The household sector acquired about 62.68% of the total deposits in banks in March, according to an analysis by Daily News Egypt.
With assistance from the Central Bank of Egypt (CBE), the Daily News Egypt analysis revealed the sector’s increase in deposits in March from about EGP 1.26tn to about EGP 2.01tn, representing the total volume of deposits in banks, including government deposits.
According to Haitham Abdel-Fattah, director general of the Treasury of the Industrial Development and Workers Bank of Egypt, the household sector, which has the largest deposits in banks, includes all individual and family businesses and controls the management of a single person or a family.
According to the CBE database this sector increased its local currency deposits in March by about EGP 15bn, reaching a total of EGP 1.06tn compared to EGP 1.045tn in February, acquiring about 66.82% of the total of those deposits.
Moreover, the household sector increased its foreign currency deposits this month by about EGP 24.6bn, equivalent to almost $2.8bn, based on the exchange rate of EGP 8.88 per US dollar.
Foreign currency deposits in this sector reached about EGP 196.61bn in March 2015, compared to EGP 172.05bn in February 2015, which is almost 46.96% of the total foreign currency deposits.
The CBE’s figures reveal the sector’s savings to be increasingly in US dollars, the work of dollarisation. This comes with the expectation that the next period will witness further reduction in the value of the Egyptian pound against the US dollar, according to Abdel-Fattah.
He also said that investing savings in the Egyptian market or maintaining their value is done in several ways. One of these ways is to keep savings in the form of US dollars, gold, real estate, savings instruments, or stock market investments.
Investing in gold has many risks related to fluctuations of the price of gold in world markets. Investment in real estate requires experience in the field and a huge liquidity that many people may not have. Also, investment in the stock market has many risks and requires experience that is not usually available to individuals. Therefore, it is better to keep savings in banks in the form of local currency or foreign currency, or keep them in form of US dollars, according to Abdel-Fattah
According to monitoring conducted by Daily News Egypt, the household sector was not alone dollarised as the private business sector joined it as well.
According to the CBE figures, the private business sector increased its foreign currency deposits in banks to about EGP 12.6bn, equivalent to about $1.4bn in March, to reach $100.544bn, compared to EGP 87.996bn in February.
This sector acquired about 24.01% of total foreign currency deposits in banks, about 16.43% of domestic deposits, and approximately 18.02% of total deposits.
Associations and government institutions also increased their foreign currency deposits in banks in March, by about EGP 12.3bn, in contrast to a decline of their deposits in local currency in the same month, by about EGP 700m, according to the CBE
The government acquires about 15.68% of the total deposits in banks, and about 13.64% of the deposits in local currency, in addition to approximately 23.43% of the foreign currency deposits, according to Daily News Egypt monitoring.
The rest of deposits in banks are distributed in the private business sector and external sector (non-residents).
The private business sector acquires about 2.857% of total deposits, 2.515% of domestic deposits, and 4.15% of foreign deposits. The external sector acquires 0.78% of total deposits, 0.63% of domestic deposits, and 1.43% of foreign deposits.
The cancelation of the cap on foreign currency deposits in March led to the growth in the volume of foreign currency deposits in banks to about 22.5%, compared to 13.2% in February, according to the CBE.
The growth rate in total deposits in banks for this month reached 19.36% versus 19.01% in February, while the growth rate of domestic deposits reached 18.7% in March compared with 20.3% in February.