By Doaa Farid
Total deposits of the banking system, other than the central bank’s deposits, hiked by about EGP 21bn in June, equivalent to an increase of 1.8%, according to a Wednesday Central Bank statement handed to state-run news agency MENA.
Total deposits reached EGP 1.190tn in June compared to EGP 1.169tn the month before, according to figures provided by the news service. The bank said that the government’s total deposits reached EGP 126.7bn, EGP 64.4bn of which are local currency deposits and about EGP 62.3bn are foreign currency deposits.
The statement added that the non-governmental total deposits increased during June to reach EGP 1.06tn compared to EGP 1.04tn the previous month.
Professor of finance and business administration Alaa Mostafa said that the increase in banks’ deposits reflects a state of “economic deflation” where investors feel risk in investing their capital so they tend to save it in the banks.
“Banks’ deposits decrease in situations of economic recovery,” said Mostafa.
Mostafa, who is also a financial advisor for El-Sewedy Electric Company, said he expects a economic improvement in the coming period “if the political roadmap works scheduled and the constitution and elections [go ahead]. Investors will be more confident to invest their money” in Egypt.
CBE’s statement also pointed that the non-governmental total deposits in the local currency amounted to EGP 835bn, where the public sector’s share accounted for EGP 24.1bn, and EGP 121bn was by the private sector.
While foreign currency deposits reached EGP 228bn, the public sector acquired EGP 12.5bn and the private sector acquired EGP 76.8bn from them.
Meanwhile, the net international reserves have significantly increased to reach $18.916bn at the end of August 2013 due to the influx of Gulf aid.
Following the release of financial reports for the first half of the year, a number of banks have recorded consistent profits despite the current sluggish economy. However, a number of leading international agencies such as Capital Intelligence (CI), Moody’s, Fitch Ratings among others, have been downgrading the ratings of several Egyptian banks due to the country’s poor economic performance and slow economic growth.