access to data

Neutrality

Equal Treatment; Facts only

Efficient Dispute Handling

Right to review information

Security Standards

Secured Environment and

Authorized Usage

I-Score & IFC

I-Score as highlighted in IFC Credit Bureau Knowledge Guide

“Jan-2007”

“ The first credit bureau in Egypt, which demonstrates how a private credit

bureau can be set up in a relatively short time when all stakeholder interests are

aligned and the project has backing of the authorities ”

IFC Visit to I-Score Office “March 2009”

“The progress I-Score has made is timely and reassuring. Credit bureaus are a

key financial infrastructure component and remain high on IFC’s priorities as a

means to broaden the depth and breadth of financial services for both individuals

and small businesses”

Peer Stein, IFC Manager for Financial Infrastructure and Institution Building.

“I am very pleased with I-Score’s operation and what they have realized to-date.

This nascent bureau is promising and serves to demonstrate to other Middle East

markets that investing in a world-class credit bureau has many advantages”.

Thomas Jacobs, IFC Financial Markets Program Manager, MENA.

-:نوعية الخدمات الحالية والمزمع تطويرها مقارنة ببعض الدول في الشرق األوسط باإلضافة لدول أخرى

The types of services currently provided and planned compared with other Countries

(Middle East Countries and others)

Positive

Information

Negative

Information Legal Suits

Bankruptcy /

ProtestorCredit Scoring SME’s Rating

Collateral

Registry

Egypt

I-Score

Saudi

Arabia

SEMAH

UAE

EM-CREDIT

India

CIBIL

Singapore

CBS

New Zealand

Production

I-Score overall Progress

Members Status : (As of end December – 2009)

Su

bm

itting

Da

ta

In p

roc

es

s

No

tsta

rted

yet

To

tal M

em

be

rs

Ou

tO

f Se

cto

r

Pe

rce

nta

ge

Me

mb

ers

’ T

rain

ing

Se

ss

ion

s

Extra

ctio

n o

f Rep

orts

Banks 41 __ 0 41 100% 16 41

Mortgage Finance 5 __ 3 8 100% 10 5

Leasing Finance 5 __ 0 5 56% 10 5

Social Fund for

Development

1 __ __ 1 100% 7 1

Retailers 1 __ 1 2 ?? 5 1

I-Score Data Repository Over All Contents (As of End December 2009 Data )

CBE History I-Score Total

(Jun06 – Nov09) (Oct07 – Nov09)

Consumers 1,299,694 4,324,538 5,624,232

SME’s 13,187 43,004 56,191

Total Customers 1,312,881 4,367,542 5,680,423

Total Number Facilities 3,649,660 10,583,840 14,233,500

2009 YTD growth in no of Facilities 50%

Impact of I-Score

I-Score led the process of the creation of the borrower data bank with Unique ID ( GT 5.7 Million).

Significant increase in number of credit facilities/loans data base size ( GT 14.3 Million).

Catalyst for banks/lenders to improve their data quality, revision of internal lending policies/procedures leading to new avenues to grow credit / improved profitability and advanced skill sets.

Impact of I-Score

Contribution to increased awareness among lenders on data quality in acquisition and management.

Catalyst for active credit growth with prudence and confidence by providing a unified and robust borrower database across the lending community.

Egypt Getting Credit *Doing Business Report 2010

* Source : Doing Business Report 2010

Indicator 2007 2008 2009 2010

Credit Information Index

Points (0-6)

2 4 5 6

Getting Credit Rank 156 102 84 71

Power of the Bureau Data

39.8

74.8

0

10

20

30

40

50

60

70

80

Negative Information Positive and Negative Information

Effect on Approvals of Including Positive Information

Ap

pro

va

l R

ate

s

Source: Credit Bureau Knowledge Guide

2.222.42

1.31

0.52

0

0.5

1

1.5

2

2.5

3

Large Banks Small Banks

Effect on Default Rates of Increasing Number of Information Sources

Information from a Bank Information from a Bank & Bureau

Defa

ult R

ate

s

88% Increase in

Approvals

41% Decline 79% Decline

Potential Growth – 1Private Sector

Credit to Private Sector averages to GDP Source

10 Economies ranked at the bottom 8% **

EGYPT 35.4%

10 Economies ranked at the TOP 130% **

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

10 economies ranked at the

bottom

EGYPT 10 economies ranked at the TOP

35.4%

130.0%

Credit to Private Sector averages to GDP

10 economies ranked at the bottom

EGYPT

10 economies ranked at the TOP

8%

Source Doing Business Report 2008

Mortgage Finance Market

Value (EGPMil) Percentage

Mortgage Finance Companies 1,100 34.41%

Banks 2,097 65.59%

Total 3,197 100%

Source: Egypt Investment Monitor December 2008, MFA

Mortgage Finance Market as at December 2008

34%

66%

Chart Title

1

2

Prepaid, 95.81%

Postpaid, 4.19%

Mobile Market in Egypt as of December 2007

Prepaid

Postpaid

Mobile Market

Subscribers (Mil) Percentage

Prepaid 29.76 95.81%

Postpaid 1.30 4.19%

Total 31.06 100%

Source: Business Monitor International

Postpaid Growth Potential

Postpaid to Total Lines Date

Egypt 4.2% 2007

Worldwide 24.9% 2006

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Egypt Worlwide

4.2%

24.9%

Postpaid to Total Lines

Egypt Worlwide

HIGH GROWTH POTENTIAL

I-Score can help to rationalize risk assessment process

Source: 2nd Q Business Monitor International, www.pre-comm.com

Potential Growth Micro Finance Institutions

There is no consensus on the market size. Although Egypt has been the leader of microfinance in

the Arab region ,the access of poor and low-income households to financial services remains

lacking in terms of both service outreach and product diversity. The outreach gap estimate reported

in most studies is 90%. Estimate of the total number of potential clients for microfinance services in

Egypt range between 2 and 3 million (some MFIs believe that the market is up to 4m when households and underemployed persons are included). At the same time, it is only an estimated

250,000 of these clients that currently enjoy access to financial services. This means that Egypt’s

market penetration rate is among the lowest in the region. A recent SFD study estimated that a total

of LE 8.5 billion is needed to meet unsatisfied demand within the MSE sub-sector.

(Source: African Dev. Bank 2006 and UN MFI Sector Assessment in Egypt 2008)

I-Score can assist in higher penetration levels

91%

9%

Microfinance Industry Outreach

Do not have access Have access

Approx

Borrowers who

do not have

access

Approx

Borrowers who

have access

2,250,000 250,000

Introduced Dec 2009 for Free Trail

to all I-Score Members

Commercial operation starts January 2010

Mr. John Hadlow, Director of Scoring Solutions for FICO, said:

“Lenders in Egypt are now able to benefit from the early availability

of FICO scores because this implementation by The Egyptian Credit

Bureau (I-score) of our scoring system has been one of the most

efficient and fastest we have observed worldwide due to the high

readiness level of its implementation team and the strong support

of management.”

Credit Scoring

What is a Credit Score?

A credit score is the result of advanced analytical models that

take a “snapshot” of the consumer’s credit report and translate it

into a three-digit number representing the amount of risk a

consumer brings to a particular transaction, such as financial,

insurance or even employment.

As a result of credit scoring, lenders can make faster, more

objective decisions. Lenders retain complete control over their

lending decisions and set their own score levels.

The Importance of Credit Scoring for

Economic Growth

Credit scoring offers multiple benefits at every level of the economy.

Credit scores have enabled lenders to extend into historically

underserved market segments (e.g. SMEs & Microfinance Sectors).

In addition, decisions are now faster and more objective with the

majority of applicants receiving answers within minutes, rather than

days.

Finally, by using credit scores to predict risk more effectively, lenders

have been able to reduce the cost of such vital services as mortgages,

personal loans and credit cards.

Despite this expansion into traditionally underserved markets,

moral hazard rates are actually lower with credit scores because

lenders can more proactively monitor risk and maintain it at more

appropriate levels.

There are five main categories of credit information

which impact your credit score:

1.Late payments, delinquencies, bankruptcies: Past inability to pay

on time will hurt your chances of getting credit in the future. More recent

problems will be counted more heavily than those in the past.

2. Outstanding debt: The more debt one has, the greater the risk that he or she

will not be able to keep up with the payments

3. Length of credit history: With a short track record it is harder for a lender to

assess creditworthiness

4. New applications for credit (inquiries): Frequent credit checks by lenders

may indicate that a borrower is looking to increase his or her amount of debt.

5. Types of credit in use: Some types of credit, including credit cards, provide

you with a credit line greater than the amount you have already borrowed. The

more credit available, the greater the risk to the lender since a borrower can

easily increase their outstanding debt.

Types of Credit in Use10%

New Credit10%

Length of Credit History15%

Amounts owned30%

Payment History35%

Break down of FICO Score

للعميل االئتمان منح في المخاطرة نسبة

Percentage of Credit Risk

( فقـط للتـوضـيـــــح افتراضــية النـســـب)

الرقمي التقييم درجة

CREDIT SCORE

44.4% 300

28.6% 350

16.9% 450

9.1% 550

4.8% 650

2.4% 750

1.2% 850

Future Projects

Egyptian Small and Medium Enterprises

SMEs Rating Agency

Overview

Credit Rating Agencies are firms that compile information and issue credit

ratings for a large number of companies.

Credit rating is an assessment of the credit worthiness of enterprises. It is

based on different aspects including:

• Credit history (if any)

• Financial statements

• Management experience and qualifications

• Suppliers and customers base

• Physical stability and growth

• Market stability and growth

• Competition

• Laws and regulations (etc….)

There are various benefits to the financial institutions, SMEs, and the economy as whole which may be provided by the SME Rating Agency.

1. Financial Institutions

•Ready and reliable third party opinion•Rating reports provide relevant information for loan approvals

•Facilitates lending decision- quantum of loan, price, margin, security• Increased credit volume•Attraction of better borrowers•More accurately evaluation of risk•Improvement of current portfolio

Benefits of SMEs Rating Agency

2. SMEs

Enables best SMEs to better differentiate themselves among other SMEs

A trusted third party opinion

Faster access to funding at appropriate interest rate and other terms

Credibility with business partners - customers, suppliers and collaborators

Tool for self improvement - gives a comparative benchmark

Reduction of defaults as borrowers are encouraged to build reputation

More borrowers are attracted to obtain credit facility

Enhancement of company reputation

Supports company in case of any plans to capital increase through SME

bourse (NILEX)

Benefits of SMEs Rating Agency(cont)

Benefits of SMEs Rating Agency (cont)

3.Economy

Increased investment in the SME sector

Facilitating the transfer of saving into investment in stable

enterprises

Increase in the Gross Domestic Production

More employment opportunities

4. Regulators

Enables regulators to see through a reliable third party

Take decisions to facilitate SMEs development in the light of

reliable third party studies

The Rating process

The rating process puts emphasis on working with the actual data that are

provided by the enterprise or that are available to the agency from other

information sources considered by the agency as reliable.

The rating process is executed under co-participation and cooperation of the

management of the company.

The most important principle is the strict preservation of secrecy on all

confidential information about the client.

Rating has a validity of one year, though the rating may be modified and re-

evaluated during this time.

Two lines of products are offered by the Small and Medium Enterprises

Rating Agency

1-Standard Ratings

Standard Ratings are divided in four categories A,B,C & D. This

classification is based upon a combination of number of employees,

investment, and turnover. Class A being the highest of the classified

SMEs and Class D the lowest.

Class A 5%

Class B 10%

Class C 25%

Class D 60%

Refer to the Revenue Assumptions in the financial plan.

2- SME Studies and Publications

SME studies and publications would include studies on the SME at large

or specific sector in which the SMEs are operating.

Rating Products

األصول المنقولة/ شركات سجل الضمانات

Collateral / Asset Registry

األصول المنقولة/ شركات سجل الضمانات

The Collateral Registration is the term that is used to describe

the combined components of a registration:-

•The Secured Party

•The Debtor

•The Collateral and proceeds ( collateral description)

•The start time for registration

•The end time for registration

•Address of Service of Notices

•Attachments ( e.g.… change requests , additions..etc)

The Basic functions of the Collateral Registry

Function 1 Verification in I-Score Collateral registry by financiers

Function 2 Registration in I-Score Collateral registry by the financiers

Function 3 Searching for interest by person / entity other than financiers

Function 4 Registration of Collateral

Function 5 Authorized broking firms of a financier in searching and registering

of collateral

Function 6 Payment of fees for the servicers rendered by Collateral registry

Function 7 Administrative functions of Collateral Registry

Function 8 Interfacing with other systems

The Collateral description is the core component of the Collateral Registration.

The Secured Party and Debtor are the main parties to the Collateral Registration.

All changes over the lifecycle of a collateral registration package are retained in order to provide the

capability to reconstruct the Collateral Registration at any given moment in time since creation.

There may be multiple debtors registered on a single collateral registration.

But it is possible that the secured party may never be a user of the system, instead a third

party “Broker”

Credit Bureaus and Collateral Registry

Collateral Registry and Credit Bureaus work together

as Public Knowledge Networks “PKNs” to assist in

increasing the probability of gaining credit.

They are an organizational response to the need for

assistance in fixing the problem of in-concurrent

information in the credit markets.

Way Forward:

• Trail began with members 6 Dec 2009 – going commercial Jan 2010

Scoring

• MOU Signed and target to implement by mid 2010

SME Rating

• Is under way with Ministry of Investment – expected mid 2010 subject to Low Issuance

Collateral Registry

• MOU By 2nd Q 2010

Telecom Operators

• MOU By 3rd Q 2010

Insurance Companies

• MOU By 1st Q 2010

Micro Finance Organizations

• Is under study

Fraud Detection / Application Processing

Conclusion

I would like to highlight the immediate benefits to the Egyptian Economy:

Replace relationship/collateral based lending by reputation collateral.

This will unlock significant assets for more productive usage.

Customer will not be owned by lenders. He will be the king resulting in greater choice,

transparency, and competitiveness leading to more credit outflow.

I-Score usage will mitigate risk in lending, reduce process time, improve productivity

and reduce bad loans & NPAs.

Promote productiveness/prudence/informed lending.

Provides a unified customer profile across the lending community. This will be

enhanced by data from sector utility companies (Telecom) soon.

The Egyptian Credit Bureau “I-Score”

1191 Corniche El Nil

World Trade Center

17th Floor

Phone: (+202) 2594-6600

Fax: (+202) 2579-7832

Hotline 16262

Web www.i-score.com.eg

I-Score is licensed by the CBE Board of Directors dated 22 Jan.2008

Contact Information