Banking – Daily News Egypt https://wwww.dailynewssegypt.com Egypt’s Only Daily Independent Newspaper In English Sun, 15 Dec 2019 08:00:20 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.1 Bank Audi Egypt targets SMEs portfolio of EGP 5bn by 2019 end: managing director https://wwww.dailynewssegypt.com/2019/12/15/bank-audi-egypt-targets-smes-portfolio-of-egp-5bn-by-2019-end-managing-director/ Sun, 15 Dec 2019 08:00:20 +0000 https://wwww.dailynewssegypt.com/?p=716536 The bank’s bad loans do not exceed 4%

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Bank Audi Egypt aims to increase its small and medium-sized enterprises (SMEs) loan portfolio to EGP 5bn by the end of 2019, in line with the Central Bank of Egypt’s (CBE) SMEs initiative, Mohamed Bedeir, managing director of Bank Audi Egypt, told Daily News Egypt.

Bank Audi, one of the major players in the banking market, has a total retail finance of EGP 7.3bn at the end of September 2019, representing 26% of the total loans and facilities portfolio, which recorded EGP 28.1bn in this period.

Daily News Egypt interviewed Bedeir to find out the bank’s latest plans, digitalisation efforts, and performance in 2019.

By Hossam Mounir

What are the main features of the bank’s business strategy in the coming years?

At Bank Audi, we always put our customers first by reviewing the bank’s strategy quarterly according to the economic changes on the local and global levels. The bank has a strong growth plan to further expand in the Egyptian market.

Currently, the Egyptian government is focusing on digitalisation of the economy. This comes in line with Bank Audi’s continuous close monitoring of the latest worldwide technological trends in all relevant industries. The bank took serious steps in this respect, as it has collaborated with one of the international professional services firms in order to develop a medium-term digital strategy that encloses course of actions and initiatives. These initiatives include rethinking of the organisation processes, services, and roles from a technology-enabled perspective.

What are the main indicators of the bank’s performance related to the deposits and loans portfolios and the size of profits?

The bank’s total retail finance reached EGP 7.3bn at the end of September 2019, representing 26% of the total loans and facilities portfolio, which records EGP 28.1bn in this period. The bank’s non-performing loans (NPL) portfolio is also among the best in the Egyptian banking sector, reaching 4% in line with the international ratios related to NPLs especially after the application of the International Financial Reporting Standards (IFRS) starting from 2019.

As of 30 September, the bank’s performance indicators showed total assets of EGP 71.7bn, net loans of EGP 26.8bn, total shareholders’ equity of EGP 6.8bn, total customer deposits of EGP 62bn, and net profit of EGP 1.088bn. Bank Audi targets profit growth of around 20% per annum.

What are the latest developments regarding the SMEs financing, and how large is the bank’s SMEs portfolio?

The bank’s management is keen on supporting the CBE initiatives. The CBE backs SMEs being the main pillar of the economic development in any country, decreasing unemployment rates and reducing poverty. At Bank Audi Egypt, we target an increase in the SMEs portfolio to EGP 5bn by the end of 2019.

What is the bank’s strategy regarding mortgage finance?

Bank Audi Egypt provides a competitive mortgage loan programme with many benefits, and one of these benefits provide clients with a flexible repayment period up to 20 years. Moreover, the bank has highly experienced sales team to help clients choose the right unit that suits their needs.

How many branches does Bank Audi have in Egypt, and do you have a geographical expansion plan?

Bank Audi has a strategic plan to further expand in the Egyptian market. We aim to open new branches before the end of 2019, and we successfully opened some since the beginning of the year in different areas, including Port Said Port, Cairo International Airport, Fifth Settlement, Shebeen El Koum, Damanhour, and Ismailia.

The new branches offer clients the best products and services being a pioneer in providing competitive retail banking products and services in the market. Bank Audi has 52 branches, of which 49 are offering conventional banking services and products, while three branches offer Islamic services and products. By the end of 2019, our branches will reach 55, of which four will be dedicated to Islamic banking and the remaining 51 will be conventional branches.

What is the bank’s recent position regarding NPLs, what is the size of provisions set aside to cover them?

Banks play a key role in the development of Egypt’s economy. As the boundaries and aspects of development expand, a more flexible and sophisticated banking system is needed. Our bank can only support businesspeople and big corporates to restore financial stability and position after drawbacks which will only benefit the Egyptian economy. We are proud to announce that bad debts in Bank Audi Egypt do not exceed 4%, which is one of the best ratios in the Egyptian market. As for the provisions dedicated to cover the risks in the bank, they recorded EGP 350.575m as for September 2019.

How much is the capital of the bank currently, and do you intend to increase it during the coming period?

As of 30 September, the paid-in capital of the bank was EGP 2.152bn, while its total capital is EGP 6.850m with a capital adequacy ratio of 22.03%, while the minimum ratio set by the CBE’s regulations is 12.50%. Bank Audi Egypt is constantly increasing its capital since it was established in 2006.

What is the role played by the Bank in spreading financial technology and electronic payments in the Egyptian market?

Bank Audi recognises the importance of being at the forefront of technological change by offering e-payment and alternative solutions. So, we provide our clients with the latest technologies in our e-payments platform.

The bank offers Audi Online, a secure, fast, and flexible platform that allows clients to manage their money at their convenience, and its number of users reached 56,000. Moreover, the bank offers “Audi2Pay” mobile wallet application. It’s a new easy, secure, and smart tool that allows clients to make everyday payments directly from their smartphone, that currently serves around 15,000 clients.

Moreover, Bank Audi implements 3.17m  financial transactions through its ATM network.

In 2019, we succeeded to divert 40% of retail transactions from traditional banking to digital channels, including ATMs and online banking, up from 5% in 2018.

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IDB pumps EGP 2.2bn the Thousand Factories initiative and EGP1.2bn in real estate mortgage financing in November https://wwww.dailynewssegypt.com/2019/12/14/idb-pumps-egp-2-2bn-the-thousand-factories-initiative-and-egp1-2bn-in-real-estate-mortgage-financing-in-november/ Sat, 14 Dec 2019 18:11:22 +0000 https://wwww.dailynewssegypt.com/?p=716506 SMEs portfolio increased to EGP 3bn: Azzam

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The Industrial Development Bank (IDB) will be pumping EGP 1.2bn into the real estate mortgage financing initiative for low and middle income families until the end of November 2019.

IDB’s Chairperson Maged Fahmy stressed that the bank has achieved great booms and unprecedented operating rates in recent years, as a result of the successful and distinguished management that keeps pace with successive developments in banks worldwide, becoming one of the most developed banks in the past year.

He added that it is in this spirit that the IDB supports national initiatives, which work to alleviate the Egyptian citizen’s suffering. It also works with the sectors that work to advance the Egyptian youth.

Deputy Chairperson of the Board of Directors Hamdy Azzam said the bank pumped EGP 2.2bn in funds for a number of factories within the “Thousand Factories” initiative, which the bank launched to finance 1,000 small and medium factories at the beginning of this year. It also allocated EGP 7.5bn initially directed at all industrial activities especially labour-intensive and export-oriented ventures.

Azzam added that the bank’s portfolio of small and medium-sized projects registered EGP 3bn by the end of November 2019, as a result of transferring a portfolio of EGP 500m from medium companies to large companies.

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Crédit Agricole Egypt transforms club memberships into prepaid cards https://wwww.dailynewssegypt.com/2019/12/14/credit-agricole-egypt-transforms-club-memberships-into-prepaid-cards/ Sat, 14 Dec 2019 06:30:11 +0000 https://wwww.dailynewssegypt.com/?p=716439 One-third of bank’s customers has beem registered in its e-services

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In light of Credit Agricole’s raison d’être to achieve customer satisfaction and offer best customer service, Crédit Agricole Egypt has unveiled, on Wednesday, an innovative service, the first of its kind in Egypt, aiming to support the concept of “cashless” transactions and financial inclusion by reaching out to various segments of society, in alignment with the Central Bank of Egypt’s (CBE) directions.

This new service came in collaboration with Alexandria Sporting Club, to transform its club membership cards into prepaid Visa Cards, allowing club members to use their membership cards for payments.

Moreover, the bank cooperated with the Egyptian Shooting Club to also turn their membership cards into prepaid cards.

The announcement came during a press conference held by the bank in the presence of Pierre Finas, the bank’s managing director, and Walie Lotfy, deputy managing director, as well as journalists to review some of the bank’s main achievements during the year.

With regard to the bank’s digital transformation process, which resulted in the launch of an integrated platform of digital services, called “Banki”, the bank’s senior officials have highlighted that one-third of the bank’s customers has been registered in the digital service.

Furthermore, nearly 1m transactions have been carried out during 2019 using the bank’s digital services.

The bank’s representatives also reviewed Crédit Agricole’s plan for geographical expansion, Crédit Agricole Egypt opened in early 2019 its first cashless branch.

The bank also celebrated the launch of its cutting-edge system of customer relationship management (CRM), using the latest worldwide technology systems.

During the media gathering, Crédit Agricole Egypt shared the results of its good performance, as demonstrated by the recent reaffirmation by Fitch Ratings in November 2019 for Crédit Agricole Egypt’s long-term issuer default rating at ‘AA+’ and short-term rating at ‘F1+’, with a stable outlook. Fitch Ratings also stated that Crédit Agricole Egypt’s profitability is among the best in the private-sector banks in Egypt. The bank’s financial results showed a net profit of EGP 1.868bn during the first nine months of 2019, an increase of 11.5% compared to the same period last year.

Crédit Agricole Egypt has moved to finding new digital solutions provided by startups, in alignment with the Central Bank of Egypt’s direction. In this context, the bank has taken part in the launch of the first French-Egyptian competition for startups in Egypt, in partnership with 15 French companies operating in Egypt, in light of the Declaration of Intent that was signed during the latest visit of French President Emanuel Macron to Egypt in January 2019.

As for its plans for year 2020, Crédit Agricole Egypt announced the launch of several new banking services, including a new service for companies, namely ‘Digital Trade Finance’, which facilitates obtaining letters of credit and guarantees for commercial activities. The bank also plans to launch a new scheme, called Loyalty, to reward its customer.

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CBE offers $1bn in 1-year T-Bills https://wwww.dailynewssegypt.com/2019/12/09/cbe-offers-1bn-in-1-year-t-bills/ Mon, 09 Dec 2019 11:30:37 +0000 https://wwww.dailynewssegypt.com/?p=716029 CBE floated five bill tranches worth $5.1432bn in 2019

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The Central Bank of Egypt (CBE) issues on Monday a dollar-denominated treasury bill, worth $1bn for a year, due on 8 December 2020.

The CBE uses the proceeds of this bid to pay the value of a previous bid submitted by the bank on 11 December 2018 at a value of $1.103bn and is due on Tuesday, 10 December 2019.

The CBE issued its latest dollar-denominated treasury bills on 18 November 2019, at a value of $1.56bn for a year, due on 17 November 2020. In this bid, the CBE received 43 offers from local and foreign investors at a value of $1.721bn, of which 33 were accepted at just $1.56bn. The interest rate accepted by the CBE was 3.55% as the lowest price, 3.6% as the highest price, and 3.587% as an average, and other offers were rejected at higher rates up to 3.9%.

During the year 2019, the CBE offered five bids for treasury bills in dollars, through which they obtained about $5.1432bn.

It is noteworthy that the CBE allows subscribing to these bills for both local banks and foreign institutions, with a minimum subscription of $100,000 and its multiples. The return on these dollar bills is determined according to several indicators, the most important of which are the amount of dollar liquidity in the market, alternative investment opportunities available to local and foreign banks and financial institutions, and the country’s credit rating.

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Amer starts second term in CBE by launching three initiatives to support industry, medium income housing https://wwww.dailynewssegypt.com/2019/12/08/amer-starts-second-term-in-cbe-by-launching-three-initiatives-to-support-industry-medium-income-housing/ Sun, 08 Dec 2019 14:00:18 +0000 https://wwww.dailynewssegypt.com/?p=715942 Directives from president to allocate EGP 100m for industry sector, EGP 50bn for medium housing with 10% interest

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Tarek Amer, governor of the Central Bank of Egypt (CBE), started his second term by launching three initiatives in coordination with the government to support industry and medium income housing.

Last Wednesday he held a press conference with Prime Minister Moustafa Madbouly to announce the details of the three initiatives.

Madbouly said that they are related to industry and that these directives come straight from the president in order to support the sector as a locomotive of growth.

He pointed out that the industry funding initiative aims to fund already existing industries that want to expand, by providing them with EGP 100bn and 10% declining interest.

He noted that the funding will cover all existing industries, giving priority to industries that currently require high importation for production requirements.

He explained that a large number of factories has the ability to expand but lacks the funds to buy new machines and workers, stressing that the initiative was discussed and a lesser interest was chosen.

According to Madbouly, the second initiative is about dealing with troubled factories that have hauled operation. He explained that it includes a programme to remove lots of burdens and allow owners to restart operation.

He added that the third initiative is related to the real estate sector for medium income families. Noting that the state gave great attention over the past period to social housing and people living in slums.

He explained that this is where the idea of the programme came from, with a support value of EGP 50bn as these units are provided with a small interest rate that encourages medium income families.

For his part, Amer said that the government discussed over the past few months ways to stimulate job growth, increase exports, and produce local goods as alternatives for imported goods.

He added that CBE decided to allocate EGP 100bn so banks may provide credit facilitations to medium and large indsutrial projects whose sales reach a maximum of EGP 1bn, allocated to funding investment goods or funding operating capital with a declining 10% interest rate, depending on the needs, with priority given to alterative industries or export industries.

Amer explained that the new initiative would cover 96,000 industrial establishments, describing it as a big step in which the Ministry of Finance and the CBE bear a great sacrifice, as they will cover the cost difference between the current interest rate on loans and the new announced interest rate for the beneficiaries of the initiative.

The Governor of the Central Bank indicated that this initiative comes four years after the launch of the initiative to finance small projects with a value of EGP 200bn, at 5% interest, and that this initiative achieved good results, as it provided credit facilities to 86,000 small projects.

According to Amer, the total loans granted to the industrial sector in Egypt amount to EGP 432bn for 182,000 industrial establishments, and that the new initiative will be a big boost for the industrial sector. He urged all Egyptian banks to join this initiative, saying, “We will not be satisfied until we are assured that the industrial sector in Egypt is making huge steps forward.”

He also discussed the initiative to exempt distressed factories from accumulated interest, which included 5,184 factories and have issues with banks, saying, “We have been reviewing the problem of troubled factories over a period of six months, and we will direct banks to exempt these factories from accumulated interest.”

He said that the size of these interests over the past years amounted to EGP 31bn.

He pointed out that the government’s initiative to exempt troubled factories from the accumulated benefits gives new opportunities for these institutions to start again.

“We decided to remove these companies from the negative lists of the CBE, provided that they pay 50% of the principal’s value, and therefore these companies and factories will be able to return to dealing with the banking system again based on their suitability, study, and the viability of their projects, without any backgrounds that hinder them from working,” according to Amer.

He pointed out that the original debt for all troubled companies is EGP 6bn.

He also discussed the mortgage finance initiative for medium housing, as EGP 50bn were allocated to it initially, at a rate of 10%, and the installment is one 20 years.

In this regard, Amer pointed out that the volume of mortgage financing on the budgets of Egyptian banks is very small, and therefore there is a great scope for increasing real estate financing over the budgets of Egyptian banks, and this initiative will contribute to the growth of the real estate market, which is one of the more important sectors, and will work to reduce its burdens through a longer period of repayment.

Amer stressed that the banking sector is in a very good place, enabling it to provide any funding required for the planned development, and that these initiatives will be a good start.

He added that the three initiatives will be implemented by state-owned banks and joint ones where the state has stakes, and he urged foreign banks to review with their main centres outside Egypt to join the initiative.

For his part, Mohamed Abdel-Aal, a member of the Suez Canal Bank Board of Directors, said that these three initiatives launched by the CBE in cooperation with the government, are a continuation of the previous presidential initiatives, which were adopted by the CBE, within the framework of the economic reform programme.

He added that the form in which these initiatives were launched reflected the existing and real coordination between the government, as one entity and a funding body for these initiatives.

According to Abdel-Aal, there is a close relationship between the launch of these initiatives and the success of the monetary policy reform programme, explaining that had it not been for the success of monetary policy to contain inflation and thus reduce interest, initiatives would not be launched with low interest rates.

He pointed out that those initiatives, just as they will benefit the sectors they target, such as, will also benefit the banks.

He explained that directing bank money to finance the industrial sector or mortgage financing is a better alternative for investing in government debt instruments, as this improves the ability of the banking system to exploit the liquidity available, which in turn leads to an improvement in the ratio of loans to relatively low deposits.

Abdel-Aal pointed out that the three initiatives are integrated in their impact, and unite to achieve added value, which is to create jobs, reduce unemployment rates, and increase growth rates to the targeted rates of 6.4% during the coming period.

He pointed out that for the second time, the government and the CBE aim to dismiss troubled factories and restart their operation as well as solve their problems with banks away from lawsuits and courts.

With regard to the mortgage financing initiative for middle income individuals for which EGP 50bn were allocated, Abdel-Aal said that this initiative aims to encourage medium housing, after the state’s success in achieving good growth rates in distinguished and above-average housing.

He added that this initiative will encourage young people to own their own housing units. It will also activate the movement of real estate developers, especially medium-sized companies, as it will lead to a decrease in real estate prices that are currently exaggerated.

According to Abdel-Aal, the Industry Financing Initiative, for which EGP 100bn was allocated, targets industries that produce alternative goods for the goods we import, which will help to provide foreign exchange, and thus improve the balance of payments, and will also increase production and increase job opportunities, as well as increase economic growth.

For its part, Beltone investment bank assured that these initiatives will would be positively reflected on supporting the recovery of industrial investments and the role of the private sector in the economy as well as supporting the Egyptian Stock Exchange (EGX) as well as easing pressures on the pound.

The bank said in a report that these initiatives confirm support ing the recovery of investments in the industrial sector and the private sector, and represents the last stop for the Egyptian economic reform programme, indicating that the decision, along with the policy of reducing interest rates and reducing the price of natural gas to factories, would provide a breather for the industrial sector, and open ed the way for the growth of factories that achieve revenues less than EGP 1bn per year.

It added that the initiatives would ill also support the recovery of capital spending by the end of 2020, which is another positive indicator, which reflects the growth of investments led by the private sector, which leads to expectations of an improvement in the PMI by the second half of 2020, as well as reducing pressures on the local currency.

It explained that the initiatives of the industrial sector would ill reflect the strength of the local currency, indicating that the U.S. dollar may move in a narrow price range against the Egyptian currency between EGP 16 and EGP 15.90, while drawing an expectation of an improvement in the banks’ business volume, the improvement in the quality of the assets, and a neutral impact on the banks, while defaulting factories are exempt from paying the accumulated interest.

It emphasized the positive impact of the real estate financing initiative on the companies participating in the initiative, increasing competition in the interest rates offered and closing the financing gap in the secondary real estate market.

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Five banks to begin collecting mortgage finance instalments electronically amid CBE initiative https://wwww.dailynewssegypt.com/2019/11/30/five-banks-to-begin-collecting-mortgage-finance-instalments-electronically-amid-cbe-initiative/ Sat, 30 Nov 2019 19:25:30 +0000 https://wwww.dailynewssegypt.com/?p=715365 277,000 customers in 15 banks and eight mortgage finance companies are to benefit from the service when fully implemented

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Five public and private banks will begin collecting mortgage finance instalments electronically under the Central Bank of Egypt’s (CBE) mortgage initiative on Sunday.

Last week, the CBE and the Mortgage Finance Fund (MFF) launched an initiative to collect mortgages electronically in partnership with the funding banks.

The CBE said that this initiative comes within the framework of achieving the objectives of the National Payments Council, by developing and automating payment, collection systems, and cooperating with all state institutions to provide easier service to the Egyptian citizens.

The CBE explained that this initiative helps MFF clients to pay their housing units’ instalments through mobile wallet or ATM bank cards, rather than going monthly to the headquarters of banks.

The CBE added that the electronic payment service for the mortgage finance instalments will be free of charge, as the customer will not bear any additional burdens when using the system. The service is available on all mobile phone wallets operating in the Egyptian market.

According to the CBE, the service will be available to the public as of Sunday for the clients of the five largest funding banks in the MFF programme. These banks are the National Bank of Egypt (NBE), Banque Misr, Banque du Caire, Commercial International Bank (CIB), Housing and Development Bank (HDB), which have more than 222,000 clients in the programme.

The CBE explained that the new system aims to provide better services to the MFF customers, by switching cash collection transactions into electronic payment method.

According to the CBE, this system relies on benefiting from the base of 14.5m mobile phone wallets users and 35m bank card holders, with the addition of new customers to achieve financial inclusion targets.

The CBE pointed out that the system contributes to saving time, effort, and money for clients of the MFF, where the system will work 24 hours, without the customer need to visit the branch.

The CBE said that the banks will open a mobile wallet for customers if they do not already have one, by simplified procedures using the national ID only, and the issuing bank will send the request to collect the instalment to the client’s mobile phone portfolio at the specific date of the monthly instalment. Through this, customer will be able to review the instalment data and then approve the payment, by entering the PIN of his mobile’s wallet.

The CBE pointed out that the new system is planning to expand in the future, to include the remaining funding sources for the clients of MFF projects, namely 15 banks and eight mortgage companies, bringing the total number of users of the electronic payment service within the system to 277,000 customers.

The NBE announced at the end of last week the implementation of the CBE’s initiative and the launch of the e-collection service for mortgage instalments.

The NBE’s Chairperson Hisham Okasha said that the bank aims to benefit from all the possibilities and technological means available in order to support electronic payment methods, to keep pace with the direction of the State and the National Council for electronic payments on the digital transformation of banking transactions.

The NBE’s Deputy Chairperson Dalia El-Baz said that the service allows payment through the mobile phone wallet or bank cards easily, where the customer does not need to visit branches to pay the monthly instalments. In turn, this allows attracting a new category of customers to enter the banking sector.

El-Baz stressed the possibility of recharging the mobile phone wallet in cash through the NBE ATM network that is available across the country, in addition to the machines of the other banks involved in the service. They can also recharge their wallet through ”Fawry” service, with the resumption of the work to increase the number of companies within the network of authorized service providers.

The service also offers the possibility to withdraw cash from the wallet, which has been launched by the bank as part of its strategy to expand the digital banking services.

Tarek Fayed, chairperson and CEO at Banque du Caire, said that it was decided to launch the service of mortgage payments through the electronic wallet “Cairo Cash”, or through deposit in the ATMs of the bank’s customers.

Fayed explained that this is in line with the government’s orientation and the initiatives of the CBE’s digital transformation, for a cashless society, and to facilitate measures for customers, by providing an easier and safer alternative to save time and effort and ease the pressure on customer service staff in the branches.

Banque du Caire signed a cooperation protocol with the MFF at the end of last week to expand the bank’s participation in financing the fund’s clients by increasing the bank’s funding to low-income citizens from EGP 2bn to EGP 5bn.

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Why CBE Governor Tarek Amer was selected to serve another 4-year term? https://wwww.dailynewssegypt.com/2019/11/27/why-cbe-governor-tarek-amer-was-selected-to-serve-another-4-year-term/ Wed, 27 Nov 2019 06:45:39 +0000 https://wwww.dailynewssegypt.com/?p=715085 CBE under Amer succeeded in managing the files of monetary policy and exchange market, which reflected positively on the performance of the national economy as a whole, say bankers

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Egypt’s President Abdel Fattah Al-Sisi issued a decision on Monday renewing the tenure of the Central Bank of Egypt’s (CBE) Governor Tarek Amer for more four years until November 2023.

According to local bankers who spoke to Daily News Egypt, the renewal of Amer’s term in office did not come as a compliment, but it had strong reasons. The CBE, led by Amer, managed the files of monetary policy and exchange market successfully, which reflected positively on the performance indicators of the national economy as a whole.

When the name of Tarek Amer is mentioned, the decision which changed the course of the Egyptian economy always comes to mind. It is the floatation of the exchange rate conducted by Amer on 3 November 2016.

This decision was undoubtedly the boldest in the history of the Egyptian banking sector, if not in the history of the Egyptian economy as a whole.

It had positive impacts on the Egyptian economy, most notably the return of foreign exchange inflows to the Egyptian market again, and the entry of more than $200bn to Egypt over three years. Besides, the CBE achieved a big leap in terms of foreign exchange reserve, reaching its highest level following the floatation.

Amer was first appointed as the Governor of the CBE in November 2015. He has since led a development revolution within the bank and the banking sector as a whole.

In addition to the monetary reform, the CBE was keen on launching a series of initiatives to support the strategic sectors in the country, and support the development environment and investment climate.

Amer led Egypt’s successful negotiations with the International Monetary Fund (IMF) to obtain a loan of $12bn, which was a strong testimony to the recovery of the Egyptian economy.

This was not the first time that Amer has participated in a reform programme, as he also played a major role in the reform plan implemented in 2004-2008 when he served as the deputy governor of the CBE at the time.

Continuing the development of the banking system

The Agricultural Bank of Egypt’s Chairperson El Sayed El Kosayer said the renewal of Amer’s term confirms the political leadership’s confidence and satisfaction with Amer’s management of the monetary policy in the past four years.

He pointed out that Amer has now the opportunity to continue his successful path, and complete the development of the banking system, which was praised by all international financial institutions, especially the IMF.

He added that this decision also achieves stability and intensify coherence of the banking system, and supports its ability to serve the Egyptian economy and economic development. It also supports achieving financial inclusion and digital transformation in Egypt in accordance with the strategy of the state and the National Council for Payments.

The monetary policy file

Moreover, Maged Fahmy, chairperson of the Industrial Development Bank, said Amer deserves to serve another term.

He pointed out that Amer managed the monetary policy file efficiently, and the bold decisions he took, especially the decision to float the exchange rate, had positive effects on the Egyptian economy as a whole.

Fahmy added that Egypt is now witnessing a stable exchange market, a low level of inflation, and a trend towards cutting interest rates to encourage investment.

According to Fahmy, Amer should work in his second term at the CBE to complete the banking reform programme, especially after the successful drafting of the new banking law. He added that he should continue to target inflation rates, in addition to resuming the reduction of interest rates to stimulate the economy.

Amer was re-chosen for the difficulty of coming period

According to Mohamed Abdel Aal, a board member of the Suez Canal Bank, the reason for re-choosing Amer for another term was not only due to President Al-Sisi’s satisfaction, the local and foreign banking sectors’ admiration of Amer, or even the risks he took without hesitation to achieve economic growth. According to Abdel Aal, the main reason is the difficulty of the upcoming stage that requires Amer’s experience and management skills.

He pointed out that the coming period would be the most difficult for Egypt’s economy. It is the stage of stabilising the positive impacts of the economic programme, which are often difficult to achieve, as was the case in many emerging countries.

Abdel Aal believes that there are eight old and new files that will define the second term of Amer, to ensure the strict implementation of the new Banking Law after the Parliament’s approval.

He added that these files also include maintaining the gains of the economic programme, the most important of which is controlling price stability under the targeted inflation rate and focusing on pushing and supporting the monetary policy that stimulates economic growth.

According to Abdel Aal, achieving exchange rate stability following the floatation policy based on the supply and demand mechanism is also an important file. In addition, the CBE implemented important initiatives that are effective in increasing employment rates for young people, while giving preferential advantage to initiatives to support entrepreneurs, applications of transformation, and financial technology.

“There may be deeper coordination with the monetary policy committee to advance the financial inclusion programme and bring the informal economy into the formal economy,” Abdel Aal said.

He added that the CBE’s governor is also required to maintain the growth of the foreign exchange reserve with an enough rate to secure importation needs for at least nine months, as well as a reasonable real interest rate (the nominal interest adjusted for the rate of inflation), which achieves the objectives of the monetary policy and the interests of depositors from the household sector and investors. Amer will also supervise the moving of the headquarters of the CBE to the New Administrative Capital.

Abdel Aal expects a rapid improvement in the exchange rate of the Egyptian pound after the renewal of Amer’s tenure, with a new price level close to EGP 15.5 per US dollar. He also expects the interest rate to stabilise at its current levels until the new year, where a further decline of 200 basis points is expected during the first half of the new year.

Five bold decisions and measures

Amer took a series of decisions and measures during his first term, topped by floatation and drafting the new banking law:

Floatation of the exchange rate

The most difficult and important decision for Amer was the decision to liberalise the exchange rate on 3 November 2016, and therefore to eliminate the parallel market.

That decision contributed to the US dollar returning to official channels, in addition to the abundance of foreign liquidity at banks and the growing cash reserves.

Banks directed to support SMEs

The CBE also obliged banks operating in the Egyptian market to allocate 20% of their credit portfolios to support small and medium enterprises (SMEs), aiming to inject EGP 200bn for these projects within four years with a facilitated interest.

Lifting restrictions on foreign currency transfer

In 2017, the CBE cancelled the instructions issued in February 2011 regarding the maximum transfer limit of $100,000 or its equivalent per customer once a year, which has already been applied to Egyptian individuals and companies, except for transfers related to import transactions, dues of foreigners resulting from their investments in Egypt, and remittances of foreign companies operating in Egypt. This confirmed that the entry and exit from the Egyptian market is safe for investors.

United Bank offered to a strategic investor

In the light of transparency and preventing conflicts of interest, the CBE decided to offer the United Bank to be sold to a strategic investor. The bank chose the consortium of EFG Hermes and Evercore to act as a financial advisor in offering a stake to a strategic investor in the 99.9% share capital of the United Bank.

The selection came after the trade-off between five offers for a group of the largest companies working in the field of financial consulting and promotion to accomplish many tasks. Their tasks included the promotion of the deal to a selected group of prestigious financial institutions, the preparation of a preliminary fair value study for the United Bank, in addition to the representation of the CBE and the United Bank before potential acquirers. 

New Banking Law

The CBE, headed by Tarek Amer, has finalised the draft of the new banking law. It aims to implement the best banking practices globally, as the CBE has used international financial institutions, in addition to reviewing banking laws in various countries to get acquainted with the latest legal applications and regulations followed by international banks.

Six initiatives led by Amer

During his tenure as the CBE’s Governor, Tarek Amer succeeded in stimulating economic growth, launching several initiatives following the decision to liberalise exchange rates, led by the SME and Real Estate Finance Initiative. He supported the tourism and industry sectors, adopting policies that support financial inclusion and developing systems for electronic payments in coordination with the National Council for Payments.

Mortgage Finance Initiative

The initiative was launched by CBE in February 2014, to provide long-term financing with decreasing subsidies for low, medium, and above middle income at 7%, 8%, and 10.5%, respectively, benefiting more than 200 thousand families, with a financing volume of EGP 20bn.

The CBE allocated EGP 10bn to the initiative as a first tranche. After it ran out, it added a second tranche of the same value. In February, the CBE installed new controls on the initiative, limited to financing only low-income people. This came after consuming the entire first and second tranche, estimated at EGP 20bn.

SMEs Initiative

Amer also succeeded in adopting the initiative to support small and medium enterprises launched by the CBE with the directives of Al- Sisi in January 2016. The CBE obliged banks operating in the Egyptian market to allocate 20% of their credit portfolios to support small, medium, and micro enterprises (MSMEs), aiming to pump EGP 200bn for them in four years, with an interest rate of 5%.

In May 2019, Amer decided to approve the addition of banks’ shareholdings in the direct investment funds targeted at small startups within the 20% of the bank’s total credit facilities to MSMEs under the instructions issued in this regard.

Tourism Sector Support Initiative

CBE launched several initiatives that serve the tourism sector and its employees. The bank decided to launch an initiative to finance the replacement and renovation of tourist and hotel facilities worth EGP 5bn in February 2017, with banks providing 75% financing at a 10% interest rate, up to a maximum of 10 years, according to the customer’s credit study.

In December 2018, the bank also decided to extend the validity of its initiative to support retail facilities related to the tourism sector until the end of December 2019, during which banks will be allowed to carry over the dues of consumer loans and mortgages for personal housing for an additional six months from the due date. This is provided for regular customers working in the tourism sector.

Nile Pioneers Initiative

In February 2019, Amer also launched the Nile Pioneers initiative, purposed to support the growth of small businesses and encourage the establishment of startups in targeted economic sectors using modern technology and providing technical and administrative support, in continuous coordination with all concerned partners in the economic system.

The initiative is implemented by Nile University in accordance with a five-year agreement with CBE, in cooperation with the Micro, Small and Medium Enterprises Development Agency (MSMEDA), the Ministry of Planning, the Academy of Scientific Research and Technology, banks, and the Egyptian Banking Institute.

Financial inclusion initiatives

The CBE also declared 27 April to be the Arab Financial Inclusion Day through cooperation with the Board of Governors of Central Banks and Arab Monetary Institutions. The Central Bank allowed banks to be present outside their branches in remote areas across different regions of Egypt. During the Financial Inclusion Week, lots of products are made available for customers and they get the chance to open new accounts without expenses or a minimum limit.

FinTech Hub

In June 2019, the CBE’s FinTech and Innovation Unit launched the first financial technology platform in Egypt “FinTech Hub”

The platform supports and connects all parties of the financial technology system, including innovative financial technology entrepreneurs, financial institutions, financial technology service providers, experts, and investors, thereby fostering entrepreneurship in Egypt.

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Winners and losers of CBE’s interest rate cut https://wwww.dailynewssegypt.com/2019/11/17/winners-and-losers-of-cbes-interest-rate-cut/ Sun, 17 Nov 2019 16:47:07 +0000 https://wwww.dailynewssegypt.com/?p=714197 Government, investors, and EGX are the most beneficiaries from the decision, while bank depositors are the most harmed

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The local market is anticipating the impacts of the Central Bank of Egypt’s (CBE) last Thursday interest rate cut decision on various sectors.

While the government, investors, and the Egyptian Exchange are the most beneficiaries from the decision, bank depositors are the most harmed, as banks will also cut interest rates on their savings vessels. Banks operating in the Egyptian market on Sunday will hold intensive meetings to discuss the fate of interest rates on their savings vessels, retail products, and loans, after the CBE’s decision.

The CBE decided during its Monetary Policy Committee’s (MPC) meeting on 14 November to cut its basic interest rates by 1% to reach 12.25% for overnight deposit, 13.25% for overnight lending, and 12.75% for main operation rate.

This was the fourth rate cut in 2019, as the first cut was in February by 100 basis points, and the CBE kept the interest rates unchanged for three consecutive MPC meetings over five months. In August, the MPC meeting resulted in a 150-basis-point cut, followed by another slash of 100 basis points in September.

Collectively, the CBE’s interest rates have seen nine movements since the exchange rate liberalisation on 3 November 2016.

The CBE raised its interest rates by 7% over three meetings in 2016 and 2017, before cutting them by 6.5% over six meetings in 2018 and 2019.

The CBE’s last decision was highly expected by analysts, investment banks, and local and international institutions, in light of the marked decline of the inflation rate below the CBE’s target level, along with the rise of the Egyptian pound price against the US dollar, and the Federal Reserve’s frequent cuts of its interest rates.

The MPC said in its interpretation of the recent rate cut that the continued decline in the annual rate of inflation recording 4.8% in September and 3.1% in October 2019, the lowest rate since December 2005, reinforced the CBE’s decision to reduce its interest rates.

It added that this decline in inflation was driven by lower annual food inflation, supported by favourable base effects stemming from the transitory shock to prices of fresh vegetables in the previous year.

The committee also pointed out that the annual inflation rate of non-food commodities increased in October 2019 due to the relatively high prices of services, which contributed to slightly rising annual core inflation rate to 2.7% in October from 2.6% in September 2019, the lowest since April 2006.

The MPC pointed out that the preliminary data indicates the stability of the real GDP growth rate to 5.6% during the third quarter (3Q) of 2019, after recording 5.6% during the fiscal year (FY) 2018/19, the highest rate since FY 2007/08, noting that the contribution of private sector increased in 2Q19, for the first time since 2Q17.

The real private demand growth has been picking up to support the stability of real aggregate demand growth.

Moreover, employment rose, contributing favourably to the continued decline of the unemployment rate to 7.5% in 2Q19, thereby narrowing by almost 6 percentage points from its peak in 3Q13.

Globally, the expansion of economic activity continued to weaken, financial conditions eased, and uncertainty regarding trade policies continued to weigh on the outlook. Meanwhile, international oil prices remain subject to volatility due to potential supply-side factors that include geopolitical risks.

Incoming data continued to confirm the moderation of underlying inflationary pressures, notwithstanding the expected impact of unfavourable base effects on near-term inflation rates due to the reversal of the transitory shock to prices of fresh vegetables in the previous year. Accordingly, the MPC decided to cut key policy rates by 100 basis points.

The reduction of policy rates in the 14 Nov. and previous meetings of the MPC provide appropriate support to economic activity, while remaining consistent with achieving the inflation target of 9% (±3 percentage points) in 4Q20 and price stability over the medium-term.

The MPC asserted that it closely monitors all economic developments and will not hesitate to adjust its stance to preserve monetary stability.

Immediately after the CBE decision, interest rates of about 29 certificates issued by 23 banks were affected. The interest rates on these certificates dropped automatically, as their pricing is linked to the CBE’s interest rates.

Banque Misr decided to cut interest rate on its three-year fixed rate savings certificate by 1% to 13%.

The bank also cut interest on certificates based on the interest rate corridor – rate between overnight lending rate and overnight deposit rate –  by 1% to 12%.

In a similar move, the National Bank of Egypt (NBE) decided to reduce the interest rate on the bank’s platinum certificates by 1% to 13% for the monthly return and 13.25% for the quarterly return.

The Bank has also decided to reduce the return on platinum certificates with variable return by 1%. A decision is to be made regarding the rest of the saving vessels in the bank over the upcoming period.

At the National Investment Bank, it was decided to reduce the interest rate by 2% on the three-year investment certificate “B” to 12% instead of 14%.

To illustrate, Mohamed Abdel Aal, board member of the Suez Canal Bank, said that the CBE’s decision to cut interest rates was expected in light of the improvement in the Egyptian economy indicators and the market’s need for further cuts in interest rates to trigger borrowing in banks.

Abdel Aal explained that despite the improvement of the indicators of the Egyptian economy, the rate or value of bank lending for financing investment activities is still weak.

He pointed out that despite the availability of deposits in banks amounting to about EGP 4tn, the loans did not exceed EGP 1.8tn, which means that the ratio of lending to deposits is less than 50%, which is not ambitious, and does not achieve the economic growth target of 6%. Consequently, most investors are hoping to cut rates to a level that actually motivates them to borrow.

At the same time, according to Abdel Aal, there are no concerns for foreign direct investment and foreign investments in government debt instruments, because there is still a difference in interest in favour of the Egyptian pound against other foreign currencies, and there are no risks for the household sector due to the interest rate cuts.

Haitham Abdel Fattah, head of Treasury and Capital Markets Sector at the Industrial Development Bank (IDB), said that the CBE’s continued interest rate cut is an explicit signal that it has shifted from targeting inflation decline to targeting growth increase, especially after its success in achieving its target level of inflation.

Abdel Fattah expected that the decision to cut interest rates would have a big positive impact on the Egyptian Exchange this week.

With regard to the bank’s position on the decision, Abdel Fattah said that the bank will hold a meeting this week to discuss the implications of the decision on interest rates, pointing out that the response of each bank to the CBE’s decision depends on its own circumstances and liquidity.

Radwa al-Swaifi, head of research at Pharos Holding, said the CBE’s rate cut of 100 basis points was in line with expectations, due to a significant slowdown in inflation since the beginning of the year.

She ruled out that foreign investments in the domestic debt instrument would be affected by the rate cut, due to the real increase in real yields so far, especially after the monetary easing carried out by the Federal Reserve last week and in light of the growing price of the Egyptian pound against the US dollar.

She stressed that the reduction of interest supports two main objectives, namely the rise of private investment, which is essential for sustainable growth rates, especially in light of the Ministry of Finance’s target growth of 6.4% in FY 2020/21, as well as reducing debt service, which leads to narrowing the fiscal deficit.

Meanwhile, the banking market is awaiting the issuance of the Sunday treasury bills, the first after the recent rate cut, to find out the direction of interest rates on government debt instruments and the impact of the CBE’s decision.

The Ministry of Finance issues five bids for debt instruments weekly, including treasury bills, on Sunday and Thursday, then a bonds bid on Monday of each week.

Similarly, Beltone Financial said that the decision came in line with their expectation, supported by the low single-digit inflation witnessed in October 2019 of 3.1%. We believe the favorable base effect and EGP strength will continue to advocate benign annual inflation readings throughout FY19/20e, keeping inflation rates within the CBE’s target zone of 9% (±3%) by the end of 2020, barring any unexpected price shocks.

They explained that the EGP will remain at around EGP16 per US Dollar. Although the rate cut should improve business sentiment, particularly with local investors, we believe an uptick in private demand growth remains key to unlocking CAPEX lending potential.

Beltone believes that despite interest rate cuts, yields on government securities should remain attractive, particularly with the government aiming to make EGP-denominated debt Euroclearable. 

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Egypt’s net foreign reserves rise by $128m to $45.247bn in October https://wwww.dailynewssegypt.com/2019/11/06/egypts-net-foreign-reserves-rise-by-128m-to-45-247bn-in-october/ Wed, 06 Nov 2019 19:21:33 +0000 https://wwww.dailynewssegypt.com/?p=713217 It’s the highest foreign exchange reserves in Egypt’s history, covering more than eight months of commodity imports.

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Egypt’s net foreign reserves rose by $128m to reach $45.247bn in October, up from $45.118bn in September 2019, the Central Bank of Egypt (CBE) announced on Wednesday.

It’s the highest foreign exchange reserves in Egypt’s history, covering more than eight months of commodity imports.

The CBE said that the value of foreign currencies included in the net foreign reserves also increased by about $66m in October, to record $41.611bn, compared to $41.545bn at the end of September.

Egypt’s foreign exchange reserves before the 2011 Revolution stood at around $36bn before the country entered a period of political and economic turmoil that negatively impacted tourism and foreign investments.

Afterwards, Egypt’s net foreign reserves hit a historic low in October 2016, with only $19bn.

Later, Egypt has adopted an IMF-supported ambitious economic reform programme in November 2016, which included currency flotation, in addition to energy subsidy cuts, and introduction of VAT.

According to the CBE, the current value of gold reserves rose by about $58m at the end of September to $3.267bn, from $3.209bn in August.

Meanwhile, special drawing rights (SDRs) in reserves increased to $369m in October, compared to $365m in September, while the IMF loans totalled $4m in October.

 

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Issuance of executive regulation for e-payments law within weeks: CBE https://wwww.dailynewssegypt.com/2019/11/05/issuance-of-executive-regulation-for-e-payments-law-within-weeks-cbe/ Tue, 05 Nov 2019 19:56:02 +0000 https://wwww.dailynewssegypt.com/?p=713087 Banks issued 3.5m Meeza cards until end-October, says CBE Deputy Governor

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The executive regulation of e-payments law will be issued within the next few weeks, the Central Bank of Egypt (CBE) Deputy Governor, Lobna Helal, announced during her speech at the people and banks conference on Tuesday.

Helal said that the law included a special part for e-payment systems and financial technology, with the aim of developing a deliberate legislative framework that regulates and protects customers’ money, and to help achieve financial inclusion and economy growth.

She stressed that digital payments using mobile phones depend on the existence of a legislative structure that facilitates and regulates the process of these payments.

She pointed out that banks have issued 13.5m mobile wallets so far, and a large proportion of them have been activated, pointing out that the CBE is working on issuing the third version of mobile phone portfolios that include new functions, such as lending through mobile wallets.

Helal stressed that the CBE is cooperating with the Ministry of Finance in the automation of government payments and has deployed 16,000 points of sale and 16,000 QR code generators so far.

According to Helal, the total number of Meeza cards issued by banks until the end of October amounted to about 3.5m cards, pointing out that about 1.5m transactions were carried out with a value of EGP 3.6bn.

Helal pointed out that the CBE has issued a new strategy for technological services support and entrepreneurship. The CBE also launched the Innovation Support Fund with a capital of EGP 1bn, and transformed the bank’s previous headquarters in Downtown Cairo to become a fintech hub.

She stressed that the CBE attaches great importance to financial inclusion and digital transformation, which will be achieved only by the development of infrastructure, noting that it was difficult to apply financial inclusion without a strong economic agenda to focus on financial inclusion and digital transformation.

Helal pointed out that the CBE put financial inclusion on its agenda in 2008 after the global crisis, and that serious steps were taken until 2011, and then continued four years ago.

Meanwhile, Hisham Okasha, chairperson of the National Bank of Egypt (NBE), said there are countries that incurred big losses due to cybercrime estimated at $600m.

During his speech at the conference, Okasha urged the need to use artificial intelligence and cybersecurity systems in Egypt.

He added that there are many international institutions that praised the economic reform programme in Egypt for achieving 5.7% growth, the highest in the region.

Okasha added that the IMF praised Egypt’s economic reform programme and the success of monetary policy in containing inflationary pressures and monetary easing policy through reducing interest rates.

He added that the state achieved great successes in digital transformation through the launch of the National Council of Payments, the National E-Commerce Strategy, and Meeza card.

Okasha pointed out that the Egyptian banking sector was open for digital transformation and technological development, thanks to the support of the CBE that took many steps to achieve this.

He stressed that the banking sector is one of the most important pillars of the economy and promotes development during the coming period, and its role in financing large, small, and medium enterprises, because of its role in reducing unemployment and achieving financial inclusion.

Yehia Aboul Fotouh, vice chairperson of the NBE, said that the banking system is the most important pillar of the Egyptian economy and has proven its strength over the various crises in the past years.

Aboul Fotouh added that the Egyptian banking sector is on a solid ground, as its assets amount to EGP 5.5trn, plus EGP 4trn deposits and loan portfolio of EGP 1.9trn.

Aboul Fotouh pointed out that there is a strong trend within the banking sector towards financial technology, supported by strong efforts from the CBE.

Mostafa El-Fekky, chairperson of Arab Media Centre, said the Egyptian banking system was able to reform itself and overcome its crises.

He noted that this year’s conference highlights the Egyptian president’s interest in digital transformation through addressing bureaucracy and corruption.

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Banks in Egypt inject EGP 144.2bn to finance MSMEs from Dec. 2015 to June 2019: CBE https://wwww.dailynewssegypt.com/2019/11/03/banks-in-egypt-inject-egp-144-2bn-to-finance-msmes-from-dec-2015-to-june-2019-cbe/ Sun, 03 Nov 2019 20:51:35 +0000 https://wwww.dailynewssegypt.com/?p=712894 Service sector received EGP 62.2bn banking funds, while industrial sector got EGP 43.1bn

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The Central Bank of Egypt (CBE) issued its annual report on financial stability last Thursday, showing its major role in maintaining financial stability as the body responsible for safety, regulation, and supervision of the banking sector, in coordination with the Financial Regulatory Authority (FRA), which supervises the non-banking financial sector.

The CBE explained that the stability of the financial sector is represented in its continued facilitation of efficient distribution of economic resources through the provision of financial intermediation services, regardless external or internal obstacles that may lead to negative effects on the real economy.

The report pointed out that the CBE aims to ensure the stability of the financial sector by studying and monitoring the systemic risks that may threaten it.

This report also represents a communication channel with various parties in the market and the public to show the CBE’s role in facing the risks to which the banking sector may be exposed, as well as its efforts to develop the financial infrastructure, and establish economic growth within a framework of transparency.

Micro, Small, and Medium-sized Enterprises

The CBE said that banks operating in Egypt pumped EGP 144.2bn to finance micro, small, and medium-sized enterprises (MSMEs) from December 2015 to June 2019, benefitting 566,000 projects across the country.

The report added that the service sector got the lion’s share of the increase in loans to these projects, receiving about EGP 62.2bn, followed by the industrial sector by EGP 43.1bn.

The loans directed to MSMEs until the end of December 2018 came as follows; 47.3% for small projects, 46.6% for medium projects, and 6.1% for micro ones.

Credit Guarantee Company

The CBE announced that the Credit Guarantee Company (CGC) has issued EGP 17bn worth loan guarantees to banks to cover EGP 25.4bn funds granted to SMEs.

The report explained that the CBE holds a 20% stake in the CGC, in return for the company covering a part of the risks associated with financing SMEs.

The CBE recognises the CGC’s role as guarantor when calculating the capital adequacy rates, as well as when making provisions, to encourage banks to finance SMEs.

Mortgage finance for low- and middle-income people

The CBE said the banks operating in Egypt have injected EGP 20.6bn mortgage loans to 213,000 beneficiaries within the CBE mortgage finance initiative for low- and middle-income people, until the end of June 2019.

Noteworthy, the CBE has excluded middle-income people from its initiative, limiting the low-interest mortgage finance for low-income only, in coordination with the Social Housing and Mortgage Finance Fund and the Ministry of Finance, which contributes to enhancing financial intermediation and inclusion.

Top 50 receivers of bank loans

The CBE revealed that the total credit facilities granted by banks in Egypt to their top 50 clients amounted to about EGP 291bn at the end of March 2019.

It pointed out that these facilities are well distributed among more than 15 industrial, agricultural, and service sectors, such as petroleum, construction, real estate, steel, and communications. The report noted that recent economic reforms also affected positively the performance of companies operating in the local market, where most of these companies recorded a steady growth.

According to the CBE, companies operating in the construction and real estate development sectors have achieved the highest growth, profitability, and liquidity rates, while companies in the steel industry faced some challenges resulting from high prices of energy and some imported inputs, but they managed to achieve acceptable results.

Private business sector

The CBE said the private business sector was the main driver of growth in private credit, contributing by 54.6% of the growth, while also contributed 70% of the growth of the implemented investments, driven by the electricity, real estate, and extraction sectors.

According to the CBE, it contributed 64.4% of the growth in real GDP, which pushed the growth of the tourism, trade, construction, agriculture, real estate, manufacturing, and telecommunications sectors, while the public sector contributed to the growth of extractions, especially natural gas.

Financial Stability Index

The CBE said the financial stability index rose to 0.54 at the end of March 2019, after achieving slight increases in 2018, compared to 2017 and stabilising at an annual average of 0.51 during that period.

This index reflects the stability of current macroeconomic conditions, as it is not used to predict periods of financial stress.

This indicator is constructed as a composite quantitative measure using a wide range of variables (21 variables), which fall under four sub-indices, reflecting the performance of the banking sector, macroeconomic conditions, along with the development of financial markets and the global economic climate, using quarterly data for the period from March 2011 to March 2019.

The value of the index approaching 1 (maximum) indicates a higher degree of financial stability, while approaching zero (minimum) indicates a lower level of financial stability.

According to the CBE, the improvement of the macroeconomic index played a major role in the improvement of the index as a whole. The economic performance indicators witnessed positive developments in 2018, compared to 2017, as a result of fiscal pressure and exchange rate liberalisation policy, which pushed down the budget deficit and the increase in monetary reserves.

Performance Indicators of Banking Sector

As for the performance indicators of banking sector, the solvency of banks increased due to the increase in the capital adequacy ratio and the improvement in the indicators of asset quality, after the decline in non-performing loans and the increase in loans granted by banks.

The CBE added that this improvement came due to development economic conditions and the CBE’s initiatives to expand financing for SMEs.

The CBE pointed out that the average liquidity ratio in the local currency in the banking sector decreased in 2018 due to the increase in customer deposits. This was reflected in the decline in net foreign currency assets of banks.

Local Capital Market Indicators

The CBE said both indicators of the domestic capital market and the global economic climate saw a decline in 2018, as a result of the recent turmoil in emerging financial markets, and the beginning of the exit of foreign capital.

However, the CBE said the overall financial situation improved during this period, due to the positive developments in the Egyptian economy and the solidity of banks, despite the global turmoil.

Foreign exchange flows

The CBE pointed out that foreign exchange inflows to Egypt will continue during the first quarter of this year, to record net international reserves of $44.1bn at the end of March 2019.

The report said that Egypt’s coverage of commodity imports was 7.8 months in March 2019.

The CBE predicted that foreign exchange flows to Egypt will continue to improve in 2019 and 2020, supported by expectations of falling global oil prices and lower US interest rates.

The report expected the US interest rates to fall to 1.9% in 2019 and 2020, supporting flows to emerging and developing markets, thus improving the external conditions and exchange rate of local currencies.

It added that these developments will push towards further reduction of the domestic trade balance deficit of these countries and the continued abundance of foreign exchange in the banking sector.

The CBE expected economic growth and trade to slow down this year and improve next year.

A field study

The CBE said it is currently preparing a field study to identify the financial services offered by financial institutions to individuals and MSMEs in the formal and informal sector.

It added that the study is being prepared in cooperation with the Central Agency for Public Mobilization and Statistics (CAPMAS) and one of the international experts specialised in financial inclusion. The study is scheduled to be completed by the end of 2020.

The CBE highlighted the active participation of the external committee to exchange information on financial inclusion in preparing the study. The committee is chaired by Lubna Hilal, deputy governor of the CBE, with the membership of representatives of Ministry of Communications; Ministry of Social Solidarity; Ministry of Trade and Industry; FRA; Egypt Post; CAPMAS; Nasser Social Bank; Micro, Small and Medium Enterprise Development Agency; and the Egyptian Credit Bureau (I-Score).

Financial Services

The CBE said the study is part of Egypt’s strategy to promote financial inclusion for all segments of the population, as almost half of citizens uses financial services, with 32% of adults (older than 21) have bank or Egypt Post accounts.

The study pointed out that men use financial services more than women.

According to the CBE, a database of financial services was completed in 2018. This data is currently being compiled from banks and post offices as a first stage, and in later stages will include all data from different financial service providers, which are analysed based on its type and geographic location. This database shall be updated periodically.

The CBE explained that the national ID was adopted as a unified tool to calculate the number of citizens benefiting from financial services.

Excerpts:

Loans directed to MSMEs until the end of December 2018 came as follows; 47.3% for small projects, 46.6% for medium projects, and 6.1% for micro ones

Total credit facilities granted by banks in Egypt to their top 50 clients amounted to about EGP 291bn at the end of March 2019

Companies operating in the construction and real estate sectors achieved the highest growth, profitability, and liquidity rates, while steel companies faced some challenges

The CBE expects foreign cash flows to Egypt to continue improving in 2019 and 2020, supported by expectations of falling world oil prices and lower US interest rates

Half of Egyptians uses financial services, and 32% of adults have bank or Egypt Post accounts

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Egypt’s foreign trade increases to $95bn in FY 2018/19: CBE https://wwww.dailynewssegypt.com/2019/11/03/egypts-foreign-trade-increases-to-95bn-in-fy-2018-19-cbe/ Sun, 03 Nov 2019 20:29:11 +0000 https://wwww.dailynewssegypt.com/?p=712877 Egypt's imports scored $66.529bn, while exports reached $28.495bn between July 2018 and June 2019

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Egypt’s foreign trade in the fiscal year (FY) 2018/19 reached $95.024bn, up from $88.93bn in FY 2017/18, an increase of $6.094bn, according to the Central Bank of Egypt (CBE).

In a recent report, the CBE said Egypt’s imports reached about $66.529bn against $35.560bn, while exports reached $28.495bn against $16.347bn, in the comparison period.

According to the CBE, 14 countries accounted for 62.3% of Egypt’s foreign trade, where the value of trade exchange between Egypt and those countries reached $59.245bn.

The CBE pointed out that Egyptian exports to these countries reached $17.091bn (60% of total exports), while imports from these 14 countries reached $42.153bn, equivalent to about 63.4% of total imports between July 2018 and June 2019.

China was the largest trade partner of Egypt with a $6.505bn trade exchange, including $6.012bn worth imports and $493.2m worth exports, followed by the United States with a $6.239bn trade exchange, including $3.383bn imports and $2.856bn exports, the CBE said.

Saudi Arabia ranked third with a $5.988bn trade exchange with Egypt, of which $4.931bn imports and $1.056bn exports, then the UAE with $5.823bn trade exchange, including $3.619bn imports and $2.204bn exports.

According to the CBE, Russia came fifth with a trade exchange of $4.782bn, including $4.574bn imports and $207.1m exports.

Moreover, the trade exchange between Egypt and Italy reached about $4.482bn, including $2.058bn imports and $2.423bn exports, while Germany-Egypt trade stood at $4.254bn, including $3.086bn imports and $1.168bn exports.

The United Kingdom was the eighth most important trading partner of Egypt with a $4.23bn trade exchange, including $2.385bn imports and $1.845bn exports, followed by Turkey with total trade of $3.617bn, including $2.588bn imports and $1.029bn exports.

Switzerland ranked 10th in the most important trade partners of Egypt with a trade exchange of $3.343bn, including $2.367bn imports and $975.7m exports, then India with a total trade exchange of $2.996bn, including $1.887bn imports and $1.108bn exports.

France came 12th with trade exchange with Egypt of $2.744bn, including $2.031bn imports and $317.2m exports, then Kuwait with a total trade of $2.26bn, including $2.105bn imports and $155m exports.

Spain ranked last among the 14 most important countries with a total trade exchange of $1.976bn, including $1.121bn imports and $855.5m exports.

According to the CBE, the value of trade exchange between Egypt and the rest of the world stood at about $35.779bn, including $24.375bn imports and $11.403bn exports.

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Three-year anniversary of Egypt’s free floating exchange https://wwww.dailynewssegypt.com/2019/11/03/three-year-anniversary-of-egypts-free-floating-exchange/ Sun, 03 Nov 2019 18:31:38 +0000 https://wwww.dailynewssegypt.com/?p=712849 FX reserves up by $25.618bn, exchange rate and inflation fall, and public debt rises

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Egypt will mark three years on Sunday since the application of free floating exchange system on 3 November 2016.

During the past three years, the Egyptian market witnessed many important developments, as the foreign exchange reserves increased by about $25.618bn, the US dollar exchange rate declined against the Egyptian pound from EGP 19.52 in December 2016 to around EGP 16, and the inflation fell to its lowest level in about six years, while the public debt, both external and internal, saw a significant increase.

At the level of foreign exchange reserves, the decision to float the exchange rate has contributed to increasing it from $19.5bn at the end of October 2016 to $45.118bn at the end of September 2018.

The increase in the size of the reserve thus contributed to Egypt’s access to strong cash flows and loans from abroad, most notably a $12bn extended facility from the International Monetary Fund.

According to the Governor of the Central Bank of Egypt (CBE), Tarek Amer, the volume of foreign exchange inflows has been around $200bn since the floatation in June 2019.

With the increase in the flow of foreign exchange in the Egyptian market, the price of the US dollar went down significantly against the Egyptian pound, especially during 2019, losing some 178 piasters since the beginning of this year until the end of October.

The exchange rate has hiked by 48% after the floating, reaching EGP 13.5 per US dollar on the morning after the float, before rising to EGP 18.16 at the end of November 2016, then to EGP 19.52 at the end of December 2016, marking its highest level ever.

As for the level of inflation, it witnessed a significant decline in 2018 and 2019, for the annual rate of core inflation to reach 2.6% at the end of September, while headline inflation scored 4.3%, which is the lowest since April 2006.

This level of inflation was compared to about 14.6% in September 2016, and 34.2% in July 2017.

After the floating decision, the CBE raised local interest rates by 5% to contain the inflation, to record 18.75% for deposit and 19.75% for lending.

After the policy of raising interest rates achieved positive results on the level of inflation, the CBE reduced it by 5% to 13.25% for deposit and 14.25% for lending.

However, there was a significant increase in the public debt, both external and internal.

At the level of external debt, the figure has reached about $108.7bn at the end of June 2019, against $67.3bn before the floating, rising by $41.4bn.

The size of domestic debt also increased by EGP 1.7trn to EGP 4.204trn at the end of March 2019,  from EGP 2.5trn before the floating.

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EALB signs a protocol with Tersana SC to finance club membership https://wwww.dailynewssegypt.com/2019/10/31/ealb-signs-a-protocol-with-tersana-sc-to-finance-club-membership/ Thu, 31 Oct 2019 18:14:06 +0000 https://wwww.dailynewssegypt.com/?p=712586 The protocol was signed by Amr Gadallah, the bank’s vice president, on behalf of Amr Kamal, the bank’s chairperson, and on the other side, Tarek El Said, the club’s president and parliament member.

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The Egyptian Arab Land Bank (EALB) signed a cooperation protocol with Tersana Sporting Club, aiming to provide banking services to the members of the club and provide loans to finance membership fees, as part of activating the club membership finance product.

The protocol was signed by Amr Gadallah, the bank’s vice president, on behalf of Amr Kamal, the bank’s chairperson, and on the other side, Tarek El Said, the club’s president and parliament member.

Gadallah stressed the EALB’s interest in expanding in retail banking activity, especially products targeting young people, such as club memberships loans, and tuition fees finance for basic and university education “Back to School”, post graduate finance programme, and Meeza cards.

For his part, El-Said said that the club’s main role is to care for the health of young people and support the youth to practice sports within the framework of the state’s great interest in youth. He pointed out that the protocol of cooperation with EALB was to facilitate membership procedures.

The signing ceremony was also attended by Hana El-Helaly, executive advisor to the corporate communications sector of the bank, and Wael Shafei, head of product marketing at EALB, in addition to the board of directors of Tersana SC.

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NBE rules out issuing foreign bonds currently https://wwww.dailynewssegypt.com/2019/10/31/nbe-rules-out-issuing-foreign-bonds-currently/ Thu, 31 Oct 2019 17:41:13 +0000 https://wwww.dailynewssegypt.com/?p=712589 Dealing with financial institutions is better and cheaper than bonds, says Aboul Fotouh

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The National Bank of Egypt’s (NBE) Vice Chairperson, Yehia Aboul Fotouh, ruled out the possibility that the bank will offer foreign bonds currently.

Aboul Fotouh explained that the bank prefers to deal with foreign financial institutions to secure foreign exchange because borrowing from them is easier and cheaper than issuing foreign bonds.

Earlier, the European Bank for Reconstruction and Development (EBRD) said it was considering arranging loans of $150m to the NBE to support entrepreneurship and SMEs in Egypt.

However, Aboul Fotouh denied that there are ongoing negotiations with any international institution to obtain loans.

He affirmed that the bank has enough US dollar reserves and that it does not need at the present time to borrow from abroad.

In addition, he noted that the bank has pumped $64bn to finance foreign trade operations since the exchange rate flotation in November 2016.

In another context, Aboul Fotouh explained that the portfolio of facilities granted by the bank to the contracting sector reached about EGP 65bn, adding that the bank does not need to increase the ceiling of financing granted to this sector and other sectors at the present.

Aboul Fotouh explained that the size of the bank’s retail banking portfolio reached EGP 80bn, while the size of the SMEs portfolio reached about EGP 60bn.

According to Aboul Fotouh, the bank’s total financing under the mortgage finance initiative for low and middle Income was about EGP 7.8bn to 75,000 customers, in addition to EGP 1.5bn funnelled to the tourism sector under the initiative launched by the Central Bank of Egypt (CBE) to finance the sector.

Aboul Fotouh said that the bank decided to add the factoring activity to Al-Ahli Leasing Company, excluding the establishment of a specialized company in the field of factoring at the present time, while still studying the launch of a company to finance the micro sector.

He pointed out that the NBE aims to exit from five or six companies in the current fiscal year along with selling lands worth EGP 1bn in cooperation with Banque Misr.

The NBE had achieved EGP 9bn profits in the first half of the fiscal year 2018/19. The bank hopes to achieve similar profits in the second half of the year, according to Aboul Fotou.

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Egypt’s external debt jumps to $108.bn end-June: CBE https://wwww.dailynewssegypt.com/2019/10/30/egypts-external-debt-jumps-to-108-bn-end-june-cbe/ Wed, 30 Oct 2019 21:25:00 +0000 https://wwww.dailynewssegypt.com/?p=712571 The CBE noted that debt services reached $13.4bn in fiscal year 2018/19, including $10.2bn in instalments and $3.2bn in interest.

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The Central Bank of Egypt (CBE) said that the external debt rose to about $108.7bn at the end of June 2019, up by $16.1bn (17.3%), against June 2018.

In its recent report on the performance of banks and the economy, issued on Wednesday, the CBE said that this increase in external debt came as a result of increasing foreign loans and facilities by $16.5bn and the decline of exchange rates of most of the borrowing currencies against the US dollar by about $0.4bn.

The CBE noted that debt services reached $13.4bn in fiscal year 2018/19, including $10.2bn in instalments and $3.2bn in interest.

According to the CBE, the ratio of external debt to GDP has fallen to 36% by the end of June 2019, noting that they are still in the safe limits in accordance with international standards.

In the same context, the CBE pointed out that the total domestic public debt reached about EGP 4.204trn at the end of March 2019, including 86.4% owed by the government, 7.3% owed by general economic bodies, and 6.3% owed by the National Investment Bank.

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US dollar records lowest level against EGP since March 2017 https://wwww.dailynewssegypt.com/2019/10/28/us-dollar-records-lowest-level-against-egp-since-march-2017/ Mon, 28 Oct 2019 19:36:04 +0000 https://wwww.dailynewssegypt.com/?p=712351 US currency lost 13 piasters of its value in October, totalling 178 piasters decline since beginning of 2019

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The US dollar continued its decline against the Egyptian pound in the domestic market, reaching about EGP 16.08 to buy and EGP 16.18 to sell on average at banks on Monday, marking its lowest level since March 2017.

The US currency lost about 14 piasters of its value since the beginning of October, totalling about 178 piasters decline since the beginning of 2019, amid strong expectations of continued downturn in the coming period.

Mohamed Abdel Aal, a banking expert and a board member of the Suez Canal Bank, expected the US dollar to continue its decline against the Egyptian pound to reach EGP 15.5 by the end of this year.

Abdel Aal pointed out that the people recently race to sell the US currency due to the gradual decline of its value in the local market. Moreover, the high inflows of foreign investments in domestic debt instruments and high-yield savings certificates, in light of the increasing expectations to continue interest rate cuts.

Tarek Metwally, a banking expert, said the increase in foreign investments in domestic debt instruments was behind the US dollar’s recent decline.

He pointed out that there is a high demand of foreigners to invest in local debt instruments, despite the reduction of interest because the return is still satisfactory for them.

Deputy Minister of Finance, Ahmed Kouchouk, revealed that the total foreign investment in treasury bills jumped to $18.3bn by the end of August 2019, after landing to $10bn at the end of 2018.

According to Metwally, the continued decline of the US dollar against the EGP requires working to reduce the deficit in the trade balance, and the continued increase in foreign exchange resources.

In a report, the World Bank indicated that the Egyptian pound against the dollar had improved by 16% since it reached its weakest point in mid-December 2016.

Fitch Solutions, a subsidiary of Fitch Ratings, said in a report that the pound would maintain its high path against the dollar, but at a slower pace in the remaining months of 2019 supported by the attractive interest rate differential and low inflation.

However, Fitch suggested that the pound would decline in the long run, in conjunction with the Central Bank of Egypt cutting interest rates.

The CBE announced that the foreign exchange reserves exceeded $45bn by the end of September 2019 to reach $45.118bn, marking its highest ever level.

Foreign exchange reserves have increased by about $2.567bn since the beginning 2019, after closing at $42.551bn in 2018.

The CBE had also noted in a recent report that the overall balance of payment deficit was at $100m only in the fiscal year 2018/19, where it achieved a surplus of $1.7bn in the second half of the fiscal year.

This comes at a time when the local and international capital markets await the Federal Reserve System’s decision on its interest rate on Thursday.

It is widely expected that the committee will cut interest rates for the third time in a row, further weakening the US currency’s position against the pound, as the spread between the two currencies widens in favour of the local currency.

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Emirates NBD – Egypt contributes to financing Farm Frites’ new factory https://wwww.dailynewssegypt.com/2019/10/28/emirates-nbd-egypt-contributes-to-financing-farm-frites-new-factory/ Mon, 28 Oct 2019 16:46:40 +0000 https://wwww.dailynewssegypt.com/?p=712284 Bank to expand in financing large companies to support economic development in Egypt, says Azab

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Emirates NBD – Egypt has granted $28m medium-term financing to Farm Frites Egypt, a subsidiary of Americana Group.

This financing is intended to contribute to the cost of establishing a new potatoes factory in 10th of Ramadan city, with a capacity of 50,000 tonnes per year and a total investment of $40m.

According to Amr Azab, head of credit at Emirates NBD – Egypt, the move comes in light of the bank’s efforts to support the Egyptian economy, as well as reflecting the expansion policy of the Emirates NBD Group in Egypt, following the acquisition of BNP Paribas Egypt in 2013.

He explained that the bank succeeded in doubling the size of its corporate loan portfolio by an average annual cumulative growth rate of 44% by focusing on financing infrastructure and urban development projects.

He added that Emirates NBD – Egypt plans to expand the financing of large companies, pointing out that it has funded many companies since the beginning of 2019 in the food, infrastructure, and real estate sectors.

He pointed out that the bank was able, through its distinctive banking services and its regional and international presence, in facilitating the import of production lines, as well as financing business and local needs, pointing out that the suppliers of production lines and Farm Frites praised the outstanding service of the bank, and its skills in the management of the import process, through a team of trade finance experts at the bank.

Emirates NBD – Egypt has a team of financial experts and consultants to provide the necessary advice to contribute to all stages of financing transactions, as well as supporting clients in making the right investment decisions.

Emirates NBD – Egypt is a wholly owned subsidiary of Emirates NBD.

Emirates NBD-Egypt is one of the largest banks operating in Egypt, with paid-up capital of EGP 1.7m by the end of December 2018. The bank has 73 branches across the country with 1,999 employees and 200 ATMS.

Emirates NBD – Egypt is a major player in the financing of major infrastructure projects and development initiatives, which has earned the bank numerous awards.

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IDB targets over EGP 0.5bn profits by end-2019: chairperson https://wwww.dailynewssegypt.com/2019/10/27/idb-targets-over-egp-0-5bn-profits-by-end-2019-chairperson/ Sun, 27 Oct 2019 13:45:28 +0000 https://wwww.dailynewssegypt.com/?p=712185 We aim to achieve 30-35% growth in various activities this year, says Fahmy

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The Industrial Development Bank (IDB) aims to achieve profits of more than EGP 0.5bn by the end of this year, according to the bank’s Chairperson Maged Fahmy.

Fahmy told Daily News Egypt that the bank has so far achieved EGP 435m profits, and it aims to achieve 30-35% growth in its various activities by the end of this year.

On the sidelines of signing a cooperation protocol with the Social Housing and Mortgage Finance Fund, the bank held a press conference last week to increase the volume of financing directed to low-income mortgage customers to EGP1.5bn instead of EGP 1bn.

During the conference, IDB’s leaders revealed that the bank succeeded in boosting the size of its mortgage portfolio to EGP 1.017bn in September 2019, which benefited about 10,000 customers, compared to only EGP 1m in February 2014.

According to Fahmy, the bank had a clear objective since its launch to have a developmental role that supports citizens and helps the state achieve its goals at the same time.

He explained that the bank was keen to offer retail banking for developmental purposes and not commercial ones, a goal that IDB exclusively achieved in the Egyptian market.

To this end, the bank has focused heavily on real estate finance, gas delivery to homes, and providing funds for any developmental projects, he said.

According to Fahmy, the new cooperation protocol with the Social Housing and Mortgage Finance Fund comes as a continuation of the developmental and vital role of the bank to support the country’s strategy. It is also part of its role to develop the national economy, along with extending it to the social dimension and the needs of the Egyptian citizens to provide a stable and adequate housing for large segments of the Egyptian society.

Fahmy praised the successes achieved under the Central Bank of Egypt (CBE)’s initiatives to serve the different sectors of the country, find appropriate solutions to the housing problem, and contribute to the welfare, stability, and prosperity of Egyptians.

According to Fahmy, the IDB is ranked sixth among the banks participating in the mortgage finance initiative in the Egyptian market, and aims to improve its ranking to fifth place soon, targeting a more advanced position later.

Meanwhile, the IDB’s Vice-Chairperson Hamdy Azzam said that after the CBE launched its mortgage initiative, the IDB established a mortgage department in June 2014.

He added that the bank has taken several other steps to support and contribute strongly to this initiative, in line with CBE’s direction to support the low-income groups.

According to Azzam, the mortgage portfolio currently holds about 60% of the bank’s retail banking portfolio.

Azzam revealed that the IDB contracted with e-payment network Fawry to provide a collection of mortgage payments services to facilitate procedures for its clients. The agreement will come into force this week.

Azzam praised the fruitful cooperation and successes achieved with the Social Housing and Mortgage Finance Fund , and the bank’s position among leading banks.

He stressed that the IDB puts development projects at the top of its financing targets, to meet the needs of all social and economic groups, and achieve tangible economic growth with a sustainable impact.

During the conference, the bank’s mortgage finance officials, including Ahmed Emam, head of the bank’s branch and retail sector, and Soleiman Mossad, an official in the mortgage sector, presented the bank’s efforts in this activity, noting that the mortgage finance portfolio covers 17 governorates and cities.

According to the presentation, the bank financed about 3,250 units in the 6th of October city; about 1,499 units in Badr, El Shorouk, and El Obour cities; about 1,372 units in the 10th of Ramadan city; about 1,326 units in Port Said, Suez, and Damietta cities; and 771 units in Qena and Aswan governorates. 

In Sadat city, the bank financed 555 units, in addition to 260 units in Alexandria with EGP 10m. It also financed 155 units in Gharbia, 119 units in Sohag, 591 units in Assiut and Minya, and one unit in Fayoum. 

The IDB has also signed a cooperation protocol with Alexandria governorate and the Social Housing and Mortgage Finance Fund to finance 1,138 new units in the governorate. The bank signed a similar protocol with the Housing Cooperative Society for Members of the Engineers Syndicate in Damanhour in Beheira governorate to finance 488 units there.

The bank also raised the maximum age of the customer at the end of the loan to 65 instead of 60, in order to finance the largest number of customers.

According to the bank’s mortgage finance officials, IDB does not finance only the units transferred through the Social Housing and Mortgage Finance Fund, but also deal with private companies which meet the requirements.

IDB is already cooperating with Fontana Real Estate Investments, with 208 clients contracted for EGP 25m.

During the press conference, IDB’s Chief General Manager of Financial Sector, Mostafa Khedr, presented the most important indicators of the bank’s performance during the past years, pointing out that the bank’s assets increased from about EGP 3.4bn in September 2011 to about EGP 24.5bn by the end of September 2019.

During the same period, the loan portfolio jumped from EGP 3.2bn to EGP 11.828bn. The deposit portfolio jumped from EGP 1.232bn to EGP 20.793bn, while the retail banking portfolio rose from EGP 58m to EGP 1.709bn.

The bank’s net income from revenue increased from EGP 21m to EGP 502m. The bank moved from loss of EGP 4m to profit of about EGP 410m, other than the profits made by the leasing company affiliated to the bank.

According to the bank’s performance indicators during the current year, it achieved a growth of 33% in the total financial position between January and September 2019, and achieved a 34% growth in the loan portfolio, 62% growth in the deposit portfolio, and 35% growth in the retail portfolio.

According to Fahmy, the qualitative development that took place in the IDB is much more important than the figures achieved.

He explained that the bank succeeded in making a breakthrough in its technology, and succeeding in fixing the imbalance in the administrative structure, in cooperation with PricewaterhouseCoopers (PwC). It also solved tax problems that have been pending for 22 years, amongst other successes.

With regard to the losses incurred by the bank, Fahmy revealed that they have fallen from about EGP 1.650bn two years ago to EGP 850m now.

He explained that the bank has many unused assets, such as its headquarters located in 90 St. in New Cairo, a building on Galaa St., and several other buildings inside and outside Cairo with a collective value of EGP 1.5bn. He added that it can be sold and make capital gains of EGP 1bn, hence covering all deferred losses.

According to Azzam, the bank is racing against time to modernise the technology infrastructure of the bank, allocating about EGP 600m for this purpose, which will enable the provision of the bank’s services electronically during the first quarter of 2020.

Azzam revealed that the bank intends to issue Meeza cards, national electronic payment card, during the current week, targeting 20,000 cards as a first stage.

He pointed out that the bank is currently expanding its branch network to reach more segments of society, promote the concept of financial inclusion, and provide the services and products of the bank easily.

According to Azzam, six new branches are scheduled to open before the end of this year, increasing the number of branches to 50 in 2023, compared to 18 currently.

It is scheduled to open new branches in the governorates of Minya, Ismailia, Beni Suef, Damietta, and Suez, as well as Sadat and New Cairo cities, in addition to the development of existing branches.

The bank also plans to install 42 ATMs covering Egypt’s governorates, and expand e-services to all its customers.

According to Azzam, the IDB was serving about 2,000 customers in 2011, and this figure reached 135,000 customers at the end of September 2019.

In June 2019, the IDB launched an initiative to finance 1,000 factories nationwide, earmarking EGP 10bn to help create 20,000 jobs.

According to Azzam, the bank has succeeded in attracting 183 customers so far within that initiative, with funding estimated at EGP 2bn, stressing that the initiative is a strategic objective of the bank.

As for the bank’s capital increase, in line with the new Banking Law, Azzam said all scenarios are on the table, but the final decision is in the hands of the bank’s main owner, the Ministry of Finance.

Azzam pointed out that a lot of people are working to make a qualitative leap within the IDB, and has begun to pay off already. He stressed that the bank will have a tangible role and a distinct position among others operating in the Egyptian market in the coming period.

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NBG-Egypt’s intransigence with its employees threatens acquisition deal with Bank Audi https://wwww.dailynewssegypt.com/2019/10/27/nbg-egypts-intransigence-with-its-employees-threatens-acquisition-deal-with-bank-audi/ Sun, 27 Oct 2019 13:30:10 +0000 https://wwww.dailynewssegypt.com/?p=712184 CBE gives last chance for conflicting parties to reach solution

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Bank Audi’s acquisition of the National Bank of Greece (NBG)- Egypt is threatened due to the latter’s failure to meet its employees’ demands, while the long-running deal still awaits the Central Bank of Egypt’s (CBE) approval.

The NBG’s management and employees are in dispute due to two conflicting articles in the Labour Law, namely Articles nine and 122.

The bank’s argument is based on Article nine of the Labour Law which stipulates that “the dissolution, liquidation, closure, or bankruptcy of the establishment shall not prevent fulfilling all the obligations arising according to the law. Merging the establishment with another or devolving it by inheritance, bequeathable, donation, or sale – even by public auction- or by assigning or leasing it or other such disposals shall not terminate the employment contracts of the establishment workers. The successor shall be responsible in coordination with the former employers for implementing all obligations arising from these contracts.”

Meanwhile, the bank’s employees uphold their rights in accordance with Article 122 of the same law which requires an institution that exits from the market to grant employees two-month compensation for each year they spent at work, regardless of whether the employees move to Bank Audi or not.

Article 122 stipulates that “if either party to the contract terminates it without legitimate and adequate justification, he shall compensate the other party for the harm occasioned to him in consequence of such termination. If such unjustified termination is by the employer, the worker shall have the right to resort to the committee referred to in article (71) of the present Law requesting compensation. Such compensation as shall be determined by the committee shall not be less than the wage of two months of the comprehensive wage for each of the years of service.”

The CBE, for its part, stressed that the acquisition deal will not take place unless both parties reach a settlement.

Earlier, CBE’s Legal Advisor Tamer El Dakkak, held a meeting with the bank’s officials and representatives of the employees, but the meeting saw no breakthrough.

Daily News Egypt was informed that the CBE gave the two parties a deadline to reach an agreement before deciding on the sale of NBG-Egypt to Bank Audi.

According to sources involved in the deal, this week may see a radical solution to this problem, if not by the NBG-Egypt, the CBE may intervene to end this dispute, preparing for approving the deal before the end of October.

During last Wednesday and Thursday, intensive meetings were held between representatives of the NBG-Egypt’s employees; Matouk Bassiouny firm, the legal adviser of the NBG-Egypt in the acquisition deal; Hisham Ragab, the legal affairs manager of Bank Audi Egypt; and Baker Mckenzie, the legal representative of Bank Audi in the deal; in the presence of George Sochos, CEO of NBG-Egypt. 

According to sources who attended these meetings, the talks resulted in no common ground.

The NBG-Egypt employees argue that Article nine was applied when the Commercial International Bank (CIB) – Egypt’s acquired the Citibank’s retail portfolio, and when the Arab African International Bank acquired the Bank of Nova Scotia.

With regard to Bank Audi’s position on this dispute, Mohamed Bedair, managing director of Bank Audi – Egypt, stressed that the bank is not a party to the dispute between the NBG’s employees and management, regarding their financial rights.

He explained that the CBE did not invite Bank Audi’s officials to attend the negotiations held between the two sides on this matter.

Bedair stressed that the management of Bank Audi is committed to any decision taken by the CBE on the issue, pointing out that when the bank signed the acquisition deal, it pledged to maintain all the bank’s staff.

According to the sources, the dispute between the employees of the NBG and the management of their bank did not only concern the compensation, but also included the NBG’s rejection recognise the annual salary increase of workers, which have not been disbursed for two years. Another concern raised by the sources is the grade and position levels of the NBG-Egypt’s staff.

The sources explained that the terms of the deal guarantee the transfer of employees of the NBG to Bank Audi with the same salaries they receive in the NBG, but employees are concerned about their grade and position levels, especially since their new contracts with Bank Audi shall include a three-month probation before signing long-term contracts.

According to the sources, there is also a big difference between the salaries of the two banks’ staff in the same grade and position level. Bank Audi insisted on the transfer of the NBG’s employees with the same salaries without adjustment, making them paid less than their counterparts in Bank Audi.

Moreover, the NBG’s staff are very upset with the way the bank’s management deals with them. The bank insists not to address them directly, and only to send its requests to the office of Matouk Bassiouny, which has no authority to negotiate on behalf of the staff.

Last week, employees of the NBG launched a social media hashtag, named “Support the rights of NBG’s employees”, aiming to grab the attention of the public opinion to their case.

“When Citibank decided to sell CIB’s retail portfolio, employees were given two-month compensation for each year in service. This was an honourable stance by the bank, and the NBG is supposed to do the same in recognition of the efforts of its staff,” an NBG’s staffer said.

“The issue is solved amicably only, and unfortunately there is no solution offered by the bank, but it delegated the law firm to impose the status quo on us,” he added.

Another employee said, “The idea that as an employee stands before their directors who instead sends a lawyer to negotiate is a problem. They use a threatening tone, which we will not tolerate. We have attended these meetings and it was an unfortunate and humiliating position for the institution, not just for the employees.”

Another employee said, “The NBG’s main headquarters in Greece does not deal with the Egyptian branch professionally, and this is the reason for the problem. The bank’s management was notified several times that the employees’ salaries are low compared to other banks in the local market, however, they did not care about fixing the problem.”

“If the employees had felt that their salaries were in line with their counterparts in the market, they would not demand any financial compensation for the past period,” he concluded.

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Banque du Caire, MSMEDA sign EGP 500m microfinance contract https://wwww.dailynewssegypt.com/2019/10/27/banque-du-caire-msmeda-sign-egp-500m-microfinance-contract/ Sun, 27 Oct 2019 13:15:08 +0000 https://wwww.dailynewssegypt.com/?p=712179 Banque du Caire's microfinance portfolio reaches EGP 6.5bn benefiting 240,000 customers, targeting EGP 7bn by year-end, says Fayed

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Chairperson and CEO of Banque Du Caire, Tarek Fayed, and Executive Director of Micro, Small, and Medium Enterprises Development Agency (MSMEDA), Nevine Gamea, signed a EGP 500m contract to finance micro projects as part of the Khalifa Fund for Enterprise Development’s agreement.

It also comes within the state’s strategy to expand in financing micro enterprises to reduce unemployment and support the owners and employees of these projects. The value of the financing contract will be all directed to Bedaity (My Start) financing project, created by MSMEDA, to provide soft loans for existing micro enterprises.

Fayed said that Banque du Caire has extensive experience in financing micro projects, based on its leadership in this field, which extends for more than 18 years. The bank secured 1.2m jobs serving various segments, notably youth and women who represent about 24% of the total labour market and receive more than 50% of the banking sector’s financing for this sector.

He pointed out that the bank’s microfinance portfolio reached EGP 6.5bn serving 240,000 customers and is expected to increase to EGP 7bn by the end of 2019 in support of the financial inclusion initiative.

Fayed added that the excellence of Banque du Caire in this field comes due to its geographical spread, especially in Upper Egypt, which accounts for 55% of the total portfolio of the bank, while women account for 35% of the bank’s customers, and young people for 40%.

Fayed pointed out that Banque du Caire has adopted a strategy during the current period to launch innovative banking solutions and technological services for micro-enterprise customers, which contribute to saving time and effort. The bank’s customers can now obtain financing in less than 24 hours, through simple procedures and conditions.

According to Fayed, Banque du Caire has launched an electronic payment acceptance service on the mobile wallet with a QR code feature that will make it easier for retailers and collectors to collect payments from suppliers through their mobile wallets.

This service will also provide merchants with more than 13 million e-wallet customers to increase sales and product marketing, stressing that the service provides a less cost-effective and safer alternative to traditional POS and cash payment methods.

He added that the bank has also launched a mobile instalment service where contracts have been signed with the largest companies in the market to collect customer premiums for the micro-credit portfolio. In addition, the bank allows inquiring about the value of loan instalments for customers benefiting from micro-loans and collecting premiums through customer’s electronic wallet “Qahera Cash”.

For her part, Gamea said this contract with Banque du Caire comes in accordance with the state’s plan to provide soft financing for micro projects and encourage citizens, especially young people and women, to establish such projects, or develop their existing projects. These contracts will increase the portfolio dedicated to financing micro projects in cooperation with major banks that have experience in financing these types of projects, in addition to cooperation with hundreds of specialised NGOs.

She explained that Bedaity offers loans up to EGP 30,000, and targets financing about 50,000 micro projects, during the period of implementation of the project across the country, which will provide tens of thousands of jobs.

According to Gamea, the proportion of projects allocated to women in this contract is about 25% of the total funding.

On a different note, she pointed out that during the period from 1992 to the end of September 2019, MSMEDA pumped about EGP 15.8bn, benefiting nearly 2.7 million customers through intermediaries, led by Banque du Caire, Banque Misr, and hundreds of NGOs.

She added that EGP 2bn of this amount has been offered to about 145,000 customers from the beginning of January until the end of September 2019, which provided more than 150,000 jobs in all governorates.

Banque du Caire and MSMEDA have inked several financing contracts since 2012 totalling about EGP 2.386bn in the form of revolving loans, through which 542,000 micro projects were financed through the bank’s branches all over the country.

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The Biggest Ever Cases of Bank Fraud https://wwww.dailynewssegypt.com/2019/10/27/the-biggest-ever-cases-of-bank-fraud/ Sun, 27 Oct 2019 12:16:49 +0000 https://wwww.dailynewssegypt.com/?p=712191 Bank fraud is the criminal act of breaching the security measures of a financial institution to steal funds or obtain delicate client information illegally.

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Bank fraud is the criminal act of breaching the security measures of a financial institution to steal funds or obtain delicate client information illegally. The term can also refer to posing as a bank in order to trick depositors into providing personal details and access to bank accounts.

Bank frauds are often characterized as “victimless crimes.” That’s certainly not the case; they inconvenience huge numbers of people, sometimes causing a substantial loss of both money and jobs. Despite this, society has always glorified bank fraud as the most debonnaire of crimes. After all, anything involving billions of dollars, high-profile targets, and secretive operations generates intrigue.

Take Nick Leeson. The infamous broker’s risky behavior halfway across the globe caused the fall of one of the longest-running financial institutions in England and the world, as well as the loss of billions of pounds. They even made a movie about him: The Rogue Dealer, starring Ewan McGregor. That’s one way to make a criminal look cool.

Nowadays, most perpetrators of banking fraud are the anonymous hacker types, stealing delicate information from soft spots in retail outlets or banks. This approach is less glamorous but just as devastating. For example, an anonymous employee of the Korea Credit Bureau stored the details of 20 million credit card users on an external hard drive over the course of 18 months. Two in five Koreans had their credit card information compromised.
Now that we’ve answered the question “what is bank fraud?” in finer detail, let’s look at some of the most serious cases of this white-collar crime in recent years. Make sure you pay attention – there are billions of dollars at stake!

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IDB to increase mortgage finance to low-income customers to EGP 1.5bn https://wwww.dailynewssegypt.com/2019/10/24/idb-to-increase-mortgage-finance-to-low-income-customers-to-egp-1-5bn/ Thu, 24 Oct 2019 19:26:16 +0000 https://wwww.dailynewssegypt.com/?p=711997 The financing is offered at 5% and 7% interest rates, as part of the Central Bank of Egypt (CBE)'s Mortgage Finance Initiative.

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Chairperson and Managing Director of the Industrial Development Bank (IDB), Maged Fahmy, and Chief Executive Director of the Social Housing and Mortgage Finance Fund (SHMFF), May Abdel Hamid, signed a cooperation protocol on Wednesday to increase the mortgage finance directed to low-income customers to EGP 1.5bn instead of EGP 1bn.

The financing is offered at 5% and 7% interest rates, as part of the Central Bank of Egypt (CBE)’s Mortgage Finance Initiative.

Fahmy said that the new cooperation protocol with the SHMFF comes as a continuation of the bank’s vital developmental role to support the state’s strategy and promote the national economy. 

Fahmy praised the successes achieved by the CBE’s initiatives to serve the different sectors of the country, find appropriate solutions to the housing problem, and contribute to the welfare, stability, and prosperity of Egyptian citizens. He stressed that the IDB is looking to further finance strategic projects in the sectors of infrastructure, health, environment, and education.

For his part, IDB’s Executive Vice Chairperson, Hamdy Azzam, praised the fruitful and constructive cooperation and successes achieved with the fund.

Azzam stressed that IDB places development projects at the top of its financing targets to meet the needs of all social and economic groups to achieve tangible economic growth with a sustainable impact.

He pointed out the success of the bank in launching the initiative to finance 10,000 factories nationwide in June 2019 and allocating EGP 10bn for this purpose, in order to contribute to the creation of 20,000 jobs.

He explained that the initiative has achieved its planned goals so far, where it attracted dealings to 183 customers with facilities estimated at EGP 2bn.

He added that the bank is ahead of time in modernizing the technological infrastructure, which will result in the provision of all electronic services during the first quarter of 2020, and is witnessing the deployment of 42 ATMs to cover the governorates of Egypt, and plans to expand the deployment of e-services to reach all its customers, and will launch the “Meeza” card next week.

In order to enhance the concept of financial inclusion, the bank is expanding its branch network and spreading it all over the country to reach different segments of society, provide the services and products of the bank easily and in line with the state policy. This will occur through opening six new branches in Minya, Ismailia, Beni Suef, Damietta, Suez, Sadat City, and New Cairo, as well as the development of existing branches.

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20 banks finance 254,200 beneficiaries by EGP 24.6bn in CBE’s mortgage finance initiative  https://wwww.dailynewssegypt.com/2019/10/22/20-banks-finance-254200-beneficiaries-by-egp-24-6bn-in-cbes-mortgage-finance-initiative/ Tue, 22 Oct 2019 08:20:40 +0000 https://wwww.dailynewssegypt.com/?p=711662 8 companies inject EGP 1.5bn, Taamir Mortgage tops with EGP 551.6m with 4,800 clients 

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20 banks have injected EGP 24.6bn of funding to finance housing units for 254,200 low and medium-income citizens under the Central Bank of Egypt’s (CBE) mortgage finance initiative.

According to a report issued by the Mortgage Finance Fund, the amount of financing provided by the National Bank of Egypt (NBE) reached EGP 7.2bn to 73,100 clients, while Banque Misr’s funding reached EGP 5.2bn to 52,200 clients.

The Housing and Development Bank distributed EGP 4.8bn over 58,100 clients and Banque du Caire contributed EGP 2.1bn to 24,500 clients.

The report noted that the Commercial International Bank (CIB) has pumped funds of EGP 1.1bn to 10,300 clients and the Industrial Development Bank provided EGP 1.02bn for 10,000 clients.

Moreover, the Arab African International Bank (AAIB) has granted funds of EGP 574.1m to 6,300 clients and Blom Bank funded 3,500 clients with EGP 360m.

The report revealed that SAIB Bank injected EGP 329.6m to 3,200 clients, while the United Bank funded 2,900 clients with EGP 318.5m.

Furthermore, QNB Alahli has granted funding to 2,900 clients worth EGP 306.6m, while funding from the Arab Investment Bank amounted to EGP 223.9m to 2,500 clients.

According to the report, the financing of the Egyptian Arab Land Bank reached EGP 223.4m to 2,112 clients, while EG Bank financed 2,3700 clients with EGP 194.7m.

It added that Union National Bank had injected funds worth EGP 162.9m to 1,500 clients and Faisal Islamic Bank of Egypt injected funds worth EGP 63.6m to 656 clients.

The National Bank of Kuwait injected EGP 39.6m to 395 clients and the Egyptian Export Development Bank funded 52 clients with about EGP 6m.

Credit Agricole pumped EGP 5.5m to 52 clients, while funding from Mashreq Bank reached EGP 3m to 26 clients.

 For non-banking financing, eight companies participating in the initiative, pumped EGP 1.47bn within the CBE’s mortgage finance initiative to 13,400 clients.

According to the report, Taamir Mortgage Company injected EGP 551.6m to 4,800 clients, while Contact Mortgage Finance provided EGP 315.7m for 3,060 clients.

The volume of financing from Al Ahly Mortgage Finance in the initiative amounted to EGP 259.233m to 2,310 clients. Amlak Egypt injected EGP 226.2m to 2,081 clients.

The Egyptian Housing Finance Company pumped EGP 49m of funding to 485 clients, while Tamweel Mortgage Finance distributed EGP 41.9m to 372 clients.

The United Bank Mortgage Finance company injected EGP 15.2m to 153 clients, while the Arab African Mortgage Company financed 99 clients with EGP 11.1m.

The CBE launched the initiative in February 2014 and allocated EGP 10bn initially before raising the figure to EGP 20bn. The initiative includes granting finances with interest rates of 7% and 8% to middle and low-income citizens. The CBE allowed in February 2019 to finance citizens making under EGP 1,400 per month with a diminishing interest of 5%.

After the CBE stopped subsidising the interest at the end of January 2019, the Mortgage Finance Fund signed a protocol for the Ministry of Finance to unlock direct cash and long-term mortgage finance to citizens who applied for the 8th, 9th, and 10th offerings of the social housing project at a lower interest rate.

 

 

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14.8% growth in Faisal Islamic Bank of Egypt’s assets during 2019 https://wwww.dailynewssegypt.com/2019/10/22/14-8-growth-in-faisal-islamic-bank-of-egypts-assets-during-2019/ Tue, 22 Oct 2019 07:23:41 +0000 https://wwww.dailynewssegypt.com/?p=711707 Bank manages 1.701m accounts for its clients worth EGP 82.896bn

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The total assets of the Faisal Islamic Bank of Egypt reached EGP 98.776bn at the end of September 2019, compared to EGP 86.059bn at the end of September 2018, a growth of 14.8%.

The bank said in a statement to the Egyptian Exchange that it’s business volume jumped to EGP 100.896bn by the end of September 2019, compared to EGP 87.587bn in September 2018, a growth rate of 15.2%.

It pointed out that its current account balances and saving vessels reached about EGP 82.896bn in September 2019, compared to about EGP 73.516bn at the end of September 2018, a growth rate of 12.8%.

These balances are distributed on 1.701m client accounts managed by the bank.

In regards to the investment balances, the bank revealed that its total investment balances reached EGP 90.963bn at the end of September 2019, marking 14.4% increase, from EGP 79.544bn at the end of September 2018.

Furthermore, the bank’s net profits witnessed 4.7% growth, to record EGP 2.06bn in the first nine months of 2019, compared to EGP 1.967bn in the first nine months of 2018.

The bank attributed the increase in net profits to the increase in the size of its savings vessels by about EGP 3.8bn during the first nine months of 2019, which positively impacted the increase in investments, and consequently the increase in net profits, in addition to the positive impact of the application of the new international accounting standard, IFRS 9.

In gross revenue terms, the bank’s total revenues recorded EGP 6.973bn at the end of September 2019, compared to EGP 6.262bn at the end of September 2018, an increase of EGP 710.9m, and a growth rate of 11.4%.

Faisal Islamic Bank of Egypt’s equity grew 25.5% at the end of September 2019 to EGP 12.773bn, compared to EGP 10.180bn at the end of September 2018.

Moreover, the total paid-up capital reached EGP 3.046bn at the end of September 2019, compared to EGP 1.775bn at the end of December 2018, a growth of 71.6%.

In July 2019, the extraordinary general assembly of the bank agreed to double the authorized capital of the bank from $500m to $1bn.

The bank said its total reserves reached EGP 3.702bn by the end of September 2019, compared to EGP3.810bn, a decrease of EGP107.874m.

Profits held by the bank reached EGP 3.965bn at the end of September 2019, compared to EGP 3.639bn at the end of December 2018, an increase of EGP 325.134bn, with a growth rate of 8.9%.

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Arab banking sector is stable, able to withstand shocks despite  challenges and risks: AMF https://wwww.dailynewssegypt.com/2019/10/21/arab-banking-sector-is-stable-able-to-withstand-shocks-despite-challenges-and-risks-amf/ Mon, 21 Oct 2019 16:31:05 +0000 https://wwww.dailynewssegypt.com/?p=711574 Arab banking sector assets reached $3.4trn by end-2018 equivalent to 124% of Arab countries’ GDP

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The Arab Monetary Fund (AMF) stressed that the Arab banking sector is stable and able to withstand shocks, despite the challenges and risks facing it, in its annual report.

The report cites the sector’s ability to achieve good levels of capital, asset quality and profitability, which reflects the efforts of central banks and Arab monetary institutions.

In its annual report on financial stability in the Arab countries for 2019, the AMF explained that the total assets of the Arab banking sector reached about $3.4trn at the end of 2018, which is equivalent to about  124% of the Arab countries combined GDP.

It added that the Arab banking sector succeeded in reducing the ratio of non-performing loans to its total loans to the lowest level between 2013 and 2017, to 6.5%, but rose slightly in 2018 to 6.8%.

The fund attributed this slight increase for Arab banks to their inclusion of the International Financial Reporting Standard (IFRS9), which includes good and bad credit facilities.

The AMF stressed that the application of this standard will enhance the durability and solvency of banks, hedge against potential shocks, and improve the quality of assets in the sector.

According to the annual report of the Arab Monetary Fund, the Arab banking sector was characterised by high solvency, where the capital adequacy ratio of the Arab banking sector reached about 17% at the end of 2018. Such ratio is higher than the international bar applied by the Basel standard of 10.5%, which indicates that the Arab banking sector enjoys a high level of solvency and enhances its ability to absorb any potential losses, the report elaborates.

Meanwhile, the report revealed a slight decline in the rate of return on average assets in the Arab banking sector for the first time since 2015 to 1.23% at the end of 2018. it added that this ratio indicates the efficiency of the process of granting credit at the banking sector, and its ability to maintain and develop assets through achieving appropriate returns on them, which enhances the flow of investments to the banking sector and increase the degree of confidence in its safety.

On the other hand, the rate of return on equity decreased slightly for the third consecutive year to 12.5% at the end of 2018, according to the report.

However, AMF believes that despite the decline in this percentage, it reflects the good performance of banks and their effectiveness in the use of their capital, and their ability to face losses that may be exposed.

This report has been prepared in cooperation and in coordination between the AMF and the Financial Stability Working Group in the Arab States, which is formed by the Board of Governors of Central Banks and Arab Monetary Institutions.

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SMEs account for 61% of the total ABE loan portfolio: ElKosayer https://wwww.dailynewssegypt.com/2019/10/20/smes-account-for-61-of-the-total-abe-loan-portfolio-elkosayer/ Sun, 20 Oct 2019 10:00:54 +0000 https://wwww.dailynewssegypt.com/?p=711489 Bank pumped EGP 19bn to about 900,000 SMEs

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Chairperson of the Agricultural Bank of Egypt (ABE), ElSayed ElKosayer, said that the SME portfolio accounts for 61% of the total loan portfolio of the bank.

In his interview with Daily News Egypt, ElKosayer explained that the bank’s credit portfolio reached EGP 30.6bn at the end of June 2019. “SME portfolio amounted to about EGP 19bn and were granted to about 900,000 customers. It is the third-largest Egyptian banks financing portfolio for small and medium enterprises,” he told Daily News Egypt.

In regards to the development of the bank’s restructuring plan, he said that a major company has been contracted to facilitate technical infrastructure development and to establish electronic banking.

Daily News Egypt interviewed ABE chairperson to find out the bank’s latest updates, farmers’ debt, and plans.

 

The Central Bank of Egypt (CBE) is interested in SMEs finance, to assure that banks reach the goals of the initiative launched four years ago, what is ABE’s stance on these projects?

The SME portfolio accounts for 61% of the Bank’s total loan portfolio, even though the CBE’s initiative provides 20%, so the bank was able to achieve the CBE’s goals and surpass it.

The bank’s credit portfolio reached EGP 30.6bn by the end of June 2019, of which about EGP 19bn was for small and medium enterprises, granted to about 900,000 customers. It is the third-largest financing portfolio in an Egyptian bank for SMEs.

While crop loans amount to about 30% of our total loan portfolio, equivalent to about EGP 8bn, which has been pumped to about 700,000 customers.

I would also like to point out that the majority of ABE’s clients belong to microfinance segment, as the financing provided, either from the credit portfolio or through CBE and the Micro, Small and Medium Enterprises Development Agency (MSMEDA), are directed mainly towards micro-enterprise clients.

 

A few days ago, the bank signed a cooperation protocol with the World Food Programme (WFP) to support and develop agricultural development projects with economic returns and provide the necessary financing for the owners of these projects in the Egyptian countryside.

Accordingly, the bank will provide financing services to entrepreneurs, to contribute to the financing of their projects, within the framework of multiple financing programmes in the Bank, and under the terms and conditions specified in each financing programme.

ABE will also raise bank awareness by participating in the WFP training seminars for beneficiaries, as well as providing small farmers with electronic solutions that will facilitate their integration into markets and achieve greater financial inclusion.

What about the national veal project?

The total funding granted by the bank under the national veal project amounted to about EGP 730m, which was granted to 5,141 customers, to finance the purchase of 52,000 cattle. The funding was provided by the Ministry of Finance as part of CBE’s initiative to fund SMEs.

What about the bank’s efforts to help the country achieve the goal of digital transformation and shift to e-payments?

The first pillar of the strategy of the ABE focuses on restructuring and developing the technological infrastructure. This will be in line with the state’s vision of a digital economy, the CBE’s transformation into a cashless society, and create digital products and services that address the youth.

To achieve this, the bank contracted with a major company to facilitate the project’s technological infrastructure development and the establishment of the banking system. Ernst & Young won the tender of the bank, competing with four companies, to be a financial advisor for development.

In parallel with the implementation of the restructuring project, the bank’s management sought to develop a set of technological factors to develop banking operations, without waiting for the completion of the technological infrastructure project.

Networks, communication lines, and computer systems have been increased to launch the bank’s business, with the help of electronic payment companies such as Fawry and e-Finance.

 

Moreover, the bank issued 620,000 Meeza cards, which have been activated, and the bank aims to issue 2.5m cards within three years, in line with the state’s policy to shift towards a digital society and support electronic payments.

It is also preparing to issue a smart wallet to enable customers to pay their bills through their smartphones, which would help the bank spread its services through its network of branches across the country, which now amount to 1,210 branches.

In terms of the bank’s assets, what are the latest developments?

Accounting for the assets of the ABE in Egypt is also at the forefront of the bank’s concerns and has been finalised accurately, whether these assets are owned, leased, exploited, or unused.

The proceeds from the sale of some of these assets will be used to cover the costs of the bank’s development and restructuring project that requires financial resources for expenditure.

 

What are the management’s main priorities in the time being?

The bank’s management is working on changing the bank’s image within the client’s mind as a bank specialised in agricultural loans only. Therefore a strategy has been developed to introduce and provide new banking products and services as well as develop existing products.

The Bank has succeeded in adding new customers as a result of diversifying its services, such as the irrigation and drainage development projects, in addition to participating in various programmes in the CBE’s initiative for small and medium enterprises, and the launch of “Bint Misr” to finance female entrepreneurs.

Also, we have developed new frameworks to update the current work systems, restructure departments and establish specialised departments and sectors such as inspection and control sectors.

The bank has also made human capital a top priority through its new training courses involving all the bank’s staff. We are hoping that the training helps us cultivate the second row of staff to work with the Bank’s management in development projects.

The budget for training has reached EGP 35m this year, with a flexible margin allowing increases depending on training needs.

What about the problem of farmers’ debt, what will be the bank’s policy in dealing with this issue?

A team has been assigned to follow up the work of non-performing loans settlements with defaulted clients, depending on the nature of each case.

Settlements were made for 421,000 customers worth EGP 2.9bn during the fiscal year ending June 2019, including EGP 1.1bn worth of settlements for 13,600 customers within the CBE’s initiative.

These settlements were reflected in the decline to 12% in the rate of non-performing debts of the bank’s total credit portfolio, compared to 20% before we started managing the bank in April 2016.

What is your vision for ABE?

With the completion of the technological infrastructure development project of the bank. ABE, with its network of branches, will be preparing for a new future.

We will start to reap the benefits of development in all areas of the bank’s business soon, and clients will feel the impact of what has been achieved.

The bank, with its 1,210 branches, representing 27% of the banking units in the banking sector, and a customer base of more than three million customers, is a key partner in all financial inclusion activities launched by the CBE, as the bank adds thousands of targeted customers to its customer base. The state’s approach to integrating their activities into the formal economy is achieved through their dealings with the bank.

 

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Egypt’s Long-term external debt at 87%: Amer https://wwww.dailynewssegypt.com/2019/10/19/egypts-long-term-external-debt-at-87-amer/ Sat, 19 Oct 2019 20:03:17 +0000 https://wwww.dailynewssegypt.com/?p=711443 13% of short-term debts are deposits from Arab countries that are renewed every four years

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Governor of the Central Bank of Egypt (CBE) Tarek Amer, said Egypt’s short-term debt is very low.

In his speech to the International Finance Institute in Washington, Amer said long-term debt constituted 87% of Egypt’s external debt, pointing out that 13% of short-term debts are deposits from Arab countries, which are renewed every four years.

Last week, the World Bank disclosed that Egypt’s external debt, before adding interest rates, was on the rise to $108.7bn at the end of June, up from $106.2bn at the end of March 2019.

According to the World Bank, government debt has risen to $57.2bn, up from $53.4bn, while debts of the CBE fell to $27.9bn down from $28.5bn, and loans to banks also fell from $10.1bn to $9.5bn. External debt service, which includes debt assets and interest, has declined to $134.87bn against $136.15bn in March.

The data revealed that the volume of short-term debt maturing within one year in accordance with the original maturity fell to $11.05bn down from $12.4bn in March.

The cost of debt servicing fell in one year, starting from June 2019 to June 2020, which includes medium-term debt assets whose repayment is due during that period, as well as short-term debt agreed to be repaid within one year or less and their interest to $26.97bn from $30.43bn.

The data showed that banks over the next 12 months have to repay nearly $5.2bn, the government about $4.5bn, CBE about $11.8bn, and other sectors around $5.8bn.

According to Amer, most long-term debts are loans ranging in duration from 10 to 59 years, adding that Egypt received loans from Asian countries with a repayment period of 59 years to finance the establishment of the metro’s third line, in addition to projects to expand three oil refineries as well as desalination plants.

Amer stressed that the Egyptian banking system is highly liquid, with a loan-to-deposit ratio of about 44%, in addition to strong capital ratios and capital rules for the banking system.

He added that Egypt was able to reduce non-performing loans to less than 5% and that CBE is leading a major effort to digitise financial services. He also mentioned that Egypt has a large financial inclusion programme.

He explained that the CBE has created a base for a number of economic forces to work well, expressing his happiness to see a number of important sectors achieve their objectives, saying, “the results may be unclear in the balance of payments now, but it will come.”

“Certainly our currency’s competitiveness has helped us develop our economy, but now we are working in consultation with the government on stricter structural reforms,” Amer said. “Our way of allocating land has been changed so that the industry can go further, ” he added.

Amer pointed out that we now have a new banking law approved by the Council of Ministers two weeks ago, explaining that this law is derived from international standards, as it has been working with international legal companies as well as the WB, the IMF, and local legal experts to draft this Law.

Amer stressed that the capital market has now become a good opportunity for investors, since Egypt has become an important player in it.

When asked about inflation expectations for the coming year and how monetary policy will be handled in this regard, Amer said, “We set a goal in 2018 to bring down inflation to 13% in the last quarter then to 9% (+/- 3%) by the end of 2020.”

Concerning the high share of foreign ownership in the domestic bond market, Amer pointed out that the Ministry of Finance is working on many things related to long-term bonds. He also mentioned that the country is finding that more and more foreign investors are starting to want 5-year bonds.

He stressed that the Finance Ministry is happy with interest rate levels and will start to do a lot of long-term bond issues.

“We are trying to enrich this market with interest rate levels. There is a greater chance of converting parts of short-term treasury bills into long-term bonds, which will provide a greater opportunity for investors who want to maintain their returns,” he added.

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CBE issues new regulations for microfinance in banks https://wwww.dailynewssegypt.com/2019/10/17/cbe-issues-new-regulations-for-microfinance-in-banks/ Thu, 17 Oct 2019 17:58:55 +0000 https://wwww.dailynewssegypt.com/?p=711250 Excluding credit portfolios purchased from micro finance companies or associations in 20% allocated to SMEs from loan portfolios at banks

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The Central Bank of Egypt (CBE) has placed new controls to regulate financing granted by banks to NGOs, institutions, and microfinance companies.

In 2017 CBE decided to include microfinance granted directly to individuals, companies, establishments, microfinance associations, and foundations to the 20% provision allocated for small and medium enterprises (SME) out of the banks’ total loans portfolios.

At the time, the decision also included setting up guidelines for banks to use when preparing credit studies to finance these entities.

However, decided to tighten control on banks in this regard. Accordingly, the CBE Governor, Tarek Amer announced that the Board of Directors of the CBE agreed on its meeting on 9 October on the addition of policies to tighten control over the funding granted by banks to NGOs, institutions, and microfinance companies.

To achieve this goal, CBE’s controls issued included declaring, monthly, both authorized or used credit limits granted to companies or NGOs for microfinance to i-Score.

Also, banks will have to continue to adhere to what is reported to the General Directorate of Credit Risk Collection at the Central Bank of Egypt.

Per the new guidelines, before granting a loan, banks should also obtain a commitment from these companies or associations to inquire about customers to verify that the number of loans granted per customer does not exceed three loans from three institutions.

Moreover, the CBE also obliged banks not to include credit portfolios purchased from companies or associations of microfinance within the 20% allocated to SMEs from the loan portfolios of banks.

The CBE required banks to obtain a letter from the Financial Regulatory Authority(FRA) stating the sound performance of companies or microfinance associations, their compliance with the standards and rules of practising the activity specified by the authority, and the absence of any irregularities that exist until the issuance of these controls.

CBE’s instructions also included that companies must disclose to i-Score all their customers, and their credit behaviour, per the contract between these institutions and i-Score. The CBE will also be reviewing the credit data contained in an i-Score report to analyse and evaluate customer payment behaviour.

According to the CBE’s instructions, the leverage of microfinance associations should not exceed 10x the original granted amount or the commitment of companies or associations working in microcredit to the maximum amount granted to microfinance, by law 141 for 2014.

The CBE asserted that in case of company’s violation or association to the provisions of this law or the rules of practising the activity, banks shall not increase the volume of financing granted to them or grant them new financing until the violations are corrected according to the time stipulated by the FRA.

Furthermore, the leverage of microfinance associations should not exceed 10x the original granted amount or the commitment of companies or associations working in microcredit to the maximum amount granted to microfinance, by law 141 for 2014.

The CBE asserted that in case of company’s violation or association to the provisions of this law or the rules of practicing the activity, banks shall not increase the volume of financing granted to them or grant them new financing until the violations are corrected according to the time stipulated by the FRA.

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ABE signs cooperation protocol with World Food Programme https://wwww.dailynewssegypt.com/2019/10/14/abe-signs-cooperation-protocol-with-world-food-programme/ Mon, 14 Oct 2019 18:38:46 +0000 https://wwww.dailynewssegypt.com/?p=710912 It’s part of bank's efforts to support, finance development projects, especially in rural areas, ElKosayer

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The Agricultural Bank of Egypt (ABE) has signed a cooperation protocol with the World Food Programme (WFP) – the food-assistance branch of the United Nations – with the aim to support and develop agricultural development projects and provide the necessary financing for the owners of these projects in the rural areas. The protocol aligns with the Egyptian government’s strategy to assist vulnerable citizens.

The ABE’s Chairperson ElSayed ElKosayer said it comes as part of the bank’s efforts, as one of the qualified financial institutions in the agricultural field, to support and finance development projects. The bank looks forward to support projects affecting Egyptian farms and farmers in villages and rural areas, through the largest bank branch network in the country with several financing plans that meet all the projects’ funding needs.

He explained that the expected areas of cooperation with the WFP include the expansion of its expertise in managing the efforts exerted throughout the governorates of Upper Egypt. It also aims to enhance them through ABE’s financial umbrella that take the form of credit facilities to small and medium enterprises and adopt new technological means in field tasks related to irrigation and other phases of agriculture.

ABE shall also assist in introducing various forms and methods of modern technology, such as the construction of solar panels at different locations to improve water resources practices.

ElKosayer pointed out that the WFP will also nominate eligible projects that need funding to implement their development, while providing training opportunities for entrepreneurs, in order to increase awareness and training in managing their projects.

He added that the ABE will provide financing services to the owners of the projects, in order to contribute to the financing of their projects, within the framework of multiple financing programmes in the bank, and the conditions and controls specified in each financing programme.

The ABE will also raise bank awareness by participating in the WFP’s training seminars for beneficiaries, as well as providing small farmers with electronic solutions that will facilitate their integration into markets and achieve greater financial inclusion.

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