Banking – Daily News Egypt https://ww.dailynewssegypt.com Egypt’s Only Daily Independent Newspaper In English Thu, 18 Jul 2019 20:24:21 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.1 NBE’s mortgage finance portfolio exceeds EGP 7bn end-June https://ww.dailynewssegypt.com/2019/07/18/nbes-mortgage-finance-portfolio-exceeds-egp-7bn-end-june/ Thu, 18 Jul 2019 06:00:49 +0000 https://www.dailynewsegypt.com/?p=703036 CBE’s initiative beneficiaries reach 68,000 this June, up from 38,000 in June 2018, says Okasha

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The total mortgage finance portfolio of the National Bank of Egypt (NBE), as part of the initiative of the Central Bank of Egypt (CBE), reached more than EGP 7bn from the launch of the initiative until the end of June 2019 against EGP 4.1bn in June 2018, up by 73%.

This comes within the NBE’s strategy to support the state plans, especially those related to the low-income category.

Hisham Okasha, the NBE chairperson, said that the bank aims to participate in the initiative to provide safe housing and good investment. This is in addition to providing all means of facilitating the citizens, especially the low-income segments, as well as expansion and investment in the mortgage finance for social housing.

Okasha explained that the number of beneficiaries of this initiative for low-income customers exceeded 68,000 clients against 38,000 in June 2018, up by 79%.

The bank’s participation in CBE’s initiative for real estate finance comes within the framework of the bank’s strategy to implement the state’s plans. This aims to develop the national economy, supports the Egyptian citizens especially the neediest citizens, according to Okasha.

He added that it is also the implementation of CBE’s policy to consolidate the principle of financial inclusion, which is always sought by the NBE.

According to Okasha, the NBE is setting its mortgage finance activity as one of its priorities by supporting the portfolio through an integrated system to study the neediest groups, to design their own financing programs to suit their abilities and meet their needs, thus leading the banking system in Egypt.

Yehya Aboul Fotouh, deputy chairperson of NBE, pointed out that one of the most important factors that helped the bank lead the initiative is its branch network covering all governorates and providing all banking services.

He added that these factors also include the continuous development of work procedures, which contributed to reducing the work cycle and the time and effort of customers. Inevitably, this helps them reach the largest segment of customers and to facilitate all forms of payment for their monthly instalments, through electronic payment channels.

Aboul Fotouh pointed out that the NBE has already established three independent units for mortgage finance in the Sixth of October, the 10th of Ramadan, and the industrial zone in Minya, in addition to allocating a number of branches distributed throughout the country to deal with the social housing programme.

The bank also established a special section to complete mortgage finance procedures, particularly for low-income citizens.

   

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NBE SME’s portfolio reaches EGP 65bn end-June https://ww.dailynewssegypt.com/2019/07/17/nbe-smes-portfolio-reaches-egp-65bn-end-june/ Wed, 17 Jul 2019 06:40:53 +0000 https://www.dailynewsegypt.com/?p=702883 Bank opens 1st specialised centres in business development services in Al-Yasmeen branch

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The total portfolio of small and medium-sized enterprises (SMEs) in the National Bank of Egypt (NBE) amounted to EGP 65bn by the end of June 2019, compared to EGP 49bn in June 2018, an increase of EGP 16bn, a growth rate of 32%, according to the bank’s Chairperson, Hisham Okasha.

Okasha explained that the portfolio of loans to these projects within the initiative of the Central Bank of Egypt (CBE) amounted to about EGP 37.5bn by the end of June 2019. The EGP 37.5bn was granted to 42,000 clients, up from EGP 25.2bn for 26,000 customers in June 2018, marking a 49% increase.

Okasha opened the bank’s first business development centre in El Yasmeen branch in the 10th of Ramadan City.

Furthermore, Okasha said that the business development centres launched by the bank are in line with the directives and supervision of the CBE. These centres’ primary objective is to consolidate the concept of entrepreneurship, by providing entrepreneurs with the financial and non-financial services needed for their projects, which exceed typical banking services.

He stressed that financing is no longer an obstacle to the owners of SMEs, which increases the need for the establishment of these centres. In turn, they will provide many services that will enable the financial education of customers in order to achieve the highest rates of quality and success for their projects.

For her part, the Deputy Governor of the CBE, Lobna Helal, pointed out that the opening of the NBE’s business development services in the 10th of Ramadan City supports the initiative of Nile Pioneers, which is integrated with the CBE’s initiatives and directions.

She added that these initiatives seek community development and support Egypt’s 2030 Sustainable Development Plan, which aims to promote innovation, stimulate the youth’s potential, foster entrepreneurship, embrace emerging companies, and provide technical, managerial, and financial support in areas suited to the Egyptian market needs.

Helal stressed the vital and effective role of the banking sector in supporting SMEs, entrepreneurship, and transition into the formal sector. This has a direct impact on supporting the country’s important economic sectors, such as industry, agriculture, information technology, and innovation. Inevitably, this helps in creating jobs and boosting the national economy.

Additionally, she pointed out that the CBE aims to open 30 business development service centres in a number of Egyptian governorates in the Delta and Upper Egypt through the 11 banks participating in the Nile Pioneers Initiative by the end of 2019.

According to Helal, the CBE is keen to achieve coordination and cooperation between the various bodies and entities that have relevance to the field of entrepreneurship and SMEs, to maximise the benefit for all parties of the economic system.

Deputy Chairperson of the NBE, Yehia Abou El-Fotouh, said that the bank is preparing a plan to expand the establishment of business development service centres in a number of places that focus on SMEs.

He pointed out that the bank started preparing a comprehensive study of the market and its needs, which led to the opening of the 10th of Ramadan centre. It is in the middle of one of the vital industrial areas, which includes a complex of factories and a variety of activities. In turn, it will serve a number of areas and neighbouring cities such as Shorouk, Badr, and Belbes, where 12 NBE branches are located.

Abou El-Fotouh revealed that preparations are being set up for the opening of two additional centres in Assiut and Tanta to serve clients in Upper and Lower Egypt.

According to Mamdouh Afia, head of the NBE’s SMEs sector, the business development service centres will provide a variety of services through well-trained teams, including some non-financial services, as well as access to finance services.

He explained that among the services that will be provided by these centres is the introduction of a new project idea; orientation toward licensing procedures; availability of feasibility study services; financial analysis and evaluation; effective communication with suppliers and target markets; knowledge dissemination services; training and capacity building, and workshops that fit the diversity and the needs of the Egyptian market.

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Banks’ credit facilities see EGP 242.6bn rise in 10 months: CBE https://ww.dailynewssegypt.com/2019/07/17/banks-credit-facilities-see-egp-242-6bn-rise-in-10-months-cbe/ Wed, 17 Jul 2019 06:20:26 +0000 https://www.dailynewsegypt.com/?p=702902 Deposits up by EGP 1bn only as non-governmental deposits drop

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The total credit facilities granted by banks to their customers increased by EGP 2424.6bn to reach EGP 1.8723tn during the period from July 2018 to April 2019, according to the Central Bank of Egypt (CBE).

Credit facilities are loans provided by banks to their clients alongside documentary credits and letter of guarantees that were opened to cover import operations.

In its monthly report on the performance of banks and the economy, the CBE explained that the private enterprise sector has obtained about 60.6% of the total facilities granted by banks to all bodies excluding the government until April 2019.

It added that the industry sector has denominated 33.6% of these facilities, followed by the services sector by 27.3%, the trade sector by 10.6%, the agriculture sector by 1.6%, and miscellaneous sectors–including households–by 26.9%.

In another context, the CBE also noted that customer deposits at banks by the end of April 2019 increased by EGP 1bn to EGP 3.932tn up from EGP 3.931tn at the end of March.

The CBE added that government deposits have declined in value by EGP 18.666bn to EGP 615.425bn against EGP 634.091bn in March.

Non-government deposits in banks recorded a rise in value by EGP 19.654bn at the end of April 2019 to EGP 3.316tn against EGP 3.296tn in March.

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Banque Misr allocates EGP 13bn for MSMEs in FY 2018/19 https://ww.dailynewssegypt.com/2019/07/16/banque-misr-allocates-egp-13bn-for-msmes-in-fy-2018-19/ Tue, 16 Jul 2019 06:40:20 +0000 https://www.dailynewsegypt.com/?p=702810 Bank signs cooperation protocol with universities to provide workspaces for entrepreneurs

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Banque Misr allocated EGP 13bn to finance micro, small, and medium enterprises (MSMEs) during the fiscal year (FY) 2018/19, bringing its portfolio to EGP 24bn at the end of June 2019, up from EGP 11bn in June 2018, a 118% increase.

About 121,000 clients benefited from these projects in the last FY until June 2019, up from 86,000 clients in FY 2017/18, a 41% increase, according to the bank.

Moreover, the bank has participated with the Ministry of Local Development to launch the Mashrouk (Your Project) programme to finance micro and small projects at 308 administrative divisions nationwide.

The bank exits in 238 administrative divisions since 26 March 2015, accounting for 77% of total administrative divisions in the programme.

On Sunday, Banque Misr signed a cooperation protocol with Al-Azhar and Ain Shams universities as well as the Arab Academy for Science, Technology, and Maritime Transport (AASTMT) to provide “design houses” (workspaces) for entrepreneurs.

It comes in line with the Nile Pioneers initiative launched by the Central Bank of Egypt (CBE) to support entrepreneurship and innovation.

Chairperson of Banque Misr, Mohamed El-Etreby, said that the bank was keen to actively participate in the Nile Pioneers initiative by contributing to providing design houses for entrepreneurs, thus contributing to development and creating more job opportunities and community progress.

Deputy Governor of the CBE, Lobna Helal, praised the efforts of Banque Misr in supporting the Nile Pioneers, stressing that providing design houses was the main mechanisms of the initiative which contributes to increasing the competitiveness of the local product and augmenting the percentage of the local component in manufacturing, in order to promote sustainable growth of the Egyptian economy.

According to the Vice President of Banque Misr, Akef El-Maghraby, the bank is keen to diversify the objectives of the three design houses to maximise their benefits to the community as a whole.

He added that the design house of Ain Shams University will serve as a link between the university and the industrial sector to provide consultancy, design services, and prototypes, and will be specialised in robotics, industrial automation, and cars.

The design house of Al-Azhar University in Qena is based on the fields of agriculture, water, and energy in order to serve as the technical arm of the technological incubator to maximise the benefits of research centres, students, and young innovators and researchers from other institutes and universities so as to spread the concept of innovation.

Meanwhile, the design house of the AASTMT is based on marine science and underwater techniques, in cooperation with several universities and organisations related to underwater technology.

CBE Assistant Sub-Governor, Nermine El Tahri, emphasised that the new design houses are the first of its kind in Egyptian universities.

She added that it works with university students, entrepreneurs, start-ups and small industrial enterprises to develop new products and build prototypes using reverse engineering and design for manufacturing, training young cadres on design principles and the latest simulation programmes, as well as evaluating and reviewing engineering designs for innovative youth.

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Capital re-flows into EMs starting Q1 of 2019, 11 months after fleeing: CBE https://ww.dailynewssegypt.com/2019/07/15/capital-re-flows-into-ems-starting-q1-of-2019-11-months-after-fleeing-cbe/ Mon, 15 Jul 2019 08:30:20 +0000 https://www.dailynewsegypt.com/?p=702718 Direction of capital flows depends on outlook for economic activity rate of growth, development of global trade tensions

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Capital flows to emerging markets (EMs) has resumed since the first quarter (Q1) of 2019, 11 months after its outflow from these markets, the Central Bank of Egypt (CBE) announced in its Monetary Policy Report.

The direction of capital flows depends on the outlook for economic growth and the development of global trade tensions, the CBE said.

It added that the international bond yields have continued to decline since the beginning of the year, in line with the lower risk margin in EMs.

Meanwhile, the CBE referred to the ongoing recovery of the GDP growth supported by structural reforms, pointing out that the rise in net exports was supported by the growth of real GDP during Q4 of 2018.

According to the report, the contribution of local bank financing to the state’s fiscal deficit declined during Q1 of 2019.

On another note, the CBE said since May 2018, household savers have tended to invest more in conventional saving forms, such as deposits in banks operating in the Egyptian market for three years and more. It indicated a decrease in the rate of deposit interest to 12% and a stability on loans at 17.7% in March 2019.

The CBE expected the international food commodity prices to rise in 2020, and that the cost of most petroleum products will be covered, in addition to the fact that the automatic pricing mechanism will be applied locally according to cost developments.

The report highlighted that economic growth of Egypt’s external environment continued to soften during Q4 of 2018, registering 2.5%, down from 2.7% in Q3 and from 3.2% in Q4 of 2017, the highest pace since 2011. “Economic growth in advanced economies continued to ease for the fourth consecutive quarter to register 1.4% in Q4 of 2018, compared to 1.8% in Q3 of 2018, as slower growth in the euro area and the United Kingdom more than offset a stronger growth in Japan. Meanwhile, economic growth in the United States remained unchanged in Q4 of 2018, compared to the previous quarter. On the other hand, economic growth in emerging economies stabilised in Q4 of 2018 at 4.9%, after maintaining continuous improvement between Q4 of 2015 and Q2 of 2018. Higher growth in Russia offset slower growth in China, India, and Brazil, compared to the previous quarter,” the report read.

It noted that headline inflation of Egypt’s external environment continued to decline in January and February 2019, registering an average of 1.9%, compared to 2.3% in Q4 of 2018. Inflation in advanced economies declined in January and February 2019, registering an average of 1.5% down from 2.0% in Q4 of 2018. Meanwhile, the CBE added that inflation in emerging economies stabilised in January and February 2019, registering an average of 2.9%, after accelerating to 3.0% in Q3 of 2018. The deceleration of the inflation rate in China, Brazil, and India offset the acceleration of the inflation in Russia, compared to the previous quarter, it noted.

Global trade growth declines for 5th consecutive quarter

Moreover, the report stressed that annual global trade growth continued to decline for the fifth consecutive quarter (Q4 of 2018) to register 1.4%, compared to 3.6% in Q3 of 2018 and down from a peak of 5.3% in Q3 of 2017.

It explained that Brent crude oil prices increased for the third consecutive month in March 2019, registering an average of $66.1 per barrel, compared to an average of $57.4 per barrel in December 2018. OPEC and its partners continued production cuts until June 2019, while production from the US continued to increase.

International food prices, using the domestic consumer price index (CPI) basket weights of core food items, continued to decline on annual terms in March 2019 for the ninth consecutive month, however, by a weaker magnitude since December 2018. The decline was mainly due to red meat, dairy products, and oils, as supply conditions improved.

The report added that the Federal Reserve System kept its policy rate unchanged in January and March 2019 after raising it by 25 basis points (bps) in December 2018, marking the fourth policy rate hike in 2018.

“Moreover, the Federal Reserve decided to slow the pace of its balance sheet unwinding plan, which started in October 2017, by slowing down the reduction of its holding of government debt starting May 2019 before ending the programme in September 2019. Meanwhile, the European Central Bank also kept its policy rate unchanged in January and March 2019, while it decided to launch a new series of quarterly targeted longer-term refinancing operations with a maturity of two years between September 2019 and March 2021, each. Furthermore, the Bank of England kept its policy rate unchanged in February and March 2019, after raising it by 25 bps in August 2018 for the second time since November 2017,” the report read.

The CBE added that capital flows returned to EMs in Q1 of 2019, after 11 months of outflows that started in February 2018. The return of international capital to EMs was mainly supported by a monetary policy normalisation pause in advanced economies. However, the direction of capital flows remains subject to the economic activity growth outlook, as well as the prospects of further escalation of trade tensions.

Elsewhere, the CBE explained that the hydrocarbon trade balance registered a surplus for the first time since Q4 of 2013, while the current account deficit widened.

“After improving on annual terms for seven consecutive quarters between Q4 of 2016 and Q2 of 2018, the current account deficit widened in Q4 of 2018. A less favourable contribution from remittances, net service receipts and the non-hydrocarbon trade deficit has more than offset the more favourable contribution from the hydrocarbon surplus and net investment income,” the report read.

“Nevertheless, the deficit of net exports of goods and services continued to narrow in Q4 of 2018 on annual terms for the eighth consecutive quarter. This was due to a more favourable contribution from imports of goods and services, mainly those related to the hydrocarbon sector, which more than offset the less favourable contribution from exports.”

The CBE explained that the hydrocarbon trade balance continued to improve on annual terms for the fourth consecutive quarter to register a surplus in Q4 of 2018, for the first time since Q4 of 2013. The improvement was mainly driven by lower imports, which coincided with the accelerating annual pace of domestic natural gas production.

Furthermore, the non-hydrocarbon trade deficit continued to widen on annual terms in Q4 of 2018 for the fifth consecutive quarter. This was mainly due to a less favourable contribution from imports, which more than offset the more favourable contribution from exports.

The report noted that the service surplus continued to increase in Q4 of 2018 on annual terms for the eighth consecutive quarter, yet its pace of growth declined to the lowest level since Q1 of 2017.

“The slower annual pace was mainly due to a less favourable contribution from net receipts from tourism as well as other services, which more than offset a more favourable contribution from transportation, excluding government services and Suez Canal tolls. Meanwhile, remittances declined on annual terms in Q4 of 2018, for the first time since Q2 of 2016. Net Foreign Direct Investment (FDI) inflows resumed its annual decline in Q4 of 2018 for the second consecutive quarter due to higher gross outflows, after witnessing an annual increase in Q2 of 2018 for the first quarter since Q2 of 2017. Portfolio flows excluding Eurobonds continued to register a net outflow in Q4 of 2018 for the third consecutive quarter amid unfavourable global conditions for emerging markets, though at a slower pace compared with the previous two quarters. This, however, was mostly offset by net inflows from commercial banks’ net foreign assets. Meanwhile, gross international reserves stabilised in April 2019 for the second consecutive month at $44.2bn, after increasing in February 2019 supported by the issuance of Eurobonds by the Ministry of Finance,” the report read.

Real GDP growth rose to 5.5% in Q4 of 2018

The report highlights that real GDP growth rose to 5.5% in Q4 of 2018 from 5.3% in Q3, while unemployment rate dropped to its lowest rate since 2010.

It explained that higher net external demand for Egyptian goods and services reinforced a more balanced expenditure structure and supported the rebound of economic growth since the fiscal year (FY) 2017/18. Meanwhile, the contribution of domestic demand to GDP growth remained contained, and the unemployment rate dropped to 8.9% in December 2018, the lowest rate since December 2010.

The CBE added that the recent improvement in the contribution of net exports was mainly driven by the continued drop in real imports, while the growth of real exports was slightly strengthened after four feeble consecutive quarters. On the other hand, the contribution of private domestic demand to GDP growth weakened due to the drop in the contribution of private consumption and investments. Meanwhile, public domestic demand stabilised during the same period, as the slight rebound of public consumption contribution was offset by the slight drop in the contribution of public investments.

It explained that at the sectoral level, growth stabilised compared to the previous quarter, as the boost in the contribution of public sector to GDP growth was offset by the weakness in the private sector. The increased contribution of the public sector to the GDP was primarily due to the rising contribution of natural gas extractions, while that of other sectors remained stable. The contribution of the private sector to the GDP growth dropped due to weaker growth in the tourism sector, which more than offset the improvement in the construction sector.

In addition, available leading indicators for the non-hydrocarbon sector mostly point to weakening activity in Q1 of 2019. The Purchasing Managers Index (PMI) average level in Q1 of 2019 weakened compared to Q4 of 2018, despite improving in March 2019 and the manufacturing index continued to contract in January 2019, albeit by a slightly lesser degree compared to Q4 of 2018. Furthermore, the number of tourist nights contracted on annual terms in January 2019 for the first time since November 2016, and total car sales grew on average at a slower pace in January and February 2019, compared to the average pace registered in Q4 of 2018. On the other hand, Suez Canal net tonnage grew on annual terms at a slightly higher pace in January and February 2019 on average compared to Q4 of 2018.

In the hydrocarbon sector, natural gas production continued to increase strongly on annual terms, yet at slower pace during January 2019, compared to the average pace in Q4 of 2018.

Broad money growth continues to decline supported by fiscal consolidation

Following the fading of the exchange rate revaluation effect in Q4 of 2017, annual M2 growth continued to decline to an average of 11.6% in Q1 of 2019, supported by fiscal consolidation and the containment of other broad money counterpart assets’ growth. In Q1 of 2019, the negative annual contribution of foreign nonbank financing of the fiscal budget deficit eased, in line with the monetary policy normalisation pause in advanced economies. This was more than offset by the decreased contribution of bank financing of the fiscal deficit in addition to the expected drop in contribution of external financing compared to Q4 of 2018.

According to the CBE, other components of counterpart assets M2 claims on the private sector which slightly picked up. The decline in M2 growth favourably coincided with an annual increase in broad money velocity which suggests lower room for noninflationary money growth.

Meanwhile, following its decline between Q2 of 2017 and Q1 of 2018, the contribution of claims on the private sector to M2 growth continued to pick up in Q1 of 2019. Similarly, inflation adjusted L/C claims on the private sector continued to witness annual increases since Q1 of 2018, after recording annual contractions in 2017. The recovery was especially evident for claims on the private business sector, while claims on the household sector recovered by a relatively weaker magnitude.

Within the components of M2, CIC as a percent of L/C deposits in M2 continued to decline in Q1 of 2019 for the third consecutive quarter recording a ratio below its long-term historical average, which suggests lessening currency holding behaviour. Meanwhile, the annual growth of F/C deposits in US dollar as well as the dollarisation ratio defined as F/C deposits to total deposits in M2 broadly stabilised during Q1of 2019.

Moreover, the structure of household deposits in L/C continued to be dominated by deposits for more than three years since May 2018, following one and a half years of dominance by deposits less than three years amid the introduction of 1.5-year saving certificates at a higher rate compared to longer term saving certificate rates. The reversal of the structure of household deposits is consistent with redemptions of these certificates since May 2018, given their cancellation by public banks in late April 2018.

The report revealed that annual growth of M0, adjusted by total excess liquidity, continued to decline in Q1 of 2019 for the sixth consecutive quarter due to CBE balance sheet operations which lowered excess liquidity growth. The money multiplier, measured as the ratio between local currency components of broad money and M0 as defined above, increased slightly in Q1 of 2019, following its broad stability between Q4 of 2017 and Q4 of 2018. This was mainly due to lower excess liquidity as a ratio of L/C deposits in M2, the CBE said.

In another context, the CBE noted that real monetary conditions remained tight, backed by receding inflationary pressures as well as previous policy rate increases, notwithstanding the cumulative 300 bps policy rate cuts in Q1 of 2018 and Q1 of 2019.

After declining between December 2018 and mid-February 2019, excess liquidity rose between mid-February and mid-March 2019 before stabilising to record an average of EGP 734.5bn (13.8% of the GDP) during the maintenance period ending of 8 April 2019, compared to EGP 665.4bn (12.5% of the GDP) recorded on average during the maintenance period ending 11 February 2019.

Meanwhile, interbank activity remained relatively stable since April 2018, with interbank rates remaining below the policy rate by around 30 bps, as higher long-term absorption tenors offset the effect of higher short-term absorption of excess liquidity. Concurrently, the interbank yield curve shifted downward post the 100% transmission of the 100-bp policy rate cut on 14 February 2019.

Moreover, the CBE added that yields for L/C government securities declined to 14.0% net of tax in March 2019 and 13.8% during the first two issuances in April 2019, the lowest since May 2018. This compares to the 15.6% recorded on average during Q4 of 2018 and January 2019, prior to the 100-bp policy rate cut in February 2019. The 1.6p.p. decline in March 2019 was due to the increase in demand reflected by higher coverage ratio which recorded 2.3x in March 2019, compared to 2.0x recorded during Q4 of 2018 and January 2019 before declining to 1.6x during the first two issuances in April after being affected by EM developments. Nevertheless, treasury yields inched down further during the beginning of April 2019, supported by lower accepted-to-required ratio, which was more than enough to offset the decline in demand. The accepted-to-required ratio recorded 0.8x during the first two issuances in April 2019, compared to 1.1x recorded in March 2019 and 1.0x in Q4 of 2018 and January 2019.

Meanwhile, Egyptian Eurobond yields have been declining since the beginning of 2019 in line with the improvement in the risk premium for EMs, after increasing during most of 2018. Moreover, Egypt’s CDS spreads remained relatively low compared to the majority of peers with similar sovereign credit rating. Furthermore, Egypt’s credit rating was upgraded by Moody’s in April 2019 and by Fitch Ratings in March 2019, following the upgrade by S&P in May 2018.

“In the banking sector, March 2019 data reflected partial transmission of the 100-bp policy rate cut on 14 February 2019 to rates of new deposits, which declined to 12.0%. The limited transmission in the magnitude of 0.7x the policy rate cut was due to adjustment of flexible deposit rates, as fixed-rate saving certificates more than or equal to three years remained broadly unchanged,” the report added.

“Meanwhile, rates of new loans remained relatively stable to record 17.7% in March 2019 due to the weaker impact of loans at subsidised interest rates. As a result, interest rate margins widened to 5.7p.p. compared to 4.6p.p. recorded on average between April 2018 and January 2019.”

In equity markets, the CBE stated, real prices recovered since the beginning of the year after declining in 2018, supported by net buying mainly by Egyptian investors. Since the beginning of the year, the EGX 30: USD index recovered by a cumulative 20% outpacing the MSCI Emerging Markets index’s 11%. Meanwhile, real unit prices in Q1 of 2019 inched down in the secondary market as the demand continued to shift from the secondary market toward the primary market, given more flexible payment plans offered by numerous developers in the wake of tight liquidity conditions.

Annual core inflation records single digits for 9th consecutive month

The CBE said that annual headline inflation recorded 14.2% in March 2019, compared to 14.4% and 12.7% in February and January 2019, respectively. Meanwhile, annual core inflation continued to record single digits for the ninth consecutive month, averaging 8.6% between July 2018 and March 2019, the lowest rate in more than two years.

“During Q1 of 2019, annual headline inflation has been generally affected by unfavourable base effects given exceptionally low monthly inflation rates in January and February 2018. This comes after annual headline inflation was affected by fiscal consolidation measures as well as price volatility of fresh vegetables due to transitory supply shocks in the second half of 2018,” the report stated.

“Nevertheless, given the containment of underlying inflationary pressures, annual inflation of services and retail items continued to record single digits for the sixth and fifth consecutive month, respectively, while annual inflation of core food items continued to record single digits for the tenth consecutive month. In the meantime, annual inflation of volatile food and regulated items remained elevated, which contributed to widening of the spread between annual headline and core inflation rates.”

Consequently, the CBE explained, contribution of non-food items to annual headline inflation has been broadly stable since November 2018, while contribution of food items experienced volatility since August 2018. Recently, annual contribution of food items remained broadly stable in March 2019 after increasing in January and February 2019, mainly due to volatile food items, following its decline in November and December 2018.

Meanwhile, monthly headline inflation was mainly driven by food inflation since August 2018, while non-food inflation has been contained. Inflation of fresh vegetables was the main contributor to food inflation. Despite higher than expected price increases in February 2019, fresh vegetable inflation was broadly in line with seasonal patterns, except for higher potato prices. This comes after a supply shock specific to potatoes and tomatoes elevated inflation of fresh vegetables in September and October 2018. However, it was partially reversed in November 2018 and by a larger extent in December 2018.

In March 2019, potato prices increased for the second consecutive month, contributing on average by 30.1% to monthly headline inflation. Prices of tomatoes declined after increasing for two consecutive months.

In the meantime, according to the CBE, prices of core food items inched up slightly since January 2019, mainly due to higher prices of poultry which increased for the third consecutive month in March 2019, contributing on average by 15.8% to monthly headline inflation. In addition, prices of rice as well as fish and seafood increased for the sixth and third consecutive month, respectively.

Average monthly core food inflation witnessed domestically since January 2019 was largely consistent with monthly international core food inflation, after diverging between August and December 2018. International core food inflation continued to be mainly driven by prices of dairy products and red meat since December 2018, while contribution of poultry prices was negative since February 2019.

Finally, after the CBE’s Monetary Policy Committee decided to cut key policy rates by 100 bps in its meeting on 14 February 2019, it decided in its meeting on 28 March 2019 that current policy rates are appropriate to achieve the inflation target of 9% (±3p.p.) in Q4 of 2020 which was declared in December 2018.

Real GDP growth is expected to continue recovering, benefiting from continued structural reforms, despite being affected by potential fiscal consolidation measures. The primary fiscal balance is targeted to record a surplus of 2.0% of the GDP in FY 2018/19, compared to a surplus of 0.1% of the GDP in FY 2017/18 and a deficit of 1.8% of the GDP in FY 2016/17, and is targeted to maintain this surplus thereafter.

Meanwhile, the overall fiscal deficit is targeted to decline to 8.4% and 7.2% of the GDP in 2018/19 and 2019/20, respectively, compared to 9.7% in 2017/18 and 10.9% in 2016/17, and is targeted to continue declining thereafter.

The outlook for Brent crude oil price incorporated in the domestic inflation outlook remained unchanged compared to the previous Monetary Policy Report, while spot prices remain subject to volatility due to potential supply-side factors as well as geopolitical risks. Domestically, cost recovery for most fuel products is expected to be reached and automatic fuel price indexation to underlying costs is expected to be implemented. Meanwhile, international food price forecasts, relevant to Egypt’s consumption basket, are expected to decline slightly during 2019 before increasing in 2020, according to the CBE’s report.

In addition to international commodity price developments, risks surrounding the inflation outlook from the global economy continue to include trade tensions and economic growth developments.

In the interim, domestic risks continue to include the timing and magnitude of potential fiscal consolidation measures and the evolution of inflation expectations.

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Net consolidated profits of QNB end of June 2019 reach EGP 4.217bn https://ww.dailynewssegypt.com/2019/07/13/net-consolidated-profits-of-qnb-end-of-june-2019-reach-egp-4-217bn/ Sat, 13 Jul 2019 20:08:38 +0000 https://www.dailynewsegypt.com/?p=702598 Bank accounts for 7.82% of loans, 5.17% of deposits in Egyptian banks by end-March 2019

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QNB’s independent net profit was EGP 4.029bn in June 2019, an increase of 22% compared to the same period last year.

The consolidated net profit amounted to EGP 4.217bn, an increase of 22% compared to June 2018.

The bank said in a statement that the portfolio of loans and advances, after deducting the allocation, amounted to EGP 142bn by the end of June 2019.

The bank’s market share of total loans in the banking sector reached 7.82% in March 2019, according to data available from the Central Bank of Egypt (CBE).

He added that the rate of facilities granted to small and medium-sized enterprises (SMEs) amounted to 22.3% of the total facilities by the end of June 2019.

According to the bank, the ratio of non-performing loans (NPLs) reached 2.76% of the bank’s total loan portfolio at the end of June 2019. It is one of the best ratios in the Egyptian banking sector.

The bank has shown good indicators of asset quality during the implementation of the IFRS 9 standards as of 2019 based on instructions issued by the CBE, while the coverage ratio for loans went below 171%.

The bank’s capital adequacy ratio was 19.5%, with the optimal application of credit policies, with the bank’s investment portfolio free from any risk assets.

The statement noted that the bank’s total consolidated assets stood at EGP 253bn at the end of June 2019.

Customer deposits reached EGP 204bn at the end of June 2019.

The bank’s market share of total deposits in the Egyptian banking sector was 5.17% in March 2019, according to data available from CBE.

The bank has a high deposit-to-deposit ratio of 73%, compared to 47% for the banking sector in March 2019, according to the latest available data from the CBE, with a focus on the growth of core banking operations, while maintaining high liquidity rates in all currencies.

The bank’s positive results confirm the efficiency and flexibility of the operational policies and procedures that helped them develop its operations, overcome crises, address the strong competition in the markets, and take advantage of the opportunities available through its branch network. The branch network has grown to 220 branches, giving excellent geographic coverage to meet the needs of the largest number of customers of all levels.

The bank continues to support SMEs through an integrated programme that, not only provides its premium banking services, but also provides integrated solutions through subsidiaries such as QNB AA Life Insurance, QNB AA Leasing, QNB AA Discounting, and QNB AA Asset Management. This is through its branch network, which has a team of specialists to serve this important segment of customers.

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CBE to discuss interest rates on Thursday https://ww.dailynewssegypt.com/2019/07/11/cbe-to-discuss-interest-rates-on-thursday/ Thu, 11 Jul 2019 14:13:49 +0000 https://www.dailynewsegypt.com/?p=702490 Expected rise in inflation means CBE likely to keep interest rates unchanged for 3rd time in 2019

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The monetary policy committee (MPC) of the Central Bank of Egypt (CBE) will hold its fourth regular meeting this year to discuss the interest rates of the Egyptian pound.

This comes at a time when a survey conducted by Daily News Egypt showed that the MPC is likely to keep the interest rates at the CBE unchanged in its meeting on Thursday for the third time this year.

In March and May, the MPC maintained its interest rate at 15.75% for deposit, 16.75% for lending, 16.25% for credit and discount rates, central operation price, after a reduction of 100 basis points (bps) in February.

The CBE’s key interest rates are the main indicator in the domestic market, especially with respect to the interest on deposits and loans and the return on government debt instruments.

Twelve of the 18 experts surveyed by DNE expected that the MPC will maintain the interest rates, while six expected to cut them.

Mohamed Abdel Aal, a banking expert and a board member of the Suez Canal Bank, told DNE that the CBE key interest rates would be fixed at the MPC meeting.

Abdel Aal referred to the possibility of rising inflation in the coming period as fuel subsidies are eliminated, which could push the CBE to maintain its current rates.

He explained that the effects of the expected increase in the prices of goods and services cannot be presently determined, and may require time, especially as there are many industries linked to fuel and natural gas, so the MPC will prefer to keep rates unchanged.

Tarek Metwally, a banking expert, predicted that the MPC of the CBE will move to stabilise the overnight deposit and lending rates in light of the expected rise in the inflation rate.

He pointed out that the lift of fuel subsidies would lead to a higher rate of inflation during the coming period, pointing out that the expected increase in inflation will not exceed the rate of return on deposit according to the price corridor at the CBE at 15.75%.

He added that the inflation effect on prices cannot be assessed before the end of July to determine the implications of the fuel subsidy cut, pointing out that fuel is associated with a large number of industries.

Meanwhile, Beltone Financial expected the CBE to keep key interest rates unchanged at the PMC meeting on Thursday, indicating that it may be maintained during the third quarter of 2019.

HC Securities and Investment also expected the CBE to keep interest rates unchanged.

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CIB achieves EGP 5.355bn net profit during H1of this year https://ww.dailynewssegypt.com/2019/07/10/cib-achieves-egp-5-355bn-net-profit-during-h1of-this-year/ Wed, 10 Jul 2019 06:20:44 +0000 https://www.dailynewsegypt.com/?p=702331 Bank's Capital Adequacy Ratio reached 25.82% by end of June 2019

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The Commercial International Bank (CIB) achieved a net profit of EGP 5.355bn during the first half (H1) of 2019, compared to EGP 4.424bn in H1 of 2018, with an increase of 21%.

The bank’s profit before taxes was EGP 7.396bn compared to EGP 5.925bn during the same period last year with an increase of 40.4%.

The CIB stated that the net income from revenues during H1 of 2019 jumped by 17%, reaching EGP 10bn from EGP 7.853bn in H2 of 2018.

Meanwhile net income fell by 38% to EGP 805m compared to EGP 1.296bn.

The capital adequacy ratio at the CIB reached 25.82% by the end of H1 of 2019.

The CIB said that this level of capital adequacy supports the bank’s ability to cope with market volatility.

The ratio of non-performing loans (NPLs) reached 4.96% of the total loan portfolio by the end of June 2019. Furthermore, the coverage rate of these loans was about 200%, which reflects the bank’s ability to absorb any unexpected increase in the value of these loans.

It added that in line with the bank’s risk management policy, it allocated EGP 795m by the end of June 2019, compared to EGP 1.291bn by the end of June 2018.

According to the bank’s performance indicators, the value of its loan portfolio by the end of June 2019 amounted to EGP 123.317bn, compared to EGP 119.503bn by the end of December 2018, with a growth rate of 3%.

The bank’s deposit portfolio rose by 7% to reach EGP 305.563bn, compared to EGP 285.297bn.

According to the bank, its investments in treasury bills amounted to EGP 147.743bn at the end of June 2019 compared to EGP 157.744bn at the end of December 2018, with a decline of 6%.

The bank’s total assets reached EGP 361.313bn at the end of H1 of 2019, compared to EGP 342.461bn by the end of 2018, with a growth rate of 6%.

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Council of Arab Central Banks Governors to convene in Cairo by mid-September https://ww.dailynewssegypt.com/2019/07/09/council-of-arab-central-banks-governors-to-convene-in-cairo-by-mid-september/ Tue, 09 Jul 2019 07:40:42 +0000 https://www.dailynewsegypt.com/?p=702123 Meeting will discuss regional and international monetary, financial, and economic developments

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Deputy Governor of the Central Bank of Egypt (CBE), Gamal Negm, participated in the meeting of the Council of Arab Central Banks Governors and Arab Monetary Institutions held on Sunday in Abu Dhabi, on behalf of the CBE Governor Tarek Amer.

During the meeting, the permanent bureau of the council agreed to hold its 43rd annual meeting in Cairo in the middle of September upon the CBE invitation.

The meeting will discuss regional and international monetary, financial, and economic developments and their implications for Arab countries. The meeting will also address other topics, such as the governance of central banks and digital currencies.

The meeting also discussed the banking supervision of local systemically important financial institutions, operational risk management frameworks, the relation between operational risk and cybersecurity, digital banking identity, responsible finance, trade in risky assets and their impact on financial stability, and encrypted currencies’ impact on the financial sector.

The council addressed the size of the household debt in Arab countries and its impact on financial stability, the financial soundness indicators and risk identification in the corporate sector and their implications for the financial sector in the Arab countries, the use of digital currencies in payment, the experience of immediate payments in the Arab countries, and the blockchain technology uses in payments.

The council agreed to review this meeting’s reports and recommendations in the next meeting.

It also stressed the importance of following up the work of international institutions and committees to address their recommendations and reports.

The meeting also welcomed forming a working group on financial technology, stressing the great importance of the group in spreading knowledge and enhancing the exchange of experience among Arab countries in this vital field.

The council called on the group to develop programmes and initiatives that would develop financial technology industry in Arab countries, stressing the importance of hedging against the risks that may arise in this regard. They also considered the establishment of a regulatory laboratory at the level of the Arab region to encourage Arab financial technology companies.

The Sunday meeting also approved the issues proposed to be included in the unified Arab speech to be delivered by the Arab delegation to the annual meetings of the International Monetary Fund and the World Bank, scheduled for October.

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Beltone expects CBE to keep interest unchanged https://ww.dailynewssegypt.com/2019/07/09/beltone-expects-cbe-to-keep-interest-unchanged/ Tue, 09 Jul 2019 07:00:04 +0000 https://www.dailynewsegypt.com/?p=702190 Investment bank expects inflation to temper at 13.3% in Q3 of 2019

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Beltone Investment Bank expects to keep core interest rates at the Central Bank of Egypt (CBE) unchanged at the Monetary Policy Committee (MPC) meeting on Thursday, indicating that it may be maintained during the third quarter (Q3) of the year.

The investment bank, in a research note, said that inflation is expected to rise between 2.5 to 3.5%, pointing out that commodities could rise slightly by 7-10% at most, compared to the hike witnessed in the previous two fuel price hikes. It is considered since the implementation of the economic reform programme in November 2016 and due to the low improvement in purchasing power.

“We confirm our vision that monthly inflation will regain strength in Q3 of 2019 up by 2.6% on average, but the base year, and its positive impact, suggest a smaller increase in annual general inflation,” Beltone said.

It explained that inflation is expected to reach 13.3% in Q3 of 2019, almost unchanged from 13% in the previous quarter and for the second half (H2) to see an annual inflation read of 13.8% against 13.4% in H1.

“From here, we expect the stability of inflation within the target range of the CBE at 9% (+/-3%) by the end of 2020,” Beltone added.

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IDB launches its 1st savings vessel product https://ww.dailynewssegypt.com/2019/07/08/idb-launches-its-1st-savings-vessel-product/ Mon, 08 Jul 2019 06:40:43 +0000 https://www.dailynewsegypt.com/?p=702058 Bank managed to increase its retail banking portfolio to EGP 1.4bn in 2 years: Fahmy

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The Industrial Development Bank (IDB) launched its first savings vessel under the name STAR SAVING, which would be one of the best savings products in the market providing the best return.

Chairperson of the IDB, Maged Fahmy, said that the introduction of this savings vessel is a continuation of the bank’s strategy to meet the needs of a large community of clients in the household sector.

He added that the bank is preparing to launch another set of products in retail banking, which will have added-value, as retail banking is one of the pillars of the national economy.

Fahmy pointed out that the IDB has a unique retail banking strategy that relies on financing for development and is reflected in improved living standards.

He revealed that the bank was able to penetrate this area, and to increase the size of its retail portfolio to EGP 1.4bn in only two years, thus it achieved the difficult equation, which is targeting all segments of society to become a “bank for everyone.”

Fahmy added that the bank is keen to achieve this goal by focusing on retail for development purposes, financing the delivery of gas to homes and factories, delivering water to homes, and providing adequate housing through mortgage loans.

For his part, the General Manager of the Treasury and Capital Markets Sector at IDB, Haitham Abdel-Fattah, said that this vessel is the first of the bank’s new products to be offered to the Egyptian market under its new logo.

He explained that STAR SAVING gives the highest return on savings vessels in the Egyptian banking market, pointing out that the return begins at 12% for the lowest category up to 15% for the top category.

Abdel-Fattah added that this account has another advantage, and that is the payment of the return on a monthly basis, which helps savers.

Furthermore, he noted that this product is just the beginning to re-introduce the bank in its new form, clarifying that the next few years will witness the launch of several other innovative products.

In conclusion, he pointed out that the launch of these products comes in line with the implementation of the geographical expansion plan recently witnessed by the bank–which aims to reach 50 branches.

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CBE launches service for instant bank account inquiry of deceased customers https://ww.dailynewssegypt.com/2019/07/07/cbe-launches-service-for-instant-bank-account-inquiry-of-deceased-customers/ Sun, 07 Jul 2019 18:40:14 +0000 https://www.dailynewsegypt.com/?p=702006 Bank signs agreement to discuss situation of vehicles purchased by credit facilities

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The Central Bank of Egypt (CBE) has introduced a new service for instant inquiry about the accounts of the deceased customers in all banks operating in the Egyptian market.

The bank has also signed an agreement that allows for electronic inquiries in traffic authority about the situation of vehicles purchased by credit facilities from commercial banks, when issuing bank letters for the renewal of traffic licenses and lifting ban on vehicles.

This comes within the framework of the CBE’s efforts to facilitate banking-related services for citizens, and to automate and simplify procedures to quickly ensure the provision of public services with minimal effort.

Amany Shams-Eldin, sub-governor banking operations, said that the new service is to inquire about the accounts of the deceased by an innovative application to respond to the customer immediately instead of the followed procedures, which require addressing all the banks operating in Egypt via mail to respond to the applying customer – a scenario that may take months.

She added that the request is submitted in the CBE’s branches through one of the legal heirs or under the power of attorney, in order to disclose the accounts of the deceased in the banks, with a copy of the hereditary information or a copy of the power of attorney that includes the disclosure of the deceased’s accounts in banks.

As for the instantaneous query service in traffic units about the situation of the vehicles owned by credit facilities of commercial banks, she pointed out that the CBE signed a cooperation agreement with the ministry of the interior and the Egyptian Company for Credit Information i-Score on June 12, 2019 to provide services in the field of credit facilities granted to vehicles.

She also noted that the agreement provides for automating the issuance of bank letters for the renewal of traffic licenses and lifting the ban on vehicles owned by credit facilities of commercial banks. This is in coordination with the parties to the agreement through the establishment of a database based on the national ID number / registry number and the license plate number to immediately update its status through the direct link between the general directorate of traffic information systems and banks through the network of i-Score.

Shams-Eldin said that the agreement allows the citizen to immediately inquire in traffic units about the vehicle’s situation instead of the current paperwork cycle. The paperwork cycle would essentially require the issuance of letters from banks and takes at least 10 days to complete the procedures for renewing or lifting the ban on vehicle licenses.

The system is expected to be operational during the fourth quarter of this year after the completion of the link between the directorate general of traffic information systems of the ministry of the interior’s “Specialized Police Sector” and i-Score.

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Beltone’s outlook for banking sector remains positive despite recent regulatory reforms https://ww.dailynewssegypt.com/2019/07/07/beltones-outlook-for-banking-sector-remains-positive-despite-recent-regulatory-reforms/ Sun, 07 Jul 2019 09:30:11 +0000 https://www.dailynewsegypt.com/?p=701950 New banking draft law negatively affects dividends of small capital banks, slight impact of IFRS 9 on capital

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Beltone Financial said its outlook for the banking sector remains positive despite recent regulatory reforms, thanks to strong growth opportunities.

In a research note, Beltone explained that financial inclusion is a major upside catalyst; however, clear signs of improving dynamics are not yet in sight, adding that money in circulation outside the banking sector marked its all-time low since 2003, reaching only 12.1% of M2, thanks to the government’s financial inclusion efforts; yet, it remains the highest among its regional peers.

On the individual front, it sees a major improvement in financial inclusion efforts as latest data from the World Bank (WB) showed that 32.8% of adults held bank accounts in Egypt, up from only 14% in 2014 and 10% in 2010.

“We are expecting a larger population to fall under the banking sector umbrella, reaching 65% by the end of our forecast horizon. This is supported mainly by the increasing financial literacy, stronger presence of Islamic banking, and the ongoing and projected government initiatives to boost financial inclusion for individuals,” it added.

However, despite such expected improvement in individuals’ financial inclusion records, Beltone is not expecting the impact on deposits’ growth to be aggressive as such anticipated growth in the number of depositors is not likely to be accompanied by large volume, since Egypt is considered to be one of the lowest per capita income in the region, with a poverty rate hovering around 32% as of December 2017.

On the other hand, studies show that Egypt’s informal economy could range between 1-1.5x.

“We believe that the major impact lies in attracting this parallel economy into the formal economy, which, in turn, will largely dampen the percentage of the money in circulation outside the banking sector.  From the government’s side, as fiscal deficit is a point of attention for the time being, increasing the tax base is a major concern for the government. Hence, restructuring the tax collection process and incentivising the inclusion into the formal economy will boost the deposits’ base while increasing the money multiplier, and therefore money supply. However, we don’t expect fast improvement on this front, as the parallel economy is still plagued with several obstacles and eradicating such impediments requires a long-term plan. With this regard, the sector won’t expectedly yield full fruits during the upcoming five years,” the report read.

The investment bank, in a research note, pointed out that the new banking draft law will adversely affect the dividends of banks with small capital, and for the IFRS 9 application to have a slight impact on capital.

“Organic equity growth to support lending expansion; New Banking Law to negatively impact dividends for small banks; minor IFRS 9 impact on equity,” it said.

“We are expecting strong expansion in lending activities during the forecast horizon, particularly

led by capex recovery. Although such expansion will burden each bank’s RWA, and hence CAR,

we highly capitalise on profitability to sustain capital base levels. Moreover, the proposed new

Banking law recommends three years to increase the minimum paid in capital to EGP 5bn; we

believe EG Bank is the most negatively impacted, EXPA and Al Baraka Bank Egypt will cut their dividends

distribution, while we postpone our projected dividends distribution for Abu Dhabi Islamic Bank (ADIB) to 2023. On the other hand, we are not expecting IFRS 9’s impact on equity levels to be hefty, thanks to the last three years’ lucrative earnings growth that supported ample provision accumulation,” Beltone explained.

In the newly proposed Banking Law (currently under discussion in Egyptian Parliament), the Central Bank of Egypt (CBE) increases the minimum paid-in capital requirements to EGP 5bn for all Egyptian banks (public and private). Beltone is expecting EG Bank to be heavily affected on the back of its lower paid-in capital and retained earnings, while its profitability is not expected to safely supply the required growth in minimum paid-in capital during the upcoming three years. On the other hand, despite their lower capital base, it is expecting ADIB and Al Baraka Bank Egypt to meet the new requirements thanks to their above average market profitability and a strong parent support that highly values their investment in the Egyptian market for its higher profitability compared to other regions.

“We are expecting lower dividends’ distribution for Al Baraka Bank Egypt, Export Development Bank of Egypt (EXPA), and Housing and Development Bank (HDB) to support capital accumulation in order to meet the projected requirements. Despite its growing profitability, we are postponing our projected dividends distribution for ADIB to 2023 instead of 2021, on the back of the currently retained losses balance that is projected to be completely diminished by the first quarter (Q1) of 2020. Moreover, we are expecting a downward pressure on the banks’ ROAE on the back of higher financial leverage due to faster growth in equity levels than that of assets growth. Cost of Risk is expected to be negatively impacted on the back of higher loans growth as banks are expected to rush for lending in order to utilise their expected surge in capital base, which may negatively impact banks’ asset quality and magnify the CoR’s negative impact on profitability due to larger loans to total assets ratio. The Commercial International Bank (CIB) Egypt and QNB Alahli (QNBA) are far above minimum requirements; Faisal Islamic Bank of Egypt (FAIT) and Credit Agricole Egypt (CAE) are not expected to be negatively impacted thanks to ample retained earnings and strong earnings growth,” the report read.

It added that a sustainable financial position expansion is clearly in sight, while deposits will regain their contribution to total financial position.

The Egyptian banking sector showed the fastest growth in financial position compared to the

MENA region, reaching a CAGR of 26.3% during the last five years. Such strong growth, Beltone said, came on the back of the surge in money supply as customer deposits – the main constituent of M2 – remain the sector’s core financing source. Egypt’s banks used to rely mainly on customer deposits to drive financial position growth with minimal dependency due to bank balances and other borrowing activities.

“However, prior to the EGP floatation, foreign currency (FC) shortage was a common syndrome most banks were suffering from. Accordingly, rising dependency on FC borrowing, particularly from supranational funding entities, was a common practice, resulting in higher cost of funds and lower FC liabilities’ duration given the floating nature of such borrowing activities compared to FC customer deposits. We are not expecting such exposure to remain strong in the future as deposits’ growth prospect, along with the currently prevailing FC liquidity, are expected to strengthen the deposits contribution to the total financial position. On the other hand, we believe that the growing presence of supranational funding entities is a strong asset that supports market liquidity upon which we highly capitalise our positive liquidity outlook,” the report stated.

It pointed out that money supply growth is expected to remain healthy backed by positive nominal GDP outlook.

Five years of materially changing a macroeconomic environment where inflation peaked reaching 33%, EGP floatation and aggressive increase in interest rates came in line with a surge in money supply reaching a CAGR of 21%, which has been reflected in deposits’ five years CAGR of 23.7%.

Although the floatation decision amplified M2 growth rate, which resulted from translating foreign currency balances, the main driver behind the growth in M2 was the surge in local currency (LC) retail deposits’ reaching a historic contribution to M2 of 56% as of December 2018 witnessing a CAGR of 23%, thanks to public banks’ unbeatable offered rate on certificates of deposits (CDs) post floatation.

Beltone expects the average return on shareholders’ equity to shrink in 2020 by an average of 190 basis points (bps) between the banks covered by the activation of the new system to calculate the taxes on investment in debt instruments.

“Lending is to regain its pull as the primary utilisation shelters on lower interest rates and new tax amendments on government securities,” it said.

Egypt’s banking sector has one of the lowest lending utilisations in the region, thanks to the huge

sovereign exposure on the back of the expanded fiscal deficit, as banks remain the primary player in the sovereign securities market. “Our in-house macroeconomic outlook shows an increase in fiscal deficit marginally lower than our expected total assets growth, mainly on the back of the government’s fiscal reform, which will result in lower government securities constitution of total assets,” the report read.

Moreover, the newly introduced tax amendment on government securities has curbed the banks’ appetite for sovereign utilisation particularly with the current lower yield, thanks to foreign inflows. As fiscal deficit remains contained, sovereign exposure will partially decrease, providing room for lending to occupy a larger portion of total assets.

However, such a reshuffle is not expected to be dramatic as fiscal deficit is not expected to diminish in absolute terms during the forecasted period. “Accordingly, we are expecting a gradual increase in LDR, reaching 54% by 2023 resulting in loans CAGR of 14%,” Beltone noted.

Beltone said that public sector and subsidised small and medium-sized enterprises (SMEs) financing is expected to keep loan growth in double digits during 2019, where the last couple of years marked a strong growth in lending activities reaching a CAGR of 18%, mainly on the back of the surge in public sector loans comprising 61% of the total growth, thanks to the energy sector and government megaprojects.

“As the government’s megaproject pipeline is still fertile and the energy sector’s expansion plans still require huge investments, we are expecting a robust growth in FC public lending to be the key driver in lending growth throughout 2019.

On the other hand, banks are obliged to meet the SMEs’ targeted weight in lending exposure

of 20% by the end of 2019. Accordingly, we are expecting SMEs’ lending to be a secondary pillar in corporate lending growth,” it added.

Covered banks deposits grew at a slightly slower 2012-18 CAGR than the total market deposits,

equivalent to 24.7% (26.7% vs total market), to reach EGP 827bn in December 2018. The bulk of this growth came mainly during the second half of 2018, capitalising on the suspension of high yield CDs offered from major public banks. Given the projected decline in interest rates, Beltone anticipates that covered banks deposits market share will be restored, especially on the retail side.

“We are expecting CIB to show the fastest growth in total deposits followed by ADIB thanks to their strong retail client base along with ambitious expansion plans. On the other hand, we believe FAIT, Al Baraka Bank Egypt, and ADIB to partially capitalise on Egypt’s lucrative potential of massive unbanked Islamic population, as their efforts to sustain and magnify their market presence are paving a way for stronger market share for Islamic banking in Egypt,” Beltone highlighted.

Meanwhile, banks under Beltone’s coverage constitute 22% of the market share of the total lending market, with QNBA and CIB taking the lead with 7.9% and 6.6% market shares, respectively.

“Although the prevailing market scene and the changing regulation are projected to toughen the competition over lending growth, we believe that demand on loans will accelerate given the projected growth in economic activity. We presume that covered banks will barely preserve their market shares during the forecast horizon and given the expected surge in private lending that is to be offset by the projected intensified competition over lending activities. Among our coverage, we believe the CIB, QNBA, and the CAE are best positioned to capture such an opportunity given their solid capital base and growing market presence. As for Islamic banks, ADIB enjoys the highest market share, standing at 1.4%; we expect ADIB to expand its market share given its strong corporate lending presence particularly under the bank’s new leadership and despite its relatively low capital base,” Beltone noted.

“Furthermore, we find a strong potential in retail lending activities after three years of curbed consumption levels on the back of elevated interest rates and inflation hikes. We expect retail lending to strongly pick up in 2019 on the back of lower inflation rates and anticipated increase in disposable income. On the other hand, the CBE’s growing attention to boost the mortgage lending activities will further support retail lending growth. We believe the CAE, ADIB, EGB, and the CIB will be key beneficiaries from such potential given their growing retail presence, while the HDB will largely capitalise on the CBE’s mortgage finance initiative,” it added.

The investment bank also expects that the banks covered by their market share of deposits will recover in light of the expected decline in interest and the maturity of high yield certificates and Suez Canal certificates.

“With currently maturing high yield CDs and the maturity of Suez Canal certificates next September, a reshuffle in deposits market share is highly expected,” Beltone stated.

As pricing battle between banks becomes laxer on the back of the increasing attention on profitability of the main public banks, Beltone is expecting the remaining players to regain their market share after their retreat in the last three years. “Banks that successfully target customers through comprehensive and sophisticated data analytics, offer compelling products, and deliver strong digital experiences, could gain funding advantages and see contained deposit costs. On the other hand, banks with a better branch network and diversified geographical presence will benefit the most by attracting the unbanked population into the banking system,” it added.

Beltone believes that the CIB will achieve the fastest pace of growth in total deposits, followed by Abu Dhabi Islamic Bank (ADIB), thanks to their strong customer base and ambitious expansion plans.

“We flag the CAE, ADIB and QNB as our top picks on superior earnings and positive expansion outlook; but the CIB still has fruits to offer,” Beltone said.

It explained that the sector outlook remains positive despite recent regulatory updates, thanks to considerable growth potentials, favouring banks with bold ROAE, proactive ALM practices, and positive expansion outlook.

It added that ADIB trades at deep discount with P/B and P/E of 0.69x and 2.39x against ROE of 32%. It also favours QNBA’s currently positive outlook given the bank’s change in growth philosophy shifting focus to CoF optimisation.

“We assign a Hold rating to the CIB post its strong rally (27% ytd), we believe the bank’s outlook remains positive. We note that the CIB’s trading multiples’ premium level is highly justifiable given its dominant market position along with improving fundamentals. The bank trades well above its peers domestically with a P/E of 11.9x and a P/B 2.8x. We remain positive on HDB on currently higher profitability and new management team’s efforts to strengthen corporate and retail lending activities,” the report read.

“On the other hand, we see EXPA and Al Baraka Bank Egypt provide attractive valuation on unjustifiably lower multiples compared to historical levels and average peers; yet, we don’t foresee a short-term catalyst. Egypt’s banks under our coverage trade at an average of 4.3x 2018a P/E, 1.4x PB, and offer a return on equity of 29.7%, versus MENA banks (9.9x, 1.5x, 18.4%),” it added.

Credit Agricole, Abu Dhabi Islamic Bank and the CIB are expected to maintain their net interest margin in 2019, supported by the expected decrease in deposit cost.

The report noted that covered banks’ deposits grew at a slightly slower 2012-18 CAGR than the total market’s deposits, equivalent to 24.7% (vs total market 26.7%). Given the projected decline in interest rates, along with the ongoing maturity of high yield CDs and Suez Canal certificates during 2019, Beltone anticipate that covered banks’ deposits market share will be restored, especially on the retail side. “We are expecting CIB to show the fastest growth in total deposits, followed by ADIB, thanks to their strong retail client base and their ambitious expansion plans,” it explained. “On the other hand, we have seen an expansion in NIM during 2018 for covered banks thanks to higher yield on government securities. However, during Q1 of 2019, NIMs remained bold on the back of lower CoF that is mainly attributable to the continuous decrease in deposits’ duration.  We are expecting the CAE, ADIB, CIB, and QNB to maintain their NIMs during 2019 backed by a projected decrease in CoF, while maintaining a positive ALM gap.”

Beltone noted that ROAA will remain bold despite the projected NIM compression to be supplemented by increasing non-interest income contribution to core banking income starting from 2021, which will further enhance the banks operating income index.

“We are expecting CIR to show a slight decline as no inflationary shocks are projected during the forecast horizon. On the other hand, as lending utilisation picks up, CoR’s negative impact on each bank’s profitability will be higher. On the ROAE level, we expect a slightly negative impact from recent tax amendments on government securities in 2019; yet, impact in 2020 ranges between c1-4ppts. Furthermore, as we are projecting RWA to occupy a larger portion of total assets, we are not expecting banks to maintain the currently elevated financial leverage ratio, which will negatively impact ROAE levels.

It believes that the return on average assets remains strong as earnings from core banking are growing, adding that the improved cost of deposits would maintain a strong net interest margin during 2019.

Sound ALM practices are expected to keep the sector’s core-banking income solid, while improving efficiency will boost the sector’s CIR on the back of easing inflation.

Moreover, Beltone highly capitalises on its positive macro outlook to contain CoR despite the growing SMEs exposure and IFRS9 implementation starting 2019.

“Accordingly, we are expecting a solid ROAA on the sector’s level weighted mainly by the anticipated improvement in profitability of public banks,” it stressed.

On the ROAE front, Beltone is expecting a slight decline in the sector’s ROAE level mainly driven by the projected lower financial leverage ratio as banks are not expected to sustain the currently high financial leverage, particularly when lending exposure regains its high contribution to financial position.

In addition, growing profitability will support capital base, paving a safe landing for the expected surge in RWA, according to Beltone.

The Egyptian banking sector enjoys continuously improving capital adequacy measures supported mainly by the organically generated capital, along with the increasing presence of supranational funding entities and strengthening parent support. Another main pillar supporting the capital base is the growing exposure toward sovereign and public business entities which exhibit lower weight in risky assets backed by the government’s support. Given our expected reshuffle in assets’ composition backed by higher private lending constitution of total assets, coupled with the expected shorter assets duration on the back of lower treasury bonds’ exposure, we foresee RWA growing faster than assets’ growth as such change in financial position dynamics will strongly weigh on credit and market risk exposures. On the other hand, we highly capitalise on banks’ growing profitability to support capital base as a consistent and sustainable source of funding.

Beltone revealed that Crédit Agricole Egypt is at the top of its list of preferred banks following its profitability and solid capital base, which supports the expansion plans of the bank and maintains the continuity of generous dividends, while it sees the CIB as making its best performance.

It noted that the HDB is still looking positively on its high profitability during the current period and the efforts of the management team to strengthen the lending activities of companies and individuals.

Beltone noted that six years of diminishing private lending weight on the back of heavy interest rates and the increasing weight of public debt resulted in a crowding out effect. Moreover, as cost pull inflation negatively impacted consumption levels, most companies under coverage were operating below maximum utilisation levels while pausing expansion plans on a high capex cost of debt.

Beltone foresees another 100bps cut in benchmark rates during 2019. However, it is not expecting that such a decrease would trigger expansion in capex lending.  Accordingly, growth in private business loans will be primarily driven by working capital financing, capitalising on improving utilisation rates while postponing capex financing to early 2020, when we are expecting another 200bps cut in benchmark.

Furthermore, the Non-Bank Financial Intermediaries (NBFIs’) expansion will toughen the competition over interest margins despite lower penetration rates where, despite the strong role the NBFIs play in the financial inclusion roadmap, their expansionary role as a financial intermediary imposes a downside risk to interest margins on loans.

Giving an insight over NBFIs, total leased contracts value grew about five folds from EGP 6.0bn in 2013 to EGP 28.6bn in 2017, according to FRA released data.

As for microfinancing, total loans portfolio reached EGP 11.55bn in 2017 versus EGP 7.1bn the prior year. These NBFIs offer a wide range of products and services to mitigate the financial intermediation gap and penetrate business areas that banks are not allowed to finance. Thereby, we do believe that these companies’ growth will continue as they diversify their products to meet more financial requirements of business enterprises, and they will carry on playing an important role for private sector loan growth.

On the other hand, banks’ appetite for utilisation in sovereign securities has been negatively affected by the introduction of new tax amendments and the decrease in government yield on the back of foreign inflows. Such change in market dynamics magnifies the aggressiveness of the competition over lending margins in terms of both interest and commissions, particularly for small cap banks, which will negatively affect the sector’s profitability. However, NBFIs provide a diversification benefit for banks which is expected to partially improve the sector’s asset quality and risk management process resulting in a contained CoR.

Beltone projected retail lending to see strong expansion during the forecast horizon. “Retail lending activities picked up in 2018, resulting in a growth of 20%, broadly in line with total lending growth despite elevated benchmark rates. Our in-house macroeconomic outlook projects inflation to be more on the declining side following two years of a steep increase in price levels.

Moreover, after reaching a historic low level, consumption level revival is in sight given our expected growth in disposable income coupled with a contained increase in price levels. Accordingly, we are expecting a surge in retail lending backed by a revival in consumption, lower inflation, and a decrease in interest levels. Banks with strong and diversified geographical representation and ample payroll service are more likely to capitalise on such potential,” the report explained.

Supervisory measures strengthened banks’ financial soundness and role in the economy

During the last seven years, the Egyptian banking sector showed a strong improvement on almost all of its financial soundness dimensions supported by a strict supervision from the CBE allowing the sector to be a bold economic arm during economic swings. The currently improving financial soundness measures pave a way for different banking sector instruments and initiatives to safely take place in the market, including SMEs’ growing exposure, mortgage financing, e-payments, tourism sector lending, etc.

We remain positive of the sector’s soundness measures, despite the ongoing and projected instruments’ and initiatives’ expected burden, given the solid structure the system currently enjoys.

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Gold in FX reserves up by $69m in June 2019 https://ww.dailynewssegypt.com/2019/07/07/gold-in-fx-reserves-up-by-69m-in-june-2019/ Sun, 07 Jul 2019 08:30:44 +0000 https://www.dailynewsegypt.com/?p=701901 FX reserves increased to $44.352bn end of May: CBE

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The value of the gold balance included in the foreign exchange (FX) reserves of Egypt increased by about $69m in June to reach $2.821bn, up from $2.752bn in May.

The Central Bank of Egypt (CBE) said on Thursday that Egypt’s FX reserves rose at the end of June to $44.352bn against $44.275bn by the end of May, an increase of $77m.

This level covers Egypt’s imports of basic commodities for 8.4 months.

According to detailed data on reserve balances, the balance of foreign currencies has risen to approximately $41.074bn by the end of June, against $41.071bn in May.

The Special Drawing Rights (SDR) balance was up by the end of June to $453m against $448m in May, while loans to the International Monetary Fund (IMF) reached $7m in June against $8m in May.

FX reserves jumped by over $29m since June 2013, rising from $14.96bn.

Egypt’s reserves consist of foreign currencies, gold, SDR units, and net IMF loans.

The purpose of the reserve is to support the currency, meet the state’s external obligations, and ensure its imports of commodities for several months.

Most Egyptian reserves consist of US dollars, euros, sterling pounds, and Japanese yen.

The reserve size of any country of origin represents a strength or a weakness in terms of its value and ability to meet the state’s FX obligations.

The resources of the Suez Canal Authority, tourism, export, foreign investment, and remittances from abroad are the most important resources for Egypt’s reserves.

Before the January Revolution in 2011, Egypt’s reserves stood at $36bn. In June 2013, 56 months after the revolution, the reserves declined to $26.56bn.

The reserves lost more than $11.5bn in two years, reaching $14.96bn in June 2013.

However, the reserves began to recover slowly in June 2014, realising $16.687bn then to $20.082bn in June 2015, before falling again in June 2016 to $17.546bn then jumping back up to $31.305bn in June 2017.

The reserves achieved a new jump in June 2018 to $44.259bn then to $44.352bn in June 2019.

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Government intends to borrow EGP 522bn in Q1 of FY 2019/20 https://ww.dailynewssegypt.com/2019/07/03/government-intends-to-borrow-egp-522bn-in-q1-of-fy-2019-20/ Wed, 03 Jul 2019 18:36:17 +0000 https://www.dailynewsegypt.com/?p=701697 Ministry of Finance offers T-Bills, Bonds worth EGP 200.5bn in July, EGP 160.75bn in August, another similar figure in September

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Figures obtained by Daily News Egypt indicate that the government intends to expand the borrowing from the local debt market to bridge the chronic deficit in the state budget significantly during the first quarter (Q1) of the fiscal year (FY) 2019/20.

According to those figures, the ministry of finance intends to offer treasury bills (T-Bills) and treasury bonds (T-Bonds) worth EGP 522bn during the period from July 1 to the end of September. This is the largest rate of borrowing through debt instruments since the launch of these tools on the market.

The state budget deficit is expected to reach EGP 445.1bn at the end of the FY 2019/20.

A plan by the ministry of finance, obtained by Daily News Egypt, reveals that the government is targeting issuing T-Bills worth EGP 490.75bn and T-Bonds worth EGP 31.25bn.

The Central Bank of Egypt (CBE), which is carrying out the task on behalf of the government, is offering bids for T-Bonds and T-Bills in July worth EGP 200.5bn, offers worth EGP 160.75bn in August, and offers worth EGP 160.75bn in September.

According to the plan, three-month T-Bills worth EGP 118.75bn, six-month T-Bills worth EGP 121.75bn, nine-month T-Bills worth EGP 125bn, and 12-month T-bills worth EGP 125.25bn will be offered.

The government’s plan also includes the issue of three-year bonds due in June 2022 worth EGP 5bn and three-year bonds worth EGP 2.5bn to be due in September 2022.

The ministry will also offer five-year bonds worth EGP 8.75bn due in July 2024 and seven-year EGP 2bn worth of bonds to mature in April 2026.

Moreover, it will float seven-year bonds due in August 2026 worth EGP 5bn and 10-year bonds maturing in May 2029 that are worth EGP 8bn.

According to the ministry of finance, the volume of outstanding balances of T-Bills and T-Bonds is in local currency until the end of April 2019 until it reached EGP 1.852tn, including EGP 1.151tn of T-Bills and EGP 701.188bn of T-Bonds.

Banks working in the Egyptian market are considered the largest investors in T-Bonds and T-Bills, which the government issues on a regular basis to cover the state’s budget deficit.

T-Bonds and T-Bills are proposed through 15 banks, which are the principal dealers in the primary market. These banks resell a portion of these T-Bills and T-Bonds in the secondary market to retail investors, as well as to local, and foreign institutions.

The Minister of Finance, Mohamed Moeit, said in recent remarks that the government is working on several axes to reduce public debt, pointing out that Egypt aims to reduce the budget deficit during the current FY 2018/19 to 8.4% of the GDP then to under 7% in FY 2019/20.

He added that the ministry also aims to reduce the debt ratio of the domestic product to reach 98% of GDP in 2018/19 instead of 108% of the GDP the previous year then to 92% in 2019/20.

According to CBE data, local public debt has reached EGP 4.107tn at the end of December 2018 against EGP 3.695tn at the end of June 2018.

The CBE said that 85.3% of public debt worth EGP 3.504tn is owed by the government, economic public agencies hold 6.4% of total public debt worth EGP 340bn, and 6.4% is owed by the National Investment Bank worth EGP 263.1bn.

For its part, Deutsche Bank noted that the Q1 of 2019, ending in March, witnessed a record increase in debt issues that reached EGP 509bn. This is much higher than the estimated figure of EGP 474bn, while Q2, ending in June, saw the issuance of EGP 479bn.

Thus, the net supply after depreciation increased to about EGP 70bn, up from EGP 60bn in 2018. The bank expected the rate of issuance to increase in conjunction with a busy schedule of recoveries, where Q3 will see the depreciation of EGP 450bn.

The bank pointed out in a report that, although T-Bills account for 95% of supply, T-Bonds are gaining grounds since Q2 of the year amid low demand on T-Bills against constant demand on T-Bills in April to mid-May, unlike Q1, which saw high demand on T-Bills.

It added that the 3.5-year T-bonds accounts for the largest share of investments which is worth 60% of outstanding balances, then 10-year bonds (22%) and 7-year bonds (18%).

The report said that the ministry of finance has succeeded in improving the structure of its issuance by increasing the issuance of T-Bonds and rates on return close to the interest on T-Bonds.

It noted that it preferred to keep local assets with the preference for T-Bills over T-Bonds in the summer months then give preference for T-Bonds in Q4 with the trend to reduce interest.

It added that the real returns are not the most attractive in emerging markets, compared to Ukraine or Turkey, but also predicted that inflation dynamics would significantly improve in the second half.

The report recommends not building major financial centres of Egypt’s international T-Bonds amid the uncertainty after the conclusion of the International Monetary Fund (IMF) programme, especially with more attractive opportunities, such as Argentina, on the table.

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CBE confirms strength of banks’ financial positions by end of 1st quarter of this year https://ww.dailynewssegypt.com/2019/07/01/cbe-confirms-strength-of-banks-financial-positions-by-end-of-1st-quarter-of-this-year/ Mon, 01 Jul 2019 15:44:20 +0000 https://www.dailynewsegypt.com/?p=701431 The CBE noted that banks secured provisions of 98% of total NPLs at the end of March 2019. The ratio reached 100% at the 10 and five largest banks.

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The ratio of non-performing loans (NPLs) to all loans in banks operating in the Egyptian market declined to 2.6% by the end of March 2019, up from 2.4% in December 2018, according to the Central Bank of Egypt (CBE).

In its quarterly report on the financial position of banks, the CBE said that NPLs reached 3.1% at the top 10 banks and 2.6% at the top five banks.

The CBE noted that banks secured provisions of 98% of total NPLs at the end of March 2019. The ratio reached 100% at the 10 and five largest banks.

“The provisions secured by banks to combat bad debt reached EGP 121.717bn at the end of March 2019, of which the largest 10 banks accounted for EGP 77.818bn, while the largest five banks’ NPL provisions reached EGP 62.375bn,” the CBE’s report read.

It added that the banks’ reserves reached EGP 173.223bn at the end of March 2019, with the top five banks recording EGP 153.558bn, and the top 10 banks had EGP 185.966bn.

According to the CBE, the loans to deposits ratio (LDR) in banks operating in the Egyptian market increased to 47.5% in March 2019 from 47.8% in December 2019. The ratio stood at 46.2% in the top 10 banks, and 47.2% at the top five.

The CBE noted that the LDR in local currency reached 40.1% in March 2019, from 39.3% in December 2018. Meanwhile the LDR in the top 10 banks stood at 36.6%, and 36.1% in the top five.

Likewise, foreign currencies’ LDR fell in March to 73.7%, compared to 76.7% in December 2018. The ratio registered 92.8% in the top 10 banks, and 80.5% in the top five.

“The private sector has taken over 59.9% of total loans granted by banks to their clients at the end of March 2019, against 58.7% in December 2018,” the CBE stated.

It added that the private sector has acquired 52.4% of the total loans in the top 10 banks, and 48.8% of the loans in the top five banks.

“The total deposits in banks until the end of March 2019 amounted to EGP 3.914tn, including EGP 2.895tn in the top 10 banks, and EGP 2.46tn in the top five,” noted the CBE.

Furthermore, the ratio of bank deposits to assets in March reached 69.3%, against 70.2% in December. The ratio reached 67.5% in the top 10 banks, and 66.5% in the top five.

The average liquidity ratio in local currency in banks fell to 43.4% down from 44.3% in December, scoring 46.5% in the top 10 banks, and 44% in the top five.

Moreover, the average foreign currency liquidity ratio fell to 65.7% in March against 59.7% in December. This ratio stood at 63.1% in the top 10 and top five banks.

On a different note, the CBE said that banks’ securities portfolios reached about 15.8% of total assets in banks in March against 16.2% in December 2018. The ratio stood at 17.1% in the top 10 banks, and 18.2% in the top five.

Moreover, according to the CBE, banks’ investments in securities and treasury bills (T-Bills) reached EGP 1.767tn at the end of March 2019, amounting to EGP 1.359tn in the top 10 banks, and EGP 1.171tn in the top five banks.

“The total capital of banks operating in the Egyptian market amounted to EGP 152.694bn at the end of March 2019,” the report stated.

It also highlighted that the capital of the top 10 banks amounted to EGP 101.053bn while the top five banks’ capital reached EGP 83.04bn.

The CBE did not disclose the names of those five or ten banks; however, the market names the National Bank of Egypt; Banque Misr; Commercial International Bank (CIB); Banque du Caire; QNB AlAhli; the Arab African International Bank; HSBC; Faisal Islamic Bank; AlexBank, and Credit Agricole.

Regarding the banks’ capital adequacy index, the CBE explained that the capital to risk-weighted assets ratio (CRAR) in banks increased to 16.5% at the end of March 2019 up from 16.2% by the end of December 2018. The ratio scored 16.4% in the top 10 banks, and 16.4% in the top five.

The tier 1 capital to risk-weighted assets scored 13.5% in March against 13.2% in December 2018 amounting to 13.3% in the top 10 banks, and 13.15% at the top five.

The continuing CRAR reached 10.3% in March 2019 against 9.6% in December 2018, reaching 9.7% in the top 10 banks, and 9.1% in the top five banks, according to the CBE.

The rate of leverage in banks reached 6.6% in March against 6.6% in December. This ratio reached 6.2% in the top 10 banks, and 5.9% in the top five banks.

The percentage is recommended starting from the end of September 2015 until 2017 and is obligatory starting from 2018, with a lower margin of 3%, as per the CBE’s report.

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Banks operating in Egypt post net profit of EGP 39.29bn end-March https://ww.dailynewssegypt.com/2019/06/27/banks-operating-in-egypt-post-net-profit-of-egp-39-29bn-end-march/ Thu, 27 Jun 2019 17:40:21 +0000 https://www.dailynewsegypt.com/?p=701330 Top 5 banks denominate 74.48% of profits, top 10 account for EGP 33.32bn of profits, says CBE

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Banks operating in the Egyptian market achieved a net profit of EGP 39.29bn at the end of March, according to the Central Bank of Egypt (CBE).

In a recent report, the CBE stated that the top five banks in Egypt accounted for 74.48% of the total profits realised by banks. Collectively, the five banks achieved EGP 29.26bn of the net profits.

The top 10 banks posted profits of EGP 33.32bn equivalent to about 84.81% of the total profits.

The list of top 10 banks includes the National Bank of Egypt; Banque Misr; Commercial International Bank – Egypt (CIB); Banque du Caire; QNB Alahli; Credit Agricole Egypt; Faisal Islamic Bank of Egypt, and the Housing and Development Bank.

According to the CBE, the revenue achieved by banks in Egypt until the end of March 2019 amounted to EGP 80.36bn. The share of the largest 10 banks recorded EGP 66.64bn, which accounts for 82.39%, while the share of the top five banks alone reached EGP 75.56bn, representing 75.23% of the total revenue.

The CBE said that the net operation income amounted to EGP 102.47bn. The top 10 banks accounted for EGP 83.61bn, equivalent to 81.59%, while the top five banks’ share reached EGP 75.56bn, accounting for 73.73%.

According to the CBE, the return on average assets of banks operating in the Egyptian market reached 1.4% at the end of March 2019 against 1.5% in the year 2018. The rate scored 1.3% for the largest 10 banks and 1.1% at the largest five banks.

It added that the return on the average equity of the banks reached 19.2% at the end of March 2019 against 21.5% in 2018 and reached 18.4% in the top 10 banks and 16.3% at the top five banks.

Net margin of return scored 3% at the end of this March, down from 3.9% in 2018, and reached 2.7% at the top 10 banks and 2.3% at the top five banks.

In contrast, the volume of bank expenses at the end of March 2019 amounted to EGP 63.18bn, including EGP 50.287bn at the top 10 banks (79.58%) and EGP 46.3bn at the largest five banks, accounting for 73.27% of total banks’ expenses.

The jump in the volume of expenses in the banks comes on the back of spending to modernise and support the technological structure, and geographical expansion, both through small and large branches or through the ATMs and POS to reach customers all around Egypt.

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Foreign investment in Egyptian T-Bills rises to EGP 265.6bn end of April 2019 https://ww.dailynewssegypt.com/2019/06/26/foreign-investment-in-egyptian-t-bills-rises-to-egp-265-6bn-end-of-april-2019/ Wed, 26 Jun 2019 08:55:17 +0000 https://ww.dailynewssegypt.com/?p=701120 Investments of banks operating in local market in government debt instruments amount to EGP 680.882bn

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The Central Bank of Egypt (CBE) said that foreign investments in Egyptian treasury bills (T-Bills) rose by the end of April 2019 to EGP 265.618bn, compared to the EGP 258.016bn in March. This is an increase of EGP 7.602bn.

Foreign investment in T-bills returned strongly after the exchange rate liberalisation decision on November 3, 2016, and the subsequent sharp rise in interest rates on the pound.

Moreover, foreign investment in T-bills reached about $11bn before January 25, 2011, but fell to less than $25m as of 2016.

Fakhry ElFiky, member of the board of directors at the CBE, said that the volume of foreign investments in government debt instruments from January to May 2019 amounted to about $5bn, to reach more than $17bn.

The investments of banks operating in the local market in the government T-Bills amounted to EGP 680.882bn during the month of April 2019, compared to EGP 703.509bn by the end of March. This is a decrease of EGP 22.627bn.

The CBE said that public sector banks’ investments in T-Bills amounted to about EGP 353.397bn at the end of April, compared to EGP 354.415bn at the end of March, a decline of EGP 1.018bn.

Private sector banks’ investments in T-Bills fell by EGP19.428bn in April to EGP 275.433bn compared to EGP 294.861bn by the end of March.

Investment of foreign banks’ branches in T-Bills declined to EGP 36.985bn in April, compared to EGP 39.881bn in March, a decrease of EGP 2.896bn.

On the other hand, T-bills investments of specialised banks increased to EGP 15.067bn, compared to EGP 14.325bn, an increase of EGP 742m.

The CBE’s figures showed that the volume of outstanding government T-Bills declined in April 2019 to about EGP 1.362tn, compared to EGP 1.371tn in March.

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Banks’ credit facilities see EGP 226.6bn rise end of March, deposits up to EGP 3.930tn: CBE https://ww.dailynewssegypt.com/2019/06/25/banks-credit-facilities-see-egp-226-6bn-rise-end-of-march-deposits-up-to-egp-3-930tn-cbe/ Tue, 25 Jun 2019 17:46:28 +0000 https://ww.dailynewssegypt.com/?p=701083 Private enterprise sector denominates 60.8% of total facilities, with industry in lead, according to CBE

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The total credit facilities granted by banks to their customers increased by EGP 226.6bn to EGP 1.8563tn during the period from July 2018 to March 2019, according to the Central Bank of Egypt (CBE).

Credit facilities are loans provided by banks to their clients alongside documentary credits and letter of guarantees that were opened to cover import operations.

In its monthly report on the performance of banks and the economy, the CBE explained that the private enterprise sector has obtained about 60.8% of the total facilities granted by banks to all bodies excluding the government until March 2019.

It added that the industry sector has denominated 33.6% of these facilities, followed by the services sector by 27.5%, the trade sector by 10.9%, the agriculture sector by 1.5%, and miscellaneous sectors–including households–by 26.5%.

In another context, the CBE also announced the increase in customer deposits at banks by the end of March 2019 by EGP 51bn to EGP 3.930tn against EGP 3.879tn in February.

The CBE added that government deposits have risen in value by EGP 2.9bn to EGP 634bn at the end of March up from EGP 631.1bn at the end of February.

Government deposits in local currency reached EGP 512.7bn, while foreign currency deposits reached EGP 121.3bn.

Non-government deposits in banks recorded a rise in value by EGP 49bn at the end of March 2019 to EGP 3.296tn against EGP 3.247tn in February.

The CBE added that non-governmental deposits in local currency amounted to about EGP 2.547tn by the end of March, against EGP 2.492tn by the end of February.

The public enterprise sector has around EGP 57.4bn of deposits, while the private enterprise sector accounted for about EGP 368.3bn, and the household sector for about EGP 2.106tn.

The other sectors, including non-residents, reported deposits of EGP 81bn.

Deposits in foreign currencies recorded about EGP 749.7bn at the end of March against EGP 755.7bn in February.

The public enterprise sector has around EGP 40.4bn of deposits compared to EGP 203.6bn for the private enterprise sector, EGP 497.6bn for the household sector, and EGP 84bn for other sectors, including non-residents.

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Attijariwafa Bank Egypt launches 1st business development centre of Nile Pioneers Initiative https://ww.dailynewssegypt.com/2019/06/23/attijariwafa-bank-egypt-launches-1st-business-development-centre-of-nile-pioneers-initiative/ Sun, 23 Jun 2019 14:53:00 +0000 https://eklutdvotyzsri.dailynewssegypt.com/?p=700876 New centre confirms effective contribution of banking sector in supporting government, CBE to encourage SMEs, says Helal

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Attijariwafa Bank Egypt launched its first business development centre at the bank’s branches, on Thursday, as part of its participation in the Nile Pioneers Initiative, sponsored by the Central Bank of Egypt (CBE) and implemented in cooperation with various local and international entities.

The initiative aims to support entrepreneurs and encourage emerging companies in the targeted economic sectors and provide technical and administrative support, in constant coordination with all concerned partners in the economic system to support local products and increase their competitiveness.

The opening of this branch comes within the framework of Attijariwafa Bank Egypt’s plan to actively contribute to the Nile Pioneers Initiative by establishing business development centres within the bank’s branches.

 

 

These centres provide a range of non-financial services to improve the work environment of small and medium-sized enterprises (SMEs), as well as communicate with young people and entrepreneurs to choose promising ideas, contribute to raising awareness of various banking services, and serve as a link between companies, entrepreneurs, supply chains, and support the growth of the Egyptian economy.

The Nile Pioneers Initiative is in line with the state’s efforts to achieve sustainable economic growth based on SMEs and entrepreneurs, with the participation and integration of all relevant parties, while providing a comprehensive and effective infrastructure to support the work environment of these projects.

Deputy CBE Governor, Lobna Helal, said that the CBE’s sponsorship of the Nile Pioneers Initiative is complementary to the bank’s financing initiatives to promote the economy and develop the community.

 

She added that the opening of this centre confirms the effective contribution of the banking sector toward supporting the government and the CBE’s efforts to encourage SMEs and support entrepreneurship, mechanisation, and technological transformation, thus increasing the competitiveness of local products and encouraging exports.

Moreover, the CBE’s Assistant Sub-Governor (Deputation) of the Banking Reform Sector, Nermine El Tahri, praised the active participation of Attijariwafa Bank in the Nile Pioneers Initiative.

She affirmed that the opening of the Business Development Centre at the branches of the bank provides a model to encourage banks operating in the Egyptian market to offer more non-financial services and overcome the challenges facing SMEs such as feasibility studies, product design, marketing, and the administrative structure.

Hala Sakr, a candidate for the chairperson of Attijariwafa Bank Egypt, said: “Since the launch of the bank’s operations in Egypt, we have been keen on developing an integrated strategy that addresses the needs of all social and economic groups and we seek to achieve tangible economic growth with a sustainable impact.”

 

As part of its efforts to support the SMEs sector, the Attijariwafa Bank Egypt launched in May the Africa Development Club in Egypt as a gateway for customers and club members to Africa. The club is opening its doors for SMEs in Egypt to enter the African market.

Managing Director of Attijariwafa Bank Egypt, Hicham Seffa, said that the initiative is one of the most important steps in line with the group’s strategy to support the SMEs sector.

Seffa praised the services provided by the development centres through a strategic plan that meets the needs of the targeted customer segments and supports emerging entrepreneurs.

 

Meanwhile, the Retail & Business Banking Director at Attijariwafa Bank Egypt, Abdelrafie El Hachimi, said that since its inception, the bank has been exerting considerable efforts to enable the SMEs sector through a set of protocols designed to finance and support these projects.

He explained that the opening of the Business Development Centre aims to provide many services, which include sponsoring project ideas and establishing new projects and guiding the customer to the steps, procedures, and documents required to register the activity and help in preparing an integrated feasibility study for the project.

El Hachimi pointed out that the bank has been exerting great efforts since the start of its presence in the Egyptian market to enable the SMEs sector by planning to launch eight new branches in Cairo and abroad during the current year in order to expand the financing of the sector in addition to launching two dedicated business centres for SMEs In Abbas Akkad in Cairo and Azarita in Alexandria.

Furthermore, these centres will have all the qualifications and competencies for SMEs, and will be fully equipped within 3 to 4 months, he explained.

Moreover, he elaborated that first the experiment will be evaluated first and then the bank will then seek to develop a future plan to build several centres to support the SMEs sector.

On another issue, he said that a new product in the field of e-services is currently being developed, and that is Online Trade, which enables customers to open lines of credit in a matter of hours, in addition to reaching a swift code in the shortest time possible. The product will be introduced within the coming months.

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ABE supports CBE’s push towards e-payments by issuing Meeza cards: ElKoseir https://ww.dailynewssegypt.com/2019/06/23/abe-supports-cbes-push-towards-e-payments-by-issuing-meeza-cards-elkoseir/ Sun, 23 Jun 2019 09:59:41 +0000 https://eklutdvotyzsri.dailynewssegypt.com/?p=700859 Maximum balance of card is EGP 1,000, maximum monthly use is EGP 50,000

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Elsayed Elkoseir, chairperson of the Agricultural Bank of Egypt (ABE), said that the bank strongly supports the government and the Central Bank of Egypt’s (CBE) direction toward becoming a cashless society through the issuance of national e-payment card Meeza to be used in Egypt.

He added that the Meeza card, which is the first national payment card, will contribute to enhancing the direction of the ABE to achieve financial inclusion as an ideal gateway toward achieve it, especially in view of the bank’s 1,210 branch network and the segment addressed by the bank including small and micro entrepreneurs and women.

He pointed out that the maximum limit of the card is EGP 10,000 while the maximum monthly use is EGP 50,000 and can be used in all local government payments, in addition to cash withdrawals from ATMs and purchases through point-of-sale (POS).

The card also offers customers the possibility of cash withdrawals via ATM machines bearing 123 network brands.

The ABE allows the deposit and recharge the card via POS of e-finance in all of the bank’s 1,210 branches.

In conjunction with the launch of the card, the National Bank of Egypt, Banque Misr, Banque du Caire, and CIB also launched the Meeza card. The ABE launched call centre hotline is 19080 to assist customers in the event of losing the card.

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USD loses over 122 piasters against Egyptian pound since start of 2019 https://ww.dailynewssegypt.com/2019/06/23/usd-loses-over-122-piasters-against-egyptian-pound-since-start-of-2019/ Sun, 23 Jun 2019 08:47:31 +0000 https://eklutdvotyzsri.dailynewssegypt.com/?p=700825 Egypt received strong foreign exchange inflows during the recent period, which has pushed the US currency to depreciate against the pound

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The United States dollar has lost more than 122 piasters against the pound since the beginning of the year until operations ended last Thursday.

The average price of the dollar in banking transactions with customers last weekend reached EGP 16.6475 pounds for purchase and EGP 16.7475 pounds for sale, compared to EGP 17.8708 for purchase and EGP 17.9564 for sale on January 2, 2019.

The official average price of the dollar at the Central Bank of Egypt (CBE) last Thursday was EGP 16.6292 for purchase and EGP 16.7512 for sale, compared to EGP 17.8539 for purchase and EGP 17.9743 for sale at the beginning of the year.

Egypt received strong foreign exchange inflows during the recent period, which has pushed the US currency to depreciate against the pound.

Governor of the CBE, Tarek Amer, estimated that the volume of these flows, since November 2015 until now, would be about $200bn.

Fakhry El-Fiky, member of the CBE’s board of directors said that the volume of foreign investments in government debt instruments from January to May 2019 amounted to about $5bn, to reach more than $17bn.

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Seffa appointed Managing Director of Attijariwafa bank-Egypt, Sakr nominated as Chairperson https://ww.dailynewssegypt.com/2019/06/22/seffa-appointed-managing-director-of-attijariwafa-bank-egypt-sakr-nominated-as-chairperson/ Sat, 22 Jun 2019 00:02:23 +0000 https://ww.dailynewssegypt.com/?p=700732 Seffa is leading figure who enjoys long history, experience within Group, appointing him ensures pursuing our strategic objectives in Egyptian market: El Kettani

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Attijariwafa Group in Egypt announced on Tuesday the appointment of Hicham Seffa as Managing Director of Attijariwafa bank-Egypt, pending the approval of the Central Bank of Egypt (CBE).

Seffa enjoys a 24-year track record with three reputable banks; he has been the Managing Director of Attijariwafa bank Tunisia since 2011, and during his tenure the bank was named “The Best Bank in Tunisia” by “The Banker” for five consecutive times, being the second largest private bank in the country.

His career spans different banking fields including Leasing, Insurance and Asset Management. He served as the Head of operations in AWB and a Member of the Executive Committee of Attijariwafa bank from 2005 to 2011.

He is also a member of the board of directors of Attijariwafa bank Leasing and has previously held several senior positions such as the Head of Transactional Banking and Back Office of Crédit du Maroc (Crédit Agricole Group) for 10 years.

“We are pleased to announce the appointment of Hicham Seffa to the role of the Managing Director of Attijariwafa bank-Egypt. Seffa is a leading figure who enjoys a long history and experience within the Group. We are confident that with his appointment, we will be able to pursue our strategic objectives in the Egyptian market”, said Chairperson and CEO of Attijariwafa bank Group, Mohamed El Kettani,.

“I take this opportunity to extend our sincere gratitude and appreciation to Halla Sakr for her leadership during the transitional phase and her significant contributions in developing the strategic plan of the bank. I am pleased to announce that the board of the bank has nominated Sakr to be my successor as the Chairperson of the board of directors of the bank in Egypt, subject to receiving the CBE approvals” El Kettani added.

Sakr has a proven track record of 35 years in the banking industry including corporate finance, risk management and retail banking services in Egypt and the Middle East.

She is a distinguished banking figure with excellent leadership qualities, a long history of achievements, and is very well acquainted with the growth engines and potential of the Egyptian market.

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EGP 399bn total corporate finance portfolio, syndicated loans at NBE end of April 2019 https://ww.dailynewssegypt.com/2019/06/22/egp-399bn-total-corporate-finance-portfolio-syndicated-loans-at-nbe-end-of-april-2019/ Fri, 21 Jun 2019 23:58:27 +0000 https://ww.dailynewssegypt.com/?p=700729 Bank arranged 17 syndicated loans in 2018 worth EGP 90bn, won 15 international awards in this field

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The total corporate finance portfolio and syndicated loans at the National Bank of Egypt (NBE) amounted to EGP 399bn by the end of April 2019, according to Sherif Reyad, head of the bank’s credit group for corporate and syndicated loans.

The NBE announced on Tuesday that it had received 15 international awards, including 14 from Europe, Middle East, Africa (EMEA) Finance, as the best bank in the field of syndicated loans, financial advisory, restructuring and securitisation in Africa in 2018.

According to Reyad, the bank winning such awards is mainly due to the efficiency of the employees in the bank’s sectors concerned with these loans. He stressed that effective and fruitful cooperation with other Egyptian banks also reflects the strength of the relationship between all banks operating in the banking sector and the understanding and harmony between all banks.

According to the General Manager of syndicated loans at the bank, Ahmed Al Sarsi, the NBE arranged 17 syndicated loans in 2018 worth EGP 90bn, in addition to providing financial advisory services and securitisation to several large companies.

EMEA Finance has given the NBE these awards for the best financing granted in Africa in the fields of petroleum, natural gas, agriculture, communications, industry, real estate construction, restructuring, refinancing, and securitisation.

These funds were awarded to the Middle East Oil Refining Company (MIDOR), Al-Canal Sugar Company, Ezz Steel Rolling Mill, Ro’ya Holding Company, Egyptian Propylene and Polypropylene Company and EFG-Hermes Financial Leasing.

In addition, the bank received the Best Financing Award through the Export Credit Guarantee Company across the Middle East for the financing of MIDOR.

According to the Chairperson of the NBE, Hisham Okasha, the bank’s acquisition of this group of awards is the result of providing all the necessary funding to various sectors, and its continuous support to public and private sector projects, as the bank is a strategic partner in financing these projects.

Okasha stressed that the bank always gives great attention to syndicated loans within the framework of its keenness to carry out its role as the largest bank operating in the Egyptian market.

He added that the bank is always interested in megaprojects related to the vital sectors in the fields of agriculture, industry, petroleum, electricity, transport, communications, building materials, contracting, food and real estate development. This contributes to creating a value added to the Egyptian economy and generating many jobs in a way that supports the state’s plans and improves development.

For his part, Vice Chairperson of the NBE, Yahya Abul Fotouh, said that these awards are the result of the strong network of relations between the bank and the local and foreign banks, which have confidence in the ability of the NBE to complete and manage large transactions professionally and efficiently.

He added that the bank relies on a large capital base, which gives it the opportunity to inject large funds, either individually or through the participation in banking alliances.

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IDB continues expansion plan with opening of new branch downtown Cairo https://ww.dailynewssegypt.com/2019/06/19/idb-continues-expansion-plan-with-opening-of-new-branch-downtown-cairo/ Wed, 19 Jun 2019 08:33:30 +0000 https://www.dailynewssegypt.com/?p=700689 Ambitious plan, to support national economy, Egyptian industry in reaching world: Fahmy

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Chairperson of the board of directors and Managing Director of the Industrial Development Bank (IDB) Maged Fahmy, inaugurated the latest branches of the bank at Noubar Street in downtown Cairo.

The bank will complete its expansion plan and restructure its geographical spread.

According to Fahmy, this plan includes the development and renovation of existing branches and opening new branches to reflect the bank’s modern identity.

He explained that with the expansion of banking operations and the development of new mechanisms to compete in the banking market, the IDB has prepared a plan to expand its network to reach 50 branches by 2023.

This is so that it can better deliver its services to a larger base of citizens from different governorates and industrial zones around Egypt.

The bank recently purchased 11 branches in its plan to spread and expand nationwide.

As per Fahmy, four branches have been completed and four other branches will be offered to contractors to prepare them within three months in Sadat City, Borg El Arab, Minya, and Ismailia.

There are four branches in Qena, Fayoum, Tanta, and Port Said that will also be developed before the end of 2019. The bank will complete the rest of its expansion plan over the next three years.

Fahmy revealed that the IDB intends to launch the first electronic bank in order to offer banking services using the latest banking technology.

He went on to say that the process of restructuring the bank takes place in all sectors simultaneously.

Fahmy elaborated that the process began to reform the administrative pyramid, which was upside down, and solve the problems of taxes that accumulated over 22 years, as these files were permanently closed.

This is all alongside preparing the technological development process.

He added that the bank aims to end losses and turn to profitability by the end of this year.

According to Fahmy, the IDB’s strategy is to focus on the bank’s presence in projects where there are no other banks, such as the Rubikki Leather Project, which the bank alone is financing, as well as financing the Agricultural Stock Exchange, for which the bank received a prize from the Central Bank of Egypt.

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Bank Audi has yet to apply for CBE approval to acquire NBG-Egypt: Helal https://ww.dailynewssegypt.com/2019/06/18/bank-audi-has-yet-to-apply-for-cbe-approval-to-acquire-nbg-egypt-helal/ Tue, 18 Jun 2019 16:51:52 +0000 https://www.dailynewssegypt.com/?p=700660 In May, Bank Audi signed the final acquisition contract of the NBG-Egypt, however sealing the deal currently depends on the approval of both the CBE and Banque Du Liban, the central bank of Lebanon

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Bank Audi-Egypt has not yet applied to obtain the Central Bank of Egypt’s (CBE) approval to complete the acquisition of the National Bank of Greece (NBG)-Egypt, CBE Deputy Governor, Lobna Helal, said on Tuesday.

She stressed that guaranteeing all the rights of the NBG-Egypt employees would be the prerequisite for issuing the CBE approval for the bank’s exit from Egypt and the acquisition deal.

In May, Bank Audi signed the final acquisition contract of the NBG-Egypt, however sealing the deal currently depends on the approval of both the CBE and Banque Du Liban, the central bank of Lebanon.

The agreement will see Bank Audi acquiring the total assets of NBG-Egypt, including deposits and investment portfolio, in addition to the bank’s 17 branches which have about 250 employees.

The NBG-Egypt’s assets are estimated to be worth €110m.

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AfDB to focus on financing manufacturing sector in Egypt https://ww.dailynewssegypt.com/2019/06/18/afdb-to-focus-on-financing-manufacturing-sector-in-egypt/ Tue, 18 Jun 2019 07:49:33 +0000 https://www.dailynewssegypt.com/?p=700610 The African Development Bank (AfDB) will focus on financing the manufacturing and industrialisation sectors in Egypt, AfDB Country Manager in Egypt, Malinne Blomberg, said on Monday

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The African Development Bank (AfDB) will focus on financing the manufacturing and industrialisation sectors in Egypt, AfDB Country Manager in Egypt, Malinne Blomberg, said on Monday.

“2019 is a special year for us due to Egypt’s presidency of the African Union (AU). Egypt has so much to offer to the African continent in the areas of trade and industry,” Blomberg said during her speech at the fifth conference on donor funding, banking, and novel financial instruments.

The conference was organised over two-days by the Federation of the Egyptian Chambers of Commerce (FEDCOC).

AfDB will implement projects with the Egyptian government that aim to achieve regional integration, she added, affirming that, “the owner of the AfDB is about 80 governments, Egypt is the second largest African shareholder at the AfDB and the third largest in general.”

AfDB provided a lot of finance for Egypt’s energy, waste water, and water sectors over the years, she said.

She also added that her organisation is discussing ways to boost the role the small and medium-sized enterprises (SMEs) with local and international partners.

“Now we don’t think about providing credit lines for the SMEs sector because we believe that Egyptian commercial banks already have the needed liquidity, yet we would like to assist them to scale up the SMEs sector participation in the economy,” she noted.

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Tamweely Microfinance increases capital to EGP 75m https://ww.dailynewssegypt.com/2019/06/18/tamweely-microfinance-increases-capital-to-egp-75m/ Tue, 18 Jun 2019 07:44:36 +0000 https://www.dailynewssegypt.com/?p=700612 Company targets expansion to 40 branches by year-end, 60 branches by 2020, says chairperson

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The board of directors of Tamweely Microfinance Company (TMC) has decided to increase the company’s capital by 50%, up to EGP 75m.

The increase is expected to be used to finance the company’s expansion plan this year and implement the company’s operating strategy.

Chairperson of TMC, Amr Abu El Azm, said the expansion plan includes taking the branch network to 40 branches by the end of this year, instead of the current 25 branches, and 60 branches by the end of 2020.

He explained that the shareholders’ decision to increase the company’s capital during the first year of operation comes in response to the current growth witnessed by the microfinance market in Egypt due to good government incentives for the sector.

He pointed out that a part of the capital increase will be invested in developing the company’s technology and information systems, as well as financing the company’s training and marketing plans.

Moreover, CEO and Managing Director of the company, Ahmed Khorshid, pointed out that the company is still growing, as the value of the company’s financing portfolio is currently EGP 400m distributed over 23,000 customers.

He added that the company aims to reach EGP 750m worth financing portfolio and 40,000 customers by the end of this year through geographical expansion and offering new products that meet the needs of all customers.

The TMC will participate in the International Conference for Small Projects, which will be held in Cairo from 18 to 21 June, out of the company’s belief of its importance and impact on entrepreneurship and supporting its culture, as well as individual initiatives in Egypt in the upcoming years.

The TMC started its operations in August 2018. Companies that contribute to the company’s financing capital are NI Capital, AYADY for Investment and Development, and the investment arm of Egypt Post.

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Net profit of Banque du Caire reaches EGP 1.218bn in Q1 of 2019 https://ww.dailynewssegypt.com/2019/06/18/net-profit-of-banque-du-caire-reaches-egp-1-218bn-in-q1-of-2019/ Tue, 18 Jun 2019 07:41:16 +0000 https://www.dailynewssegypt.com/?p=700607 Good results always push us to continue development, says Fayed

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The financial results of Banque du Caire during the first quarter (Q1) of this year showed that the bank recorded a profit of EGP 1.5bn, before taxes, compared to EGP 921m in Q1 of 2018.

The bank’s net profit after taxes rose to EGP 1.2bn against EGP 407m in the comparison period, a growth of over 200%.

The bank’s financial position continued to record positive new growth indicators, bringing the total assets to EGP 176bn in Q1 of 2019, an increase of 5% compared to December 2018.

The bank’s total loan portfolio rose by EGP 3.3bn to EGP 69bn, an increase of 5% compared to 2018, ranging between the corporate loan portfolio, which grew to 4.8%, and the retail banking portfolio, which grew 5.1% and the small and medium-sized loan portfolio which achieved growth of 8.5%.

The deposit portfolio increased by EGP 7bn to reach EGP 138bn, an increase of 5% compared to December 2018.

According to the bank’s performance indicators, the bank’s net income increased by 58%, compared to Q1 of 2018, to reach EGP 2bn in Q1 of 2019.

The net margin of return increased to 5.2% on average in Q1 of 2019, compared to 3.9% in Q1 of 2018. Net income from fees and commission increased by 53% to EGP 333m.

The Q1 of 2019 witnessed an improvement in the bank’s efficiency rate, which measures administrative expenses on the net revenues of the activity, reaching 35.5%, compared to 44% in Q1 of 2018.

Chairperson and CEO of Banque du Caire, Tarek Fayed, said that the results achieved by the bank during Q1 of 2019 are a continuation of the positive results achieved by the bank in 2018.

He added that these results were achieved following the implementation of the bank’s integrated development plan, which represents a major turning point in the bank’s strategy at all work levels, foremost of which is the development of IT systems and operations and the centralisation of the banking services to become more efficient, along with the development of the bank’s branches across Egypt and abroad.

Fayed stressed that the credit of these achievements is due to the employees of Banque du Caire, who represent the real wealth. He pointed out that the bank pays great attention to developing their skills and raising their efficiency through various training programmes, especially those related to the use of the latest technological and digital means, in addition to hiring distinguished expertise to achieve an advanced position in the market commensurate with the size and prestige of the bank.

In the same context, Banque du Caire succeeded in launching several initiatives in the area of social responsibility over the past years aimed at achieving sustainable development in various sectors, primarily training, employment, job creation, education, health, nutrition, medical and scientific research, as well as village development initiatives, convoys, and initiatives to empower women, youth, and others.

According to Fayed, the strategy of Banque du Caire focuses on taking into account the social dimension in all policies and procedures.

In April 2019, Banque du Caire announced the launch of the bank’s new identity and brand, which represents a new era in the bank’s history, reflecting the sophistication and innovation of its policies.

According to Fayed, the focus of the bank’s development is on building a strong infrastructure, the implementation of internet projects, mobile banking for companies and individuals, developing electronic products, and launching new banking products and services, with plans to open 30 new branches with the new identity.

In recognition of its achievements, Banque du Caire has received numerous awards from international institutions, including the Best North African Joint Loan and the Best Financing Award in 2018 from the EMEA Finance. The International Finance Magazine also announced that Banque du Caire was named the Best Bank in International Banking in 2019.

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Amer: 30-40% of Banque du Caire shares to be floated by October 2019 https://ww.dailynewssegypt.com/2019/06/17/amer-30-40-of-banque-du-caire-shares-to-be-floated-by-october-2019/ Mon, 17 Jun 2019 19:20:32 +0000 https://www.dailynewssegypt.com/?p=700574 CBE receives 3 bids for United Bank, awaiting new offers

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Governor of the Central Bank of Egypt (CBE), Tarek Amer, disclosed that between 30 and 40% of the shares at Banque du Caire will be floated on the Egyptian Exchange (EGX) in October 2019.

 

In his earlier remarks, Amer said that “Banque du Caire’s offer is not about money, but we plan to support the EGX through new proposals.”

 

Tarek Fayed, chairperson and CEO of the bank, disclosed that between 20% and 30% of the bank’s shares will be offered on the EGX for revenue, some for $300-400m.

 

According to Fayed, the bank is also considering the initial public offering (IPO) on the London Stock Exchange or other foreign exchanges. EFG Hermes and HSBC are currently negotiating to identify the best markets, as the offering bookrunners.

 

In a related context, Amer revealed that the CBE received three offers to buy the United Bank and is waiting for new offers in the coming period.

 

Amer said in a statement in April 2019 that the sale of the United Bank to a major United States investment fund is expected to be completed within three months, after the US firm has completed the bank’s due diligence examinations.

 

According to Amer, the US fund is one of the largest investment funds in the world, with a capital of about $104bn, however, he refused to disclose the name of the fund.

 

On the other hand, Amer revealed that the volume of foreign exchange inflows into the Egyptian market has been increasing since 2015 up until now, reaching $200bn.

 

Amer also said that the indicators of the performance of the Egyptian economy have become favourable and the climate is appropriate. This strengthened the appreciation of the Egyptian pound against the dollar in controlling the exchange market.

 

Moreover, Amer stressed that the support of the political leadership for the decision to liberalise the exchange rate has contributed to ending the random market conditions, as well as the parallel market.

 

He also said that there have been many achievements in terms of developing electronic services under President Al-Sisi, such as launching the national ‘Meeza’ cards, mobile payment services, the security of electronic financial transactions against information risks, and the automation of government payments.

 

The world is currently witnessing a boom in financial technology that requires the CBE to provide services and financial tools that meet the needs of the society so that the impact of economic reform reaches Egyptian citizens, Amer added.

This helps in achieving a greater impact of development, growth, and employment opportunities for young people.

 

The CBE has set up a mechanism to support innovation, and launched the innovation support fund with a capital of EGP 1bn, according to Amer.

 

Remarkable developments have already been achieved and many accomplishments have contributed to meeting the financial inclusion goals, he added.

 

He pointed out that each pound provided through the transformation of the services of the digital economy and financial technology enhances the output by about EGP 1.6 and creates five to six new jobs.

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