The Egyptian Agricultural Bank (EAB), formerly known as the Principal Bank for Development and Agricultural Credit (PBDAC), has provided funds worth EGP 5.5bn for about 800,000 customers working in plant production and strategic crops projects until the end of September, according to the bank’s chairperson, Elsayed Elkosayer. He told Daily News Egypt that these loans were offered at a subsidised yield rate of 5% per year, with the aim of supporting the Egyptian farmer.
The bank cooperates with the ministries of agriculture and local development to offer loans at concessional return rates, such as the agricultural sector development loans, veterinary program services and young graduates’ projects. In addition, the bank also provides loans in the framework of the Central Bank of Egypt’s (CBE) initiative to finance small- and medium-sized enterprises (SMEs). EAB also cooperates with the Social Fund for Development to lend to agricultural and livestock development projects, as well as irrigation systems projects.
The bank finances livestock projects at competitive return prices and soft loan terms, either through its own financial resources or external funding sources. It also provides loans to fund activities associated with agriculture, such as the agroprocessing industry, agricultural mechanisation, fish farming, and livestock. Elkosayer pointed out that the bank also finances social protection activities, such as supplying natural gas to provinces.
The bank also finances those participating in the 1.5m acres reclamation project in the framework of the bank’s strategic plan in the coming period and in accordance with the state development plan.
The bank also aims to expand its electronic services system to better serve its customers, such as farmers and their children. In particular the bank wants to improve their payroll, payment and remittance services as well as their ATM network.
Elkosayer said that his bank is considered to be the second largest bank in terms of providing loans for small businesses and the number of customers it has under the Mashrouak (Your Project) initiative. He added that the bank set a strategy over the next three years, which includes strengthening the financial position of the bank and increasing revenues to reduce the bank’s losses, through a growth rate of 15% per year in all bank activities.
The financial position of the bank reached about EGP 40bn at the end of September, while the size of the bank’s deposits portfolio recorded about EGP 40bn and the loan portfolio was estimated at EGP 23bn. The bank deals with nearly three million customers, representing between 25-30% of the banking sector’s customers in Egypt. The bank has 1,210 branches representing about 30% of the total bank branches operating in the Egyptian market.
However, the bank has incurred losses amounting to about EGP 6bn over the previous financial year.
Elkosayer explained that the losses were a result of the bank’s inability to generate revenues that cover the volume of expenses, in addition to an increase in overheads and assets that failed to generate revenue and other assets that had not been optimally utilised. Moreover, he said the bank had a poor internal work environment, owing in part to a lack of a control system within the company and the disregard for work procedures and laws established by the CBE.
He added that the bank’s unorganised loan portfolio is EGP 4bn and there is a gap of allocations estimated at EGP 2bn. The bank has dues owed by the Ministry of Finance worth EGP 3.5bn, of which EGP 1bn has been recovered and negotiations for the remainder are ongoing.
In regards to the CBE’s recent decision to float the Egyptian pound, Elkosayer said the bank has issued new three-year saving certificates with a 16% return to be paid on a monthly basis and increased interest rates on various deposits and savings. Opening hours of various branches have also been extended.