Banking – Daily News Egypt https://eklutdvotyzsri.dailynewssegypt.com Egypt’s Only Daily Independent Newspaper In English Mon, 11 Mar 2019 17:09:02 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.1 Annual inflation rates increase 1.7% to reach 13.9% in February 2019: CAPMAS https://eklutdvotyzsri.dailynewssegypt.com/2019/03/10/annual-inflation-rates-increase-1-7-to-reach-13-9-in-february-2019-capmas/ https://eklutdvotyzsri.dailynewssegypt.com/2019/03/10/annual-inflation-rates-increase-1-7-to-reach-13-9-in-february-2019-capmas/#respond Sun, 10 Mar 2019 11:55:46 +0000 https://dailynewssegypt.com/?p=692430 Vegetables, poultry, milk, cheese, eggs push monthly inflation to 1.8% in February compared to 0.8% in
January

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The annual inflation rates increased 1.7% to reach 13.9% in February 2019, compared to 12.2% in
January 2019, according to the Central Agency for Public Mobilisation and Statistics (CAPMAS).
The annual inflation rate recorded 14.3% in February 2018.
Moreover, the monthly core CPI inflation, computed by the Central Bank of Egypt, recorded 1%
in February 2019 compared to 0.4% in January 2019, while the annual core inflation rate
recorded 9.2% in February 2019 compared to 8.6% in January 2019.
The CAPMAS explained in its monthly report that the general consumer price index for the entire country
recorded an increase of 1.8% compared to January 2019. The monthly inflation rate recorded 0.8% in
January 2019.
The agency attributed this increase in inflation to the increase in the prices of vegetables by 8%, poultry
by 9.8%, and dairy, cheese and eggs by 1%.
The increase in the annual inflation rate is the second consecutive increase after a decline in November
and December 2018. Annual inflation started declining noticeably starting from November 2017 until May
2018 before increasing again in June 2018 with increase gas prices.
Annual inflation recorded major leaps in 2017, affected by the measures of the reform programme
implemented by the government over the past two years, reaching its peak in July 2017 when it recorded
34.2%.

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Banks start issuing free e-wallets on International Women’s Day, Arab Financial Inclusion Day https://eklutdvotyzsri.dailynewssegypt.com/2019/03/09/banks-start-issuing-free-e-wallets-on-international-womens-day-arab-financial-inclusion-day/ https://eklutdvotyzsri.dailynewssegypt.com/2019/03/09/banks-start-issuing-free-e-wallets-on-international-womens-day-arab-financial-inclusion-day/#respond Sat, 09 Mar 2019 21:23:06 +0000 https://www.dailynewsegypt.com/?p=692403 CBE aims to encourage more people to join official banking system, says Elkosayer

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Banks operating in the Egyptian market will open savings accounts for new customers on Sunday, accompanied with charge-free e-wallets.

The decision stems from the verdict of the Central Bank of Egypt’s (CBE) guidance to encourage more of the society’s spectrum to be part of the official banking system, according to the Chairperson of the Agricultural Bank of Egypt (ABE), Elsayed Elkosayer.

The CBE has allowed banks to interact with citizens across the nation on a wider level, such as clubs, universities, associations, trade unions, etc to introduce the public to banking activities, Elkosayer said.

This comes within the framework of three events determined by the CBE to interact with citizens, including the celebration of the International Women’s Day and the Arab Financial Inclusion Day from 10 March to 28 April 2019, and the International Youth Day from 1-15 August 2019, and the World Savings Day from 15 to 31 October 2019.

In a letter sent to banks, the CBE pointed out the need for banks to sponsor financial literacy for different groups, giving priority to media coverage, and sending text messages to customers to encourage them to open savings accounts.

The ABE will set on Sunday a plan in the upcoming period to implement the CBE’s instructions, and the deployment plan to be carried out across the nation.

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US dollar hits its lowest in two years https://eklutdvotyzsri.dailynewssegypt.com/2019/03/09/us-dollar-hits-its-lowest-in-two-years/ https://eklutdvotyzsri.dailynewssegypt.com/2019/03/09/us-dollar-hits-its-lowest-in-two-years/#respond Sat, 09 Mar 2019 17:21:14 +0000 https://www.dailynewsegypt.com/?p=692334 US currency lost 8.11 piasters last week, losing 49 piasters since January 2019

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The dollar lost 8.11 piasters in return of the pound last week, averaging EGP 17.3983 for buying and EGP 17.4983 for sale on Thursday, March 7, compared to EGP 17.4794 for buying and EGP 17.5794 for selling on Thursday, 28 February.

This is the lowest level the US dollar hit in nearly two years.

The highest level of the dollar in banks at the end of trading last Thursday reached EGP 17.5 for buying and EGP 17.55 for selling at Abu Dhabi Islamic Bank (ADIB), while it recorded the lowest level at the National Bank of Egypt (NBE), where it reached EGP 17.40 for buying and EGP 17.50 for selling.

The dollar declined against the pound in January 2019 to its lowest level since May 2018, losing more than 30 piasters, driven by the increase in foreign exchange offered in banks, upon the return of foreign investments in government debt instruments.

The total losses of the dollar hit 47 piasters since January.

The Central Bank of Egypt (CBE) has recently disclosed that foreign investments in Egyptian treasury bills (T-Bills) rose again in January 2019, after about nine months of decline.

According to the CBE, the volume of foreign investments in T-Bills in January 2019 jumped to about EGP 233.8bn ($13.205bn), compared to EGP 192.281bn ($10.708bn) by the end of December 2018, an increase of about EGP 41.519bn ($2.497bn).

The Minister of Finance, Mohamed Moeit, confirmed that the amount of foreign investments in T-Bills and bonds (T-Bonds) in the Egyptian market reached $15.8bn at the end of February 2019.

In its poll on dollar exchange conducted at Dubai’s investment conference last week, EFG-Hermes revealed that 42% of participants voted for the dollar to reach EGP 18 by the end of 2019, while 13% expected it to fall to EGP 16, and 7% expected the dollar to hit EGP 20.

In Daily News Egypt’s poll, analysts said that the US currency may settle at the same level of 2018, while other analysts said it will only move in very narrow terms, with some expectations to be traded at a level between EGP 17.25-19 until the end of 2019.

According to the CBE’s report, the dollar was ranging throughout 2018 between EGP 17.6584 and 17.8534 for buying, and EGP 17.7838 and 17.9738 for selling.

Mohamed Abdel Aal, a member of the board of directors of the Suez Canal Bank and the Arab Sudanese Bank, expected the exchange rate of the pound to stabilise between EGP 17.25 and 18.50 per US dollar in 2019.

According to Abdel A’al, the Egyptian pound is not expected to face pressures in 2019, due to the positive growth and improvement of the national economy; stability in growth rates of net foreign reserves; the low rates of imports; the successful policy of liberating the exchange rates that has been applied since November 2016, as well as the attractive interest rates on deposits in local currency, with expectations to continue to rise until the end of 2019.

Tarek Metwally, the former deputy managing director of BLOM Bank Egypt, expects that the dollar will move between EGP 17.5 to 19 in 2019.

While Zakaria Salah, the banking expert, expected the stability of the dollar against the pound in 2019 at the same levels it reached in 2018, as a result of import restriction and the increasing rates of exports, which will positively reflect on the balance of payments.

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Fate of inked banknotes remains vague https://eklutdvotyzsri.dailynewssegypt.com/2019/03/06/fate-of-inked-banknotes-remains-vague/ https://eklutdvotyzsri.dailynewssegypt.com/2019/03/06/fate-of-inked-banknotes-remains-vague/#respond Wed, 06 Mar 2019 17:40:56 +0000 https://www.dailynewsegypt.com/?p=692162 Rumours of banning banknotes with handwritings on them, banks deny, CBE silent

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The banking market has been confused about the destiny of banknotes with inked handwritten words, after the spread of a rumour about banning their circulation by the Central Bank of Egypt (CBE).

Media reports stated that the CBE announced on Monday that it will not recognise any banking transactions by money with personal lines written on them.

According to a source of a state-owned bank, banks have not received any written or verbal notice from the CBE of the new decision; however, they failed to receive a confirmation to their questions around the decision.

On the other hand, the CBE officials have refused to comment on the news.

“There are billions of pounds with inked words on them in the hands of citizens, so it is difficult for the CBE to make such a decision,” the source said, adding that in such a case the citizens will resort to banks to exchange the banned currency with a new one, and banks, in return, will resort to the CBE to exchange them, which will execute them and print new banknotes.

In its annual report, the CBE announced that it injected EGP 480.176bn in December 2018, while the money traded outside the CBE’s treasure reached EGP 477.220bn by the end of December 2018, compared to EGP 474.335bn in November, with an increase estimated at EGP 2.885bn.

The CBE pointed out that the value of banknotes issued from the category of EGP 200 reached EGP 290.423bn, while the value of banknotes exported from the EGP 100 category reached EGP 142.714, and the EGP 50 category reached EGP 23.612bn.

Moreover, the value of banknotes issued from the category of EGP 20 amount at EGP 7.586bn, EGP 4.997 for the EGP 10 category, and the category of EGP 5 reached EGP 4.241bn.

The volume of banknotes issued from the pound category was EGP 1.474bn, 50 pounds of EGP 455m, and 25 pounds reached EGP 174m.

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CBE imposes sanctions on 28 currency exchange companies in 2018 https://eklutdvotyzsri.dailynewssegypt.com/2019/03/06/cbe-imposes-sanctions-on-28-currency-exchange-companies-in-2018/ https://eklutdvotyzsri.dailynewssegypt.com/2019/03/06/cbe-imposes-sanctions-on-28-currency-exchange-companies-in-2018/#respond Wed, 06 Mar 2019 06:25:05 +0000 https://www.dailynewsegypt.com/?p=692041 Procedure came as result of violations to CBE’s regulations, conditions

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The supervisory department of the Central Bank of Egypt (CBE) sanctioned 28 currency exchange companies during 2018, through withdrawing their licences and suspending them, according to the CBE’s report.

The sanctions included delicencing 13 currency exchange companies, and suspending 15 others for various periods ranged from three months to one year.

The CBE’s procedures came as a result of committing violations to its regulations and conditions, or repeating the same violation more than once.

The irregularities which were monitored by different companies varied between refraining from selling currencies to customers, suspending the work in some branches of the company without obtaining the approval of the CBE, conducting uncertified transactions, besides other irregularities monitored in this regard.

According to the CBE’s report, the sanctions applied on these companies come within the framework of the supervisory role of the CBE, as part of its efforts to maintain the integrity and efficiency of the banking system.

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Attijariwafa Bank, Global Lease sign SME support protocol https://eklutdvotyzsri.dailynewssegypt.com/2019/03/06/attijariwafa-bank-global-lease-sign-sme-support-protocol/ https://eklutdvotyzsri.dailynewssegypt.com/2019/03/06/attijariwafa-bank-global-lease-sign-sme-support-protocol/#respond Wed, 06 Mar 2019 06:16:44 +0000 https://www.dailynewsegypt.com/?p=692029 Attijariwafa Bank Egypt and Global Lease Company have signed a joint protocol to support the small and medium-sized enterprises (SMEs), through financing the capital expansions and providing financial leasing services. Under this protocol, Attijariwafa Bank will focus on regulating, financing, and collecting the agreed instalments, while Global Lease will act as the lessor and collateral …

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Attijariwafa Bank Egypt and Global Lease Company have signed a joint protocol to support the small and medium-sized enterprises (SMEs), through financing the capital expansions and providing financial leasing services.

Under this protocol, Attijariwafa Bank will focus on regulating, financing, and collecting the agreed instalments, while Global Lease will act as the lessor and collateral agent in finance leases.

The protocol is part of the Central Bank of Egypt’s (CBE) loan initiatives directed to fund SMEs, as directed by the CBE.

The portfolio of leased assets includes a variety of sectors, including lands, buildings, commercial vehicles, production lines, and machinery.

The protocol targets various sectors and industries, including petrochemicals, electronics, iron and steel, solar energy, pharmaceutical, information technology, construction materials, logistics, food and beverages, as well as education.

Ever since the establishment of Attijariwafa Bank in Egypt, it was keen to leave a mark on the economy’s growth, as well as to support all people, especially SMEs,” said Halla Sakr, the managing director of Attijariwafa Bank.

She added that this protocol is a true reflection of the bank’s strategy and its full support to the policy of financial inclusion, as well as its active role in the field of economies and investments, in line with the directives of CBE.

For his part, Hatem Samer, the CEO and managing director of Global Lease, stressed that the company adopts a balanced strategy that relies on a diverse portfolio distributed on many activities and sectors to limit risks and cover all activities, especially with the developmental measures that the Egyptian economy is witnessing across several sectors.

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CBE approves issuing EGP 870.3m worth ‘Aman’ certificates https://eklutdvotyzsri.dailynewssegypt.com/2019/03/05/cbe-approves-issuing-egp-870-3m-worth-aman-certificates/ https://eklutdvotyzsri.dailynewssegypt.com/2019/03/05/cbe-approves-issuing-egp-870-3m-worth-aman-certificates/#respond Tue, 05 Mar 2019 18:54:14 +0000 https://www.dailynewsegypt.com/?p=692013 NBE, Banque Misr, Banque du Caire, ABE started offering certificates in March 2018

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The Central Bank of Egypt (CBE) has approved the issuance of Aman certificates worth EGP 870.3m for 671,000 customers on Tuesday.

The National Bank of Egypt (NBE), Banque Misr, Banque du Caire, and the Agriculture Bank of Egypt (ABE) have started offering these certificates on 4 March 2018, in cooperation with Misr Life Insurance.

The CBE said the value of issued Aman certificates reached nearly EGP 744.4m until January 2019 for 775,000 clients. The certificates were launched in several categories, starting from EGP 500 and its multiples, with a maximum of EGP 2,500 for each person.

This certificate aims to provide insurance protection for seasonal and temporary workers, as well as workers who do not have a fixed income, alongside with breadwinner women. Additionally, the certificates are available for all Egyptians not just daily workers, given that citizens would be between the ages of 18 and 59.

This certificate’s maturity lasts for three years, renewed only twice with an annual interest of 16% after deducting insurance instalments.

The certificate allows clients to choose between either a monthly pension for five or 10 years, or a financial compensation whose heirs can benefit from after their death.

The value of pensions and compensations differs according the causes of death.

The insurance amount that can be paid in case of natural death is EGP 10,000-50,000, and EGP 250,000 in case of death of unnatural causes depending on the value of the certificates.

The value of the monthly pension in the case of dying of natural causes ranges between EGP 200 -1.000.

The value of the pension, in the case of death from an accident for a term of five years, starts from EGP 1,000 to EGP 5,000. If the pension was for a term of 10 years, it starts from EGP 600 up to EGP 2,000.

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$1.44bn increase in foreign reserves to $44.06bn end-February: CBE https://eklutdvotyzsri.dailynewssegypt.com/2019/03/04/1-44bn-increase-in-foreign-reserves-to-44-06bn-end-february-cbe/ https://eklutdvotyzsri.dailynewssegypt.com/2019/03/04/1-44bn-increase-in-foreign-reserves-to-44-06bn-end-february-cbe/#respond Mon, 04 Mar 2019 17:08:41 +0000 https://www.dailynewsegypt.com/?p=691855 The foreign exchange reserves at the CBE have increased by $1.44bn by the end of February 2019, reaching $44.06bn, compared to $42.617bn by end of January 2019. The foreign exchange reserves recorded an all-time high by the end of November 2019, when they reached $44.51bn. The CBE has not revealed the reason behind the increase …

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The foreign exchange reserves at the CBE have increased by $1.44bn by the end of February 2019, reaching $44.06bn, compared to $42.617bn by end of January 2019.

The foreign exchange reserves recorded an all-time high by the end of November 2019, when they reached $44.51bn.

The CBE has not revealed the reason behind the increase in reserves in February.

Moreover, the CBE revealed last week an increase in net foreign assets in the Egyptian banking sector in January 2019 for the first time, after a wave of decline that lasted for six months.

The CBE’s data showed that the total foreign assets in the sector recorded about EGP 981.86bn by the end of January, an equivalent of $55.45bn, compared to EGP 950.55bn, an equivalent of $52.93bn, by the end of December, with a $2.52bn increase.

The data explained that the total dues in the foreign currency in the CBE and the banking sector recorded EGP 832.36bn, an equivalent of $47.014bn by end of January, compared to EGP  823.15bn, an equivalent of $45.84bn by end of December, with a $1.2bn increase.

The report showed that foreign assets in the CBE recorded a limited decline in January, reaching $41.52bn, compared to $41.55bn by end of December.

Furthermore, the dues in foreign currencies have increased in the CBE, reaching $28.65bn by the end of January, compared to $28.08bn by the end of December, which is a $578m increase.

The net foreign assets in the CBE recorded $12.87bn by end of January, compared to $13.47bn by the end of December.

According to the CBE, the deficit of net foreign assets in banks have declined for the second month in a row, recording $4.42bn, compared to $6.37bn.

The CBE attributed the decline to an improvement in foreign assets in banks, to record $13.92bn compared to $11.38bn, while the dues have increased to $18.355bn, compared to $17.76bn.

The support that foreign assets in banks received in January came as a result of an increase in foreign investments in debt instruments, to record an increase of nearly $2.49bn, reaching $13.20bn, compared to $10.70bn by the end of December.

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EPG 489.138bn increase in banks’ deposits in 2018: CBE https://eklutdvotyzsri.dailynewssegypt.com/2019/03/03/epg-489-138bn-increase-in-banks-deposits-in-2018-cbe/ https://eklutdvotyzsri.dailynewssegypt.com/2019/03/03/epg-489-138bn-increase-in-banks-deposits-in-2018-cbe/#respond Sun, 03 Mar 2019 20:06:30 +0000 https://www.dailynewsegypt.com/?p=691773 Government’s deposits hit EGP 391.7bn, family sector deposited 66% of them

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Deposits in Egyptian banks jumped to EGP 3.818tn by December 2018, compared to EGP 3.329tn in December 2017, which is an increase of EGP 489.138bn, the Central Bank of Egypt (CBE) said on Sunday.

In its monthly report, the CBE said that the governmental deposits hit EGP 613.655bn by December 2018, compared to EGP 516.191bn in December 2017, an increase of EGP 97.464bn.

Meanwhile, the total value of non-governmental deposits rose to EGP 3.204tn, compared to EGP 2.813tn, an increase of EGP 391.7bn, the report also noted.

According to the CBE, deposits in local currency reached EGP 2.951tn by the end of 2018, forming 77.3% of the total amount of deposits, while the foreign-currency deposits hit EGP 866.918bn, representing 22.7% of the total amount of deposits.

The family sector accounted for 66% of the total deposits in banks, as its total deposits reached EGP 2.518tn by the end of December 2018, compared to EGP 2.277tn at the end of December 2017, an increase of EGP 241bn.

In the same context, the CBE revealed that the volume of credit facilitations granted by banks to its customers amounted to about EGP 1.815tn by the end of December 2018, the private sector obtained about 60.9% of them.

The industrial sector received about 33.8% of the credit facilitations granted to non-governmental sector, while the service sector obtained 28.4%, the trade sector 10.7%, and the agriculture sector 1.4%. Meanwhile, other sectors, which were not detailed by the CBE’s report, including the family sector, accounted for 25.7% of the total facilitations.

The CBE Governor, Tarek Amer, had previously revealed that the CBE seeks to encourage banks to pour EGP 1tn in loans in the upcoming period.

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EBI implements a development plan to stay up-to-date with new world of training: Executive Director https://eklutdvotyzsri.dailynewssegypt.com/2019/03/03/ebi-implements-a-development-plan-to-stay-up-to-date-with-new-world-of-training-executive-director/ https://eklutdvotyzsri.dailynewssegypt.com/2019/03/03/ebi-implements-a-development-plan-to-stay-up-to-date-with-new-world-of-training-executive-director/#respond Sun, 03 Mar 2019 08:00:53 +0000 https://www.dailynewsegypt.com/?p=691646 Development process includes training programmes, methodologies, infrastructure, digital architecture, says Nossier

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The Egyptian Banking Institute (EBI) has embarked on implementing a comprehensive development plan in order to stay up-to-date with the new world of training, and meet the needs of banks operating in the Egyptian market, according to its Executive Director, Abdel Aziz Nossier.

The development process being implemented receives the full support of the Central Bank of Egypt (CBE). It includes training programmes, aids and curricula, as well as the development of infrastructure related to the training halls and the digital infrastructure, along with increasing the beneficiaries of e-learning so as to reach the largest number of bankers and students in Egypt’s governorates.

Nossier pointed out that the development of the training halls in all the headquarters of the institute is scheduled to be completed by the end of 2019.

He stressed that the support the institute received from the CBE, represented by Governor Tarek Amer, is currently unprecedented, noting that this support is not only on the financial level, but also at the morale level.

This came during a tour organised by the EBI last Wednesday for a number of journalists, including the editor of Daily News Egypt, to reveal the latest developments at the EBI, and its achievements during the last period, next to its role in providing services and training for the financial and banking sector employees.

The EBI is the CBE’s training arm. It was established in 1991, with the aim of developing the skills of banking sector employees.

The institute has four branches, including two in Cairo, one in Alexandria and another in Port Said. It has 30 lecture halls and nine computer labs.

According to Nossier, the institute consists of 6 departments which offer training and assessment services, along with 3 other support departments.

He explained that the largest department providing training services is the Banking and Finance Operations Department. This department provides training for banking personnel in the technical part of their business, such as credit, finance, risk, compliance, retail banking and branch management through dozens of training programmes.

The second is the Performance Development Department, which focuses on management training programmes such as leadership, strategic management, and behavioural skills, and includes programmes such as the Future Leadership Development Programme and the Young Leadership Programme.

Furthermore, he pointed out that the third management is the management of small and medium-sized enterprises (SMEs), which provides training programmes for employees in the sectors of SMEs in banks, as well as for customers with banks who own the projects.

The fourth department is the Computer and Information Technology Department, which provides programmes related to the development of the information sector in banks, along with computer and network security.

The fifth is the governance department and the executive leadership training, which is tasked with the provision of governance programmes, and the departments related to the development of the skills of senior bank leaders such as board members, delegated members, and non-executive members.

The sixth administration is the Evaluation Department, which offers programmes to evaluate the banking sector at three levels: an assessment of recruitment, an evaluation of promotions, or an assessment of development.

Nossier added thatabout 12 banks benefited from EBI in recruitment, five banks for promotions, and 10 banks for performance development. The EBI further plans to establish a new centre for evaluation services, which is scheduled to open on an area of 700 sqm within the coming two months.

As for the other supporting departments, Nossier explained that there is TQM, the department concerned with guaranteeing and confirming the quality of the educational process, and is also concerned with the preparation and selection of lecturers and the evaluation of the scientific material being taught.

Another department is the International Cooperation Department, which is concerned with providing certificates and agreements with foreign institutions or universities. It is also interested in organising field visits to foreign countries to learn about the experiences of these countries and the latest experiences in the banking sector.

Moreover, Nossier stated that the institute deals with all known international bodies, both in obtaining programes and training courses, or field visits, or the introduction of experts from them.

Among these institutions are Euromoney, Fitch, Frankfurt School, Moody’s, as well as Wharton, Pennsylvania, America, and the London School of Economics, among other universities.

The third department is the Research and Awareness Department, which is responsible for all research and awareness raising activities, as well as the establishment of the annual conference of the institute, the publication of a quarterly magazine, and all related activities and research competitions conducted by the institute.

According to Nossier, the visit of the Governor of the CBE, Tarek Amer, aimed to inspect the latest developments in the training process as well as launch of one of its strategic programmes for 2019, entitled the Corporate Finance and Credit Certification Programme.

Nossier explained that this programme is the result of the agreement between Financial Edge, Moody’s Analytics, and the EBI. The programme was prepared in collaboration with JP Morgan Chase, in order to provide a similar programme to that offered in the United States.

He added that the number of hours of training for the programme is 280, and it is attended by 33 bankers from 14 banks. Additionally, the programme is presented for the first time in Egypt according to the  directives of the governor of the CBE in order to provide the best international banking programmes and practices in the field of corporate finance for employees in the Egyptian banking sector, he pointed out that. It is also the first time to be executed outside JP Morgan Chase. In February 2018, the EBI launched the e-learning service.

According to Nossier, there are three banks that have benefited from this service so far, for 4,361 trainees. The institute is currently negotiating with three other banks to provide this service to their employees.

“The number of beneficiaries of the services of the institute amounted to 54,705 people during the fiscal year (FY) 2017/18, ending 30 June 2018, an increase of 24% over 2016/17, where they were qualified to work in the banking sector technically and administratively, as well as contribute to building their character to be able to interact and deal with others in the labour market,” Nossier said.

In addition he highlighted  that the total number of beneficiaries of the training courses amounted to about 34,112 beneficiaries, an increase of 13%, while the number of beneficiaries of the evaluation services reached 20,593 , up 47%.

The total number of training courses amounted to 1,985 courses, up by 24%, while training hours reached 3,638, up by 36% added EBI’s Executive Director.

He revealed the start of the implementation of the largest initiative to train employees in the banking sector on information security, under the supervision of the Information Technology Sector of the CBE and the Computer Emergency Response Unit.

Furthermore, he explained that this initiative will contribute toward the preparation of bankers to deal with information security and cybersecurity, pointing out that it aims to build and prepare cadres to achieve development.

In a different context, Nossier stressed that the institute held a training programme on the role of central banks in a changing market-the Egyptian experience, for employees of African Central Banks, in cooperation with the International Agency for Partnership for Development of the Egyptian ministry of foreign affairs, which benefited 35 representatives from 23 African countries, in the framework of enhancing banking cooperation and transfering expertise to various African countries.

“The EBI launched an initiative, the first of its kind in the banking sector, to offer a training programme to serve customers with special abilities,” Nossier said. 

Moreover, he explained that this initiative aims to attract and encourage those with special abilities to deal with the banking sector, through training several customer service staff in several bank branches on how to deal with them. The initiative aims to support and provide more opportunities for them, as an integral part of the community entity, where the Egyptian state works to integrate them and empower them economically, politically, and socially.

What’s more, he cited that the training is provided by a selection of the best trainers specialised in this field, where the courses rely heavily on practical simulation, and the use of a volunteer with special abilities to conduct practical experiments during the programme, in order to increase interaction and put a real picture of how to deal with banking through illustrative examples and representative roles.

According to Nossier, a number of banks took part in the initiative spanning eight training courses with the participation of 120 employees.

These banks include National Bank of Egypt, Alex Bank, the United Bank, and BLOM Bank, in addition to the implementation of a training programme to learn sign language for employees of HSBC Bank.

“During the last FY, the institute has prepared four visits of bank employees working in the Egyptian market to a number of important places in the world, such as Silicon Valley, and visiting companies such as Google, Facebook, and Cisco,” he said.

Nossier added that the institute has also made 11 international visits to bring together workers in a number of banking sectors of local banks and their counterparts in countries which have achieved success stories, such as France; the US;, the United Kingdom; Switzerland; the Netherlands; Tunisia; Germany, and Poland.

The SMEs department has also organised three international visits for workers in this sector in Egypt to the Netherlands, India, and Singapore, as well as 19 credit courses for SMEs employees.

An agreement is now activated, which has been signed with the ministry of agriculture to benefit from the French agency grant to support small projects in the agricultural sector through a number of training courses and workshops.

In terms of training for employment, Nossier said that the institute cooperated with the American University in Cairo to submit an updated version of the programme to benefit university students.

He added that one of the best successes achieved by the EBI during the last period is the preparation of training programmes for journalists, which came at the will of the CBE in order to develop the skills of economic journalists.

On the level of entrepreneurship support, Nossier explained that the institute aims to train young people and entrepreneurs on how to identify viable project ideas, choose the project idea that fits their respective characteristics, and adapt to their local environments, through a series of training programmes in different governorates.

“The institute’s library provides a collection of books and references in the fields of finance, banking, economics, accounting, and information technology to provide timely and appropriate information to the beneficiaries, using traditional and electronic sources of information to support the institute’s training programmes and research activities,” Nossier said.

The institute participated in the Cairo International Book Fair through holding financial education seminars on the concept of savings, investment, and concepts related to the financial and banking community. In addition, it also participated in the recruitment forum of Sohag University, to raise awareness among students at the university about the importance of financial education.

Nossier also stressed the institute’s interest in women by pointing out that January 2019 witnessed the graduation of the first batch of the ‘Most Influential Ladies’ programme launched in early 2018. The aim of this programme is to introduce women to the concepts of advanced leadership and to transfer experience to a new generation of women workers in different fields.

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Egyptian Arab Land Bank signs cooperation protocol with Nile Capital Holding https://eklutdvotyzsri.dailynewssegypt.com/2019/03/02/egyptian-arab-land-bank-signs-cooperation-protocol-with-nile-capital-holding/ https://eklutdvotyzsri.dailynewssegypt.com/2019/03/02/egyptian-arab-land-bank-signs-cooperation-protocol-with-nile-capital-holding/#respond Sat, 02 Mar 2019 20:46:28 +0000 https://www.dailynewsegypt.com/?p=691632 Protocol to finance microenterprises, private education, urban development, contracting, health care services, renewable energy

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Amr Kamal, chairperson of the board of directors of the Egyptian Arab Land Bank, and Basel Hussein Roushdy, chairperson and managing director of Nile Capital Holding Company for Financial Investments, signed a cooperation protocol covering the fields of microfinance, private education, urban development, contracting, healthcare and renewable energy.

According to Kamal, such a partnership represents one of the objectives and strategies set by the bank’s board of directors, in support of the economic and community development framework. It is also a continuation of the bank’s strategy of forging strong partnerships in different areas aiming to achieve economic and community development.

Hussein said that the cooperation with the bank represents a substantial success for the company which will benefit from the expertise and competencies that the bank and the company will integrate the achievement of the objectives of the company toward economic and community development.

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HDB partakes in Nile Pioneers Initiative by financing of bank’s incubator for construction https://eklutdvotyzsri.dailynewssegypt.com/2019/03/02/hdb-partakes-in-nile-pioneers-initiative-by-financing-of-banks-incubator-for-construction/ https://eklutdvotyzsri.dailynewssegypt.com/2019/03/02/hdb-partakes-in-nile-pioneers-initiative-by-financing-of-banks-incubator-for-construction/#respond Sat, 02 Mar 2019 20:39:06 +0000 https://www.dailynewsegypt.com/?p=691633 Thirty business development centres established in several governorates, will increase in future to cover republic    

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Fathy Sebaey, chairperson of the Housing and Development Bank (HDB), and Hassan Ghanem, vice chairperson and managing director of the bank, witnessed the official launch ceremony of the Nile Pioneers Initiative. The ceremony was attended by Tarek Amer, governor of the Central Bank of Egypt (CBE), Lobna Helal, deputy governor of the CBE, and Tarek Khalil, head of Nile University.

During the ceremony, Sebaey received a plaque honouring the HDB for its active participation in this initiative.

The CBE, in cooperation with the Nile University, and with the participation of the HDB, and 11 other banks, established the Nile Pioneers Initiative through a 5-year agreement that embraces the ideas of the youth as well as their inventions, in order to find innovative solutions to their problems.

The notion of incubators is an aid to entrepreneurial initiatives, aimed to create new ideas or manufacture Egyptian products to replace imported products that companies, institutions and society can benefit from.

The HDB has contributed toward the development of the HDB construction incubator, providing developers with technical, legal, marketing, and financial support in order to create innovative solutions in the construction industry– whether mechanical solutions or the development of inexpensive building material. The incubator also supports green construction or any innovative solutions for the problems of the construction sector.

Also scheduled is the establishment of 30 business development centres in a number of governorates, which will be gradually increased in the coming years, covering all governorates of the republic.

These centres seek to adopt the ideas of promising projects, and subsequently provide technical support to them, which will help to meet the needs of the Egyptian market and increase employment opportunities.

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Foreign investments in T-bills increase by $2.4bn in January https://eklutdvotyzsri.dailynewssegypt.com/2019/03/02/foreign-investments-in-t-bills-increase-by-2-4bn-in-january/ https://eklutdvotyzsri.dailynewssegypt.com/2019/03/02/foreign-investments-in-t-bills-increase-by-2-4bn-in-january/#respond Sat, 02 Mar 2019 16:28:09 +0000 https://www.dailynewsegypt.com/?p=691569 This increase followed nine-month wave of decline

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Foreign investments in Egyptian treasury bills (T-bills) recovered in January after nine consecutive months of decline.

According to CBE, foreign investments in T-bills in January climbed to EGP 233.8bn, an equivalent of nearly $13.20bn, compared to EGP 192.29bn, an equivalent of $10.70bn, at the end of December 2018, an increase of EGP 41.51bn ($2.49bn).

In in January, the price of US dollar declined to its lowest level since May 2018 losing over 30 piasters, pushed by the major increase in foreign exchange reserves at banks operating in Egypt, with the return of foreign investments in government debt instruments.

The National Bank of Egypt (NBE) and Banque Misr have both received over $2bn investment flow in January.

Foreign investments in Egyptian T-bills reached their highest level in March 2018 at EGP 380.3bn, an equivalent of $21.5bn.

Foreign investments in T-bills stood at nearly $11bn before 25 January 2011, however, it declined to less than $25m at the beginning of 2016.

Foreign investments in T-bills have returned strongly following the Central Bank of Egypt’s (CBE) decision to float the local exchange rate on 3 November 2016, with the major increases in the interest rates on the Egyptian pound that followed the decision. However, another decline in foreign investments in T-bills started in April 2018 affected by the crisis of emerging markets, which reduced the confidence of interest traders in the economies of emerging markets generally, including Egypt.

The CBE pointed out in an earlier report that foreign capital leaving emerging countries was the result of investors’ concerns over the future of economic activity growth in these countries, alongside with the instability of international trade policies and the restriction of the international financial situation, as well as the weakness of the economic structure in some emerging countries.

Near the end of November 2018, the CBE decided to terminate the foreign exchange repatriation mechanism for new portfolio investments starting 4 December 2018.

Tarek Amer, the governor of CBE, said at the time that the decision was planned since the flotation of the local currency, with the aim to direct foreign investments towards the banking sector.

The wave of foreigners exiting debt instruments has impacted net foreign assets at the banks operating in the local market, which funded a major part of exit operations, to cause foreign net assets in banks to record a deficit of about $7.33bn in November 2018.

The total value of existing government T-bill investments reached about EGP 1.37tn at the end of January, compared to EGP 1.30tn at the end of December 2018, with an increase of about EGP 70bn.

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ADIB-Egypt’s profits jump by 35% to EGP 850m in 2018 https://eklutdvotyzsri.dailynewssegypt.com/2019/02/26/adib-egypts-profits-jump-by-35-to-egp-850m-in-2018/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/26/adib-egypts-profits-jump-by-35-to-egp-850m-in-2018/#respond Tue, 26 Feb 2019 19:55:46 +0000 https://www.dailynewsegypt.com/?p=691294 Bank to settle tax disputes of EGP 1bn by 2020, says ADIB-Egypt’s CEO

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Abu Dhabi Islamic Bank (ADIB) – Egypt has made a significant jump in its consolidated profits to record a net profit after taxes of EGP 850m in 2018, compared to EGP 632m in 2017, an increase of 35%. The bank’s total revenues amounted to EGP 3,1bn, an increase of 18% equivalent to EGP 474m.

The profits hike was supported by a growth in deposits of EGP 10.06bn to EGP 39.9bn, an increase of 34%, besides an increase of EGP 7.7bn or 47% in net loans to reach EGP 24.3bn.

“The bank’s performance was remarkable over the past year in terms of operation and restructure, in addition to reducing losses which are expected to end next year,” ADIB – Egypt’s CEO, Mohamed Aly, said on Tuesday.

He added that the bank has started to develop its financial position to meet the expectations of both shareholders and customers and expanding the bank’s capacity to cope with its network of branches and employees, which contributed to making this growth in budget, jumping from EGP 35bn to EGP 50bn in the fourth quarter of 2018.

The ADIB-affiliated National Company for Glass and Crystal has also seen a leap in its business results in 2018, and now is being prepared to be sold in 2019. Additionally, the bank will restructure six other affiliated companies in preparation for selling them as they are not part of the bank’s main activities, including Assiut Islamic Trading (AITG), Assiut National Agricultural Development, El Kahera El Watania Investment, Cairo National Company for Brokerage and Securities, Alexandria National Company for Financial Investment, and Eastern National for Trading and Development.

 

Aly stated that the bank’s loan portfolio has increased to EGP 17.3bn in 2018, a growth of 54.1% compared to 2017, while the deposit portfolio reached EGP 12.5bn, a 53.2% increase compared to 2017. The bank’s retail banking portfolio has also grown to reach EGP 6.8bn, a 32.8% increase, while the deposit portfolio for individuals reached EGP 27.7bn, a 26.4% increase.

Aly disclosed that the ADIB settled the bank’s disputed tax in 2018, as it paid the taxes on the yields of treasury bills and bonds for the fiscal years from 2009 to 2017, estimated at EGP 994m, benefiting from the exemption law that exempted the bank from 90% of the interest after the settlement.

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MSMEDA expects $200m, €107m funds to be reinjected into micro, small projects https://eklutdvotyzsri.dailynewssegypt.com/2019/02/26/msmeda-expects-200m-e107m-funds-to-be-reinjected-into-micro-small-projects/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/26/msmeda-expects-200m-e107m-funds-to-be-reinjected-into-micro-small-projects/#respond Tue, 26 Feb 2019 16:33:10 +0000 https://www.dailynewsegypt.com/?p=691126 ‘We are anticipating president’s approval on several deals of $200m with World Bank, €50m with AFD, €30m with KfW, €27m with EU,’ says Gamea

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The Micro, Small, and Medium Enterprise Development Agency (MSMEDA) is anticipating $200m and €107m worth deals to enter into force within the next few days, to be reinjected into micro and small projects, with the support of the Ministry of Investment and International Cooperation, according to Nevine Gamea, the executive director of the agency.

Those funding deals include a $200m deal signed with the World Bank previously. This deal is pending the president’s approval to enter into force, Gamea told the Daily News Egypt.

There is also a €50m deal with the Agence Française de Développement (AFD), which was signed during the French President Emmanuel Macron’s latest visit to Egypt, she added, noting that it will be fully allocated to fund women-owned projects. Additionally, a deal of €30 was signed with the German development bank KfW to fund small projects.

MSMEDA will also cooperate with the European Union (EU) to fund youth projects in 11 governorates in order to eliminate illegal migration phenomenon, besides another deal with the International Organization for Migration (IOM) to execute local development initiatives as part of Egypt’s efforts to achieve the sustainable development by 2030.

The agency decided to direct the first batch of international funds to small projects in Assiut governorate, being one of the neediest governorates in Egypt from which comes the highest share of illegal migrants.

MSMEDA will collaborate with local municipalities to determine the needs of every area and suggest new projects to be funded by the agency.

In the same context, the agency injected EGP 5.3bn to fund 247,000 micro and small enterprises that secured 395,000 jobs in 2018, Gamea said, adding that it also allocated EGP 2.27bn to fund 16,900 small enterprises, which provided 49,100 jobs, while EGP 3bn worth funds were directed to finance 229,700 micro enterprises that secured 346,100 jobs.

The agency also offered EGP 1.3bn for 12,900 small enterprises through intermediaries, while it directly funded 4,041 projects with EGP 970m. 

“Upper Egypt accounted for 50% of micro and small enterprises funding in 2018, while the Nile Delta area received 33%, with 12% for the urban areas and 5% for border cities,” Gamea told Daily News Egypt. She pointed out that 58% of funding was directed to the trade sector, while the service sector and livestock industries received 16% each, 8% for industrial sector, and 2% for the self-employment sector.

Women-owned micro and small enterprises accounted for 49% of the agency’s funds in 2018. Women also represent 40% of the participants of fairs held by MSMEDA, according to Gamea. She added that 23% of the agency’s services provided by its single-window system nationwide benefited women. As for the women’s shares in marketing services and different training programmes provided by the agency, they reached 32% and 65% respectively.

She pointed out that the agency deals with about 450 civil organisations across the country, in addition to 18 banks, in order to ensure that it reaches out its target segments, most prominently youth, women, and the neediest citizens. 

Gamea revealed that an agreement with QNB Al Ahli will be signed within a few days. The agreement is worth EGP 100m provided by the agency to the bank to re-inject them into small projects. The agency has also approved to provide a financial leasing company a loan worth EGP 15m. 

She also revealed that the agency plans to establish several companies specialised in the sectors of micro funding, financial leasing, and insurance.

Gamea expects the agency to achieve a growth of over 15% in 2019, supported by entering some initiatives, such as converting cars to run on natural gas and industrial complexes, in cooperation with the Industrial Development Authority (IDA), in addition to funding workshops at the Damietta furniture city.

Earlier, the agency signed two contracts worth EGP 20m with Car Gas and Gastec with the aim of converting 4,000 cars to run on natural gas.

According to Gamea, these contracts come within the framework of the initiative “Towards Natural Gas” which was launched by the agency and the Ministry of Petroleum, contributing to the national project to convert cars to run on dual fuel and implementing the state’s strategy to rationalise the energy consumption.

Over the past few years, Gastec and Car Gas have been funding the fuel conversion project in cooperation with MSMEDA through providing facilitated loans for car owners with the least interest and longest repayment period. Cars are converted at stations of both companies using the latest technologies in the field.

The initiative aims to convert 10,000 cars to run on natural gas and open 50 motor oil outlets with a total funding of EGP 100m, which would provide many jobs across the country.

Gamea added that MSMEDA has funded converting 30,500 cars to run on natural gas, including 25,500 taxis and 5,000 private cars, with EGP 152m.

Egypt’s prime minister issued in November 2018 a decision to transfer the affiliation of MSMEDA to the cabinet rather than the Ministry of Trade and Industry, as well as restructuring the agency’s board of directors.

According to Gamea, the first meeting of the agency’s new board of directors was held on 7 February 2019, as several agreements signed by the agency were passed. Additionally, a new work strategy for the agency was discussed.

Gamea pointed out that a committee was formed to study the work strategy of the agency, in a way that suits the state’s 2030 Vision. This committee would include the Minister of Planning, Hala El Saeed, and two experienced experts. Gamea pointed out that the committee’s meeting will be held within a few days.

In a related context, Gamea revealed that the cabinet will soon announce approving the micro and SME law and will refer it to the parliament for discussion and approval.

She explained that the agency has completed preparing this law nearly a year ago. It was discussed by the legislative committee of the Ministry of Justice and then forwarded to the cabinet.

She pointed out that the law issuance took a long time due to the change of the agency’s affiliation, which required amending some articles in the draft law.

According to Gamea, the draft law includes a wide range of incentives that would facilitate the required measures for individuals who want to establish projects and encourage existing project owners in the informal sector to enter the formal sector.

This includes some tax incentives, in addition to other incentives related to technical training and facilitating institutional measures, in addition to incentives that ensure that those who want to establish projects have high success chances for their projects.

The new draft law would also allow the agency to fund medium enterprises, as the old law No. 141 for 2004 did not include medium enterprises and limit the work of agency to funding micro and small enterprises.

Quotes

MSMEDA injected EGP 5.3bn to fund 247,000 micro-small enterprises in 2018, of which 49% owned by women

We target achieving a 15% growth in 2019, through initiatives, such as converting cars to run on natural gas, funding industrial zones, and Damietta for Furniture

We intend to establish investment arms in the sectors of microfinance, finance leasing, and insurance

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Banque du Caire participates in Nile Pioneers initiative to support entrepreneurship https://eklutdvotyzsri.dailynewssegypt.com/2019/02/25/banque-du-caire-participates-in-nile-pioneers-initiative-to-support-entrepreneurship/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/25/banque-du-caire-participates-in-nile-pioneers-initiative-to-support-entrepreneurship/#respond Mon, 25 Feb 2019 20:42:48 +0000 https://www.dailynewsegypt.com/?p=691109 We participate in all important events supporting state plans for sustainable development: Fayed

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Banque du Caire has announced its participation in the national “Nile Pioneers” initiative sponsored by the Central Bank of Egypt (CBE) and implemented by Nile University in cooperation with several local and international banks and agencies to support entrepreneurship, small projects, and start-ups.

Tarek Fayed, chairperson and CEO of the bank, said that the initiative aims to encourage young people to establish successful projects as well as support small projects in the informal sector with technical and financial consultations in a way that legalises their situation. Hence, it turns them into bodies that work under the umbrella of the formal economy, which leaves a positive impact on the state’s revenues as well as national income, in addition to developing and creating new channels to serve customers of small and medium companies.

Fayed has commended the success of the initiative thanks to the efforts of the CBE and Nile University setting a model for adopting the culture of entrepreneurship.

He explained that his bank has established three specialised centres to support entrepreneurs through a package of business development services to cover main areas in Beheira, Menoufiya, and Assiut.

These units aim to achieve the initiative’s goals, providing the entrepreneurs with technical support in all their development stages to turn ideas into reality. The initiative’s goals also include empowering women economically, encouraging the local industry, and expanding in digital applications to meet the demands of the Egyptian market and create job opportunities.

Banque du Caire has sponsored a business incubator for five years in partnership with the Nile University under the name “Banque du Caire Centre for Exportation Excellence” with the aim of supporting the Egyptian export councils to help companies enter new international markets.

Fayed added that Banque du Caire managed to increase its SMEs clients by about 570 people, with an increase of EGP 1.8bn in the bank’s SMEs portfolio at the end of 2018.

He pointed out that the SMEs represent a milestone in the national economy for their ability to grow, provide jobs, and achieve sustainable development.

According to Fayed, the bank has a long experience to develop locally and regionally in this vital sector.

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Limited response from banks to CBE’s decision to cut interest in first week https://eklutdvotyzsri.dailynewssegypt.com/2019/02/24/limited-response-from-banks-to-cbes-decision-to-cut-interest-in-first-week/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/24/limited-response-from-banks-to-cbes-decision-to-cut-interest-in-first-week/#respond Sun, 24 Feb 2019 08:00:06 +0000 https://www.dailynewsegypt.com/?p=690773 Banks move interest on variable yield certificates, others cut interest on deposits, savings accounts

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The first week following the interest rate reduction decision by the Central Bank of Egypt (CBE) saw a limited response by banks. The interest rate cut in a large number of banks was only limited to variable yield savings certificates, while a few banks reduced interest rates on some of their other savings accounts and deposits.

Interest rate on thirty 3-and-5-year saving certificates issued by 24 banks declined on Sunday in a quick response to the decision to cut interest rates, where the pricing of these certificates is linked to the CBE’s basic interest rates.

In the National Bank of Egypt (NBE), Egypt’s largest bank, the yield of the variable-yielding tripartite certificate fell only to reach 16% from 17%. The yield on this certificate is paid every three months. The bank kept the yield on the tripartite certificate with a fixed return at 15% disbursed monthly or 15.25% on certificates of fixed yield disbursed quarterly.

The NBE’s assets and liabilities committee also decided in the meeting on Sunday to fix interest rates on savings accounts and deposits for further study and calculation of the bank’s liquidity cost, in return for the cost burden on such savings.

For its part, Banque Misr, the second largest bank operating in Egypt, decided to cut interest rates on its variable yield savings certificate linked to the CBE’s basic interest by 1% to 16% from 17%.

Most of Banque Misr’s liquidity is concentrated in savings certificates owned by individuals, while companies hold the largest share of deposits.

Banque Misr also decided to reduce the interest rate of the current account with a daily yield (VIP) by 1% and reducing 6-month or more deposits’ interest rates by about 0.5%.

Interest on the first tranche of the day-to-day account at Banque Misr, which begins from EGP 1m to EGP 2m, dropped to 7.25% from 8.25%. The interest on the second tranche of EGP 2-10m was cut to 7.75% from 8.75%.

Interest on the third tranche between EGP 10m and EGP 30m recorded 8.25% down from 9.25%, while that on the fourth tranche from EGP 30m to EGP 100m was cut to 8.25% from 9.75%. The interest rate on the fifth tranche from EGP 100m and above was cut to 10% from 11%.

Al Watany Bank of Egypt cut interest rates on savings accounts and deposits by 1 and 1.25%, while keeping the yield on its savings certificates unchanged.

In the same context, the United Bank of Egypt decided to reduce the interest rate by 1% on the bank’s fixed-income certificates for three and five years, and kept interest rates on remaining savings unchanged.

In the National Investment Bank (NIB), the interest on fixed-return investment certificates remained unchanged at 15.75%.

The bank offers these certificates through the branches of the NIB of Egypt, with a period of one year only, and the proceeds are paid on a monthly basis. It is now the highest yielding saving certificate in the market.

In Al Baraka Bank Egypt, interest rates were cut by 1% across all deposits.

Simultaneously, AlexBank cut interest rates on the Alex Gold saving certificate to 13.75% down from 14.75%. The yield is disbursed on a quarterly basis for three years. The interest rate on the Alex Gold Prime certificate fell to 13.5% from 14.5%. The yield is disbursed on monthly basis for three years.

The Egyptian Arab Land Bank also decided to cut interest rates by 1% on the VIP deposits while it kept the rates on other clients’ deposits fixed, as well as the rate on saving accounts and certificates of fixed income.

Misr Iran Development Bank has decided to cut the interest rate on its savings and deposits accounts by 1%. The bank has also decided to discontinue the three-year fixed-yield certificate, which gives a 14.5% annual return on a temporary basis until a decision is made on the return.

The bank’s variable interest rate was down by 1% to reach 16%.

Meanwhile, in the Arab Bank, the interest rate was reduced by 1% on the three-year fixed-yield savings certificates to 14% for the monthly return, and 13% for the daily return, while the bank decided to keep the savings accounts unchanged.

The interest rate on the variable-yield bank certificates was down to 15.25% from 16.25%.

Likewise, the loans associated with the CBE’s basic interest rates were impacted by the decision, while banks excluded other loans from the decline for now.

Tarek Metwally, Former deputy managing director and executive board member of BLOM Bank-Egypt

According to Tarek Metwally, Former deputy managing director and executive board member of BLOM Bank-Egypt, interest rates in the Egyptian market are still high. “The recovery of bank lending needs interest rates to reach 9-11%,” he added.

Metwally continued to say that the rate cut by the CBE is a step in the right direction, but its effect will not be large on credit during the current period, and he expected further cuts in interest rates by the end of this year.

For his part, an official at a private bank ruled out banks’ tendency to reduce interest rates on lending at the moment, citing the high cost of funds with banks, especially as there is a general tendency in the banking sector not to reduce interest rates on fixed-rate certificates.

He stressed that banks will not cut interest rates on loans until their monetary costs fall.

In a related context, the yield of treasury bills (T-Bills) and bonds (T-Bonds) raised by the ministry of finance last week decreased by less than 1%, where the ministry resorted to reducing the volume of liquidity received by some bids in order to avoid paying high interest.

The interest rate accepted by the ministry of finance on T-Bills offered by the CBE on its behalf fell on Sunday, reaching a minimum of 17.248% and a maximum of 17.528% for 91 days, averaging 17.453%, against 17.9%, 18.36%, and 18.202% in a similar bid posed on 10 February 2019, down by 0.625 – 0.832%.

On Sunday, the finance ministry also offered another tender for T-Bills spanning 273 days worth EGP 8.5bn.

The interest rate accepted on this tender fell to a minimum of 17.5% and a maximum of 17.8%, averaging 17.686%, against 17.849%, 18.45%, and 18.296% in a similar bid posed on 3 February 2019, marking a decline of 0.349 and 0.65%.

On Monday, T-Bonds yields were also down by between 0.65 and 0.89%.

On Monday, the CBE, on behalf of the ministry of finance, put forward a tender for a term T-Bonds of three years worth EGP 1bn.

On Monday, the CBE also floated another tender for 7-year T-Bonds worth EGP 750m.

The interest rate accepted by the ministry of finance on T-Bills offered by the CBE on its behalf fell on Thursday, reaching a minimum of 17.2% and a maximum of 17.451% for 182 days, averaging 17.373%, against 18.1%, 18.611%, and 18.53% in a similar bid posed on 12 February 2019, down by 1.1 – 1.16%.

OnThursday, , the CBE, on behalf of the ministry of finance,  also offered another tender for T-Bills spanning 357 days worth EGP 8.5bn.

The interest rate accepted on this tender fell to a minimum of 17% and a maximum of 17.139%, averaging 17.104%, against 18.144%, 18.259%, and 18.182% in a similar bid posed on 12 February 2019, marking a decline of 1.078 and1.144%.

According to Metwally, each 1% drop in interest rates saves the ministry of finance some EGP 30bn in service of the domestic public debt, which enables it to control the budget deficit.

He pointed out that inflation should be curbed in the coming period and to continue the facilitation policy initiated by the CBE to promote economic growth and increase the demand for borrowing.

“I think that the interest rate will not affect the inflow of foreigners towards debt instruments, as the current level of interest is still the highest in the world, which makes Egypt attractive to foreign investments in debt instruments,” proclaimed Metwally.

The government has revealed its intention to reduce the interest rate of public debt, both internal and external, to EGP 502bn, which accounts for 33% of total spending, according to the draft general state budget for the fiscal year (FY) 2019/20, against EGP 541bn, accounting for 37.8% of total spending in the current FY.

Furthermore, the government intends to achieve this target by cutting interest rates, setting a strategy to reduce the budget deficit, and imposing a ceiling to reduce public debt.

The monetary policy committee of the CBE decided in its meeting on Thursday, 14 February 2018, to reduce interest rates by 1% to 15.75% for deposits, and 16.75% for lending, and 16.25% for the price of main operations, discounts, and credit.

According to the Beltone Investment Bank, the CBE’s decision to cut interest rates despite the slight increase in inflation in January 2019 will pave the way for a new rate cut in the first half (H1) of 2019 before implementing the mechanism of automatic pricing of fuel prices.

Investment bank Arqaam Capital Limited predicted a rate cut between 4% and 5% this year, based on several reasons: the expected increase in the interest margin on the bonds and bills and rates of return at the CBE, which means the continuation of the high interest environment, in addition to financial markets no longer expecting further tightening of US interest rates.

It expected that most of the reduction in interest rates will come in H2 of the year, in preparation for the pressures that may arise from the application of fuel price mechanism on gasoline 95.

It said that Egyptian T-Bills are still attractive to foreign investors, as a result of the appreciation of the pound and the existence of expectations to increase its price by about 5% to change hands at EGP 17.5-18 in average this year, and then lose 5%-7% of its value in one and a half year.

However, it noted that T-Bonds are less attractive, especially after taxes and the cost of sovereign debt insurance, but they will become attractive if inflation falls to 9% and the CBE realising its targets by 2020.

Moreover, it pointed out that Egypt is the third largest country to offer high returns on government debt securities of 15%, against 17% in Turkey, and 24% in Brazil, while the cost of sovereign debt insurance is higher by 1% from Turkey, and 2% from Brazil.

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HDB, Civil Status Organization sign protocol over clients’ database https://eklutdvotyzsri.dailynewssegypt.com/2019/02/23/hdb-civil-status-organization-sign-protocol-over-clients-database/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/23/hdb-civil-status-organization-sign-protocol-over-clients-database/#respond Sat, 23 Feb 2019 16:28:11 +0000 https://www.dailynewsegypt.com/?p=690863 The Deputy Chairperson and Managing Director of the Housing and Development Bank (HDB), Hassan Ghanem, and Assistant Interior Minister for the Civil Status Sector, Mohamed Al-Aasar, signed a cooperation protocol on Saturday to allow the bank to inquire about their clients through the Civil Status Organization’s database. The protocol facilitates for the bank direct inquiring …

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The Deputy Chairperson and Managing Director of the Housing and Development Bank (HDB), Hassan Ghanem, and Assistant Interior Minister for the Civil Status Sector, Mohamed Al-Aasar, signed a cooperation protocol on Saturday to allow the bank to inquire about their clients through the Civil Status Organization’s database.

The protocol facilitates for the bank direct inquiring about their clients and updating their data, using only their national ID number, which ensures the highest security to clients’ data and offers them a better service.

The agreement comes in line with the state’s policy to exert more efforts between public and private sectors in the field of information exchange, through establishing an information system that depends on linking the national ID number with different bodies that provide citizens with different services which would contribute to enhancing the economy and improve the service and administrative performance.

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CBE sets new controls for mortgage finance initiative for low-income individuals https://eklutdvotyzsri.dailynewssegypt.com/2019/02/23/cbe-sets-new-controls-for-mortgage-finance-initiative-for-low-income-individuals/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/23/cbe-sets-new-controls-for-mortgage-finance-initiative-for-low-income-individuals/#respond Sat, 23 Feb 2019 16:27:06 +0000 https://www.dailynewsegypt.com/?p=690770 Mortgage finance will be provided for clients who meet CBE’s conditions

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The Central Bank of Egypt (CBE) has issued new measures and controls for the mortgage finance initiative launched in February 2014 and its following amendments. The initiative has been limited to only individuals with low incomes.

In a statement, the bank stressed that the initiative will continue to provide financing to the low-income clients after its recent decision in January to make it limited to the low-income based on the new rules and measures.

The new measures include providing mortgage finance to clients who meet the CBE conditions through the banks’ resources at interest rates of 5 – 7% for the low-income segments for a maximum period of 20 years without providing treasury bills as a guarantee.

CBE noted that banks will be compensated for the price difference of interests based on the main operation’s price at the CBE.

The new controls also stipulated that the interest rates applied on mortgage financing shall not be changed after its provision and during the entire period of the loan.

The new measures added a condition that the CBE must be informed about the value of compensation within the first week of each month starting from the month that follows providing the loan.

The CBE has stressed the importance of banks taking the necessary measures for providing the mortgage financing to any low-income individual in the light of their credit policies, taking into consideration all credit controls issued by the CBE.

The CBE explained that banks must receive applications from low-income individuals through the Social Housing Fund, as this initiative will be applied on all the available units through the fund only.

The new procedures have stipulated conditions for the clients benefiting from the initiative, they must have the Egyptian nationality and they are entitled to benefit from the initiative only once, regardless of any mortgages that have been or will be obtained by the client outside the framework of the initiative.

The CBE has also stipulated that the maximum monthly income of customers and the maximum unit price shall be determined by the Board of Directors of the Social Housing Fund.

The new measures have allowed each bank to carry out the necessary credit studies according to its policy, obtain required credit approvals, and ensure all the conditions and guarantees that enable banks to complete the mortgage measures for clients were met, taking into consideration that the inquiry about clients shall be conducted through the Egyptian Credit Bureau (I-Score) to ensure that clients have not previously obtained a funding within the initiative’s framework.

The new procedures also stipulate that clients’ data shall be recorded on the e-registration system of the CBE’s initiative to ensure that clients have only purchased one unit through the subsidised mortgage system, so that all banks would have the right to refrain from dealing with the client within the initiative’s framework once he has obtained a financing approval from one bank.

As for families, the measures stipulated that the clients’ marital status must be updated simultaneously. Documents that prove a change in the marital status must be provided to the bank that provides the loan.

According to the new procedures, if the client wishes to sell the unit or accelerate payment, the value of subsidy provided on the unit, starting from the date of granting the unit until the date of selling or accelerated payment, shall be refunded

The banks shall also be entitled to apply a 2% delay fee on the final value of the loan to be paid in instalments.

The new measures have excluded the injured and the families of police or army martyrs from the maximum income condition.

The measures have also included the possibility of using the assessment prepared by the Ministry of Housing or the New Urban Communities Authority, real estate assessors registered on the CBE’s list of house of expertise assessors, or assessors that have been dealt with in the past, as a way to reduce the cost of real estate assessment.

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Egypt’s outstanding dollar, euro bonds increase to $23.2bn, €2bn respectively https://eklutdvotyzsri.dailynewssegypt.com/2019/02/20/egypts-outstanding-dollar-euro-bonds-increase-to-23-2bn-e2bn-respectively/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/20/egypts-outstanding-dollar-euro-bonds-increase-to-23-2bn-e2bn-respectively/#respond Wed, 20 Feb 2019 20:31:43 +0000 https://www.dailynewsegypt.com/?p=690609 Maturities of dollar bonds range between 5-30 years, euro bonds between 8-12 years

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Egypt’s outstanding dollar and euro-denominated bonds reached $23.2bn and €2bn respectively so far on international markets.

The maturities of the dollar bonds ranged between five and 30 years, and between eight and 12 years for euro bonds.

Before the last bond issuance, Egypt’s total dollar and euro bonds recorded $19.2bn and €2bn respectively at the end of December 2018, after the Ministry of Finance repaid $1.36bn worth of international bonds on 10 December.

The Ministry of Finance has offered two international bond issuances of $2.57bn on 19 November 2018.

The first bond issuance recorded $860m with eight-year maturity that is due on 10 November 2026 with an interest of 7.125%, according to the Ministry of Finance.

The second issuance was worth $1.71bn and will mature in 12 years, due to be repaid on 10 November 2030. These bonds have an interest rate of 7.625%.

Last year, the Ministry of Finance offered T-Bonds worth $3bn on 21 February 2018, including $1.25bn with five-year maturity that is due on 21 November 2023.

There are also bonds worth $1.25bn for 10 years that due on 21 February 2028, in addition to another set of $1.5bn for 30 years that is due on 21 February 2048.

Furthermore, the Ministry of Finance succeeded in January 2018 in offering three sets of bonds which attracted $4bn.

The first set of these bonds was issued at $1.750bn with a yield of 6.125% maturing on 31 January 2022, the second set of $1bn with a yield of 7.5% maturing on 31 January 2027, and the third set of $1.25bn maturing on 31 January 2047.

On 29 May 2017, the Ministry of Finance issued bonds worth $1bn bond with a yield of 7.5% for 10 years maturing on 31 January 2027. On the same date, the ministry offered $750m worth bonds at an interest rate of 6.125% for a 7-year maturity that will be due on 31 January 2022. A third set was offered with a value of $1.25bn at an interest rate of 8.5% for 30 years that will be due on 31 January 2047.

Egypt returned strongly to the international bonds market on 10 November 2016, as the Ministry of Finance launched at the time three issuances of bonds worth $4bn in a special London Stock Exchange issuance.

The first tranche of these issued bonds was worth $1.36bn with a yield of 4.62% maturing on 10 December 2018. The second set worth $1.32bn with 6.75% yield maturing on 10 November 2024. The third set was worth $1.32bn with a yield of 7% maturing on 10 November 2028.

Prior to this, the Ministry of Finance made an issuance worth $1.5bn on 11 June 2015, with 5.875% yield maturing on 11 June 2025.

In addition to these bonds, there are issuances of several bonds on international markets, including an issuance worth $1bn offered on 29 April 2010 with 5.75% yield that will be due on 29 April 2020, in addition to another issuance worth $500m offered on 29 April 2010 with 6.875% yield maturing on 20 April 2040.

There are other bonds that were launched on 16 April 2018 by the Ministry of Finance, worth €2bn on two sets, the first was worth €1bn with 4.75% yield maturing on 16 April 2026, the second set was worth the same value with 5.625% yield maturing on 16 April 2030.

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For first time, CBE instructs banks to protect clients’ rights https://eklutdvotyzsri.dailynewssegypt.com/2019/02/20/for-first-time-cbe-instructs-banks-to-protect-clients-rights/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/20/for-first-time-cbe-instructs-banks-to-protect-clients-rights/#respond Wed, 20 Feb 2019 17:58:35 +0000 https://www.dailynewsegypt.com/?p=690588 Instructions have been in effect since 13 February, banks were given one-year period to adjust their situations

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The Central Bank of Egypt (CBE) issued directives on Wednesday to the banks operating in the Egyptian market regarding protecting clients’ rights. This was the first time that such directives are issued in the Egyptian market.

The concept of protecting clients’ rights, according to the CBE, includes establishing clear rules that control the relations between banks and their clients to ensure justice and transparency and secrecy of clients’ data. Additionally, a mechanism will be put forward to deal with clients’ complaints and spread banking and financial awareness among clients.

According to a statement issued by the CBE, these directives were finalised on 2 August 2018 and sent to banks for discussion. After reviewing the banks’ comments, the final version of the directives was issued on 13 February.

The CBE stressed that protecting the rights of clients in banks is one of the main elements of achieving financial inclusion, which is one of the CBE’s main priorities currently. He pointed out that banks will have a period of one year to adjust their conditions to suit the new directives.

The bank added that the issuance of these instructions comes in the framework of the CBE’s plan to develop the banking sector through the implementation of the best international practices, which require strengthening the clients’ confidence in the banking sector and enhance competition among banks generally.

According to the CBE’s directives, the concept of protecting the rights of clients is having a clear regulatory framework that defines the relationship between the providers of banking services and their users, in order to ensure that customers obtain their rights in terms of fairness, transparency and confidentiality.

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CBE pays EGP 114.4bn of interest on Deposit Operation in FY 2017/18 https://eklutdvotyzsri.dailynewssegypt.com/2019/02/18/cbe-pays-egp-114-4bn-of-interest-on-deposit-operation-in-fy-2017-18/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/18/cbe-pays-egp-114-4bn-of-interest-on-deposit-operation-in-fy-2017-18/#respond Mon, 18 Feb 2019 20:36:11 +0000 https://www.dailynewsegypt.com/?p=690292 Bank turns from profits of EGP 12.66bn in FY 2016/17 to losses of EGP 33.34bn in FY 2017/18

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The Central Bank of Egypt (CBE) paid the banks operating in the Egyptian market about EGP 114.4bn of interest on Deposit Operation, according to the bank’s financial statements for the last fiscal year (FY) 2017/18 released on Sunday.

The CBE raised the Deposit Operation mechanism to absorb excess liquidity in the Egyptian banking system.

The CBE’s financial statements revealed that the bank suffered losses of EGP 33bn in FY 2017/18 versus profits of EGP 12.6bn in FY 2016/17.

The CBE attributed its losses to recording a net yield of EGP 10.4bn after deducting interest payments of EGP 129.2bn, while the bank’s revenues reached EGP 118.8bn, including EGP 11.6bn of loans and balances at the banks, in addition to EGP 107.6bn of treasury bonds and bills.

The CBE expanded in raising Deposit Operation in the last fiscal year to absorb the excess liquidity in banks due to their high interest prices amid the growing inflation rates and the bank’s initiatives to support low-income housing and SMEs.

According to the CBE, the value of interests on Deposit Operation amounted to EGP 114.4bn at the end of June 2018 compared to EGP 49.6bn at the end of June 2017.

At the same time, the CBE’s financial statements revealed that it paid EGP 30.8bn in taxes on yields of its investments in government bonds.

The CBE increased its capital by EGP 7.6bn to reach EGP 21.6bn at the end of June 2018 compared to EGP 14bn at the end of June 2017.

This is the largest increase in capital by the CBE. It was applied in coordination with the Ministry of Finance as the state treasury contributed with about EGP 6bn to this hike.

The Banking Law No. 88 of 2003 stipulates that the CBE’s paid-up capital amounted to EGP 4bn, and the bank’s board of directors in agreement with the Minister of Finance can allocate a part of its net annual profits to increase its capital. The bank’s governor shall also increase the capital with a direct contribution from the state treasury in coordination with the Minister of Finance.

The CBE’s capital stood at EGP 4bn in 2012 before it was doubled to EGP 8bn in June 2013. Then an annual increase to the capital was applied, adding EGP 2bn, bringing it to EGP 14bn at the end of FY 2016/17.

The CBE’s financial statements showed a total increase of its assets to about EGP 2.03tn at the end of June 2018, compared to EGP 1.83tn at the end of June 2017.

According to the CBE, the value of its contributions to several international financial institutions’ capitals increased to EGP 5.02bn at the end of June 2018, compared to EGP 4.23bn at the end of June 2017.

The CBE explained that it raised its contribution to the capital of the Arab Fund for Social and Economic Development to EGP 1.4bn, compared to EGP 1.05bn. It also raised its contribution to the Islamic Development Bank’s capital to EGP 3.01bn, compared to EGP 2.64bn, and the capital of the Islamic Foundation for Private Sector Development to EGP 174m, compared to EGP 109m.

The CBE has raised its contribution to the capital of the United Bank to EGP 3.5bn, compared to EGP 1bn, and to EGP 1.56bn in the African Export-import Bank’s capital, compared to EGP 436m.

The CBE also contributed to the capital of the Credit Guarantee Company with EGP 90m, representing 20% of the company’s capital.

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Crédit Agricole Egypt’s net profit rises by 12.4% to EGP 2.2bn in 2018 https://eklutdvotyzsri.dailynewssegypt.com/2019/02/17/credit-agricole-egypts-net-profit-rises-by-12-4-to-egp-2-2bn-in-2018/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/17/credit-agricole-egypts-net-profit-rises-by-12-4-to-egp-2-2bn-in-2018/#respond Sun, 17 Feb 2019 20:52:46 +0000 https://www.dailynewsegypt.com/?p=690155 Crédit Agricole Egypt reported a net profit of EGP 2.2bn at the end of 2018 up by 12.4% year-over-year (Y-O-Y), according to the bank’s financial results released on Sunday on the year that ended in December 2018. The bank’s return on equity reached 55% in 2018, while earnings per share went up by 12.36% to …

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Crédit Agricole Egypt reported a net profit of EGP 2.2bn at the end of 2018 up by 12.4% year-over-year (Y-O-Y), according to the bank’s financial results released on Sunday on the year that ended in December 2018.

The bank’s return on equity reached 55% in 2018, while earnings per share went up by 12.36% to EGP 6.4 in 2018, compared to EGP 5.7 in 2017.

Furthermore, the results indicated a substantial increase of 19.5% in the bank’s gross loans to reach EGP 21.589bn, compared to EGP 18.06bn a year earlier. While deposits witnessed a 18.5% growth to record EGP 43.93bn in 2018, up from EGP 37.08bn in 2017.

“Our endeavor is to create an impact by being useful to our customers, staff, local economy, the community, and the environment by integrating a sustainable approach through all our activities. As a result, our well-balanced business model generated a rise of 12.4% in 2018 net profit contributed by all lines of business: retail, private banking, SMEs, corporate, and capital markets,” said Crédit Agricole Egypt’s Managing Director, Pierre Finas.

Additionally, at the end of 2018, the bank’s capital adequacy ratio reached 20.31%, well above regulatory threshold (11.875%).

In terms of operational efficiency, Crédit Agricole Egypt managed to pursue its controls in order to maintain the same level of cost-to-income ratio at 27.9% in 2018.

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Yields on Egypt’s T-Bills down by 0.34 – 0.83% after CBE interest-rate cut https://eklutdvotyzsri.dailynewssegypt.com/2019/02/17/yields-on-egypts-t-bills-down-by-0-34-0-83-after-cbe-interest-rate-cut/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/17/yields-on-egypts-t-bills-down-by-0-34-0-83-after-cbe-interest-rate-cut/#respond Sun, 17 Feb 2019 17:43:15 +0000 https://www.dailynewsegypt.com/?p=690118 Interest rates, accepted by finance ministry, decline on T-Bills of 91-day to 17.248 - 17.528%

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Following the Central Bank of Egypt’s (CBE) decision to cut interest rates by 1%, the yields on Egypt’s treasury bills launched by the Ministry of Finance saw a decline on Sunday ranging between 0.34 and 0.83%.

On Sunday, the CBE, on behalf of the Ministry of Finance, issued treasury bills for maturity of 91 days for EGP 8.5bn.

The interest rates, accepted by the Ministry of Finance, on the T-Bills has declined to 17.248% for the lowest price, 17.528% for the highest price, and 17.453% on average, compared to 17.9%, 18.36%, and 18.202% in the last T-Bills offer launched on 10 February, a decline ranging between 0.625% and 0.832%.

Also on Sunday, the CBE issued other treasury bills for maturity of 273 days for EGP 8.5bn.

The interest rates, accepted by the ministry, in this offer declined to 17.5% for the lowest price, 17.8% for the highest price, and 17.686% on average, compared to 17.849%, 18.45%, and 18.296% in the last T-Bills offer on 3 February, a decline ranging between 0.349% and 0.65%.

Every 1% cut in interest rates saves EGP 30bn from the Ministry of Finance’s allocations for the public debt bill, which would contribute in containing the budget deficit, according to Tarek Metwally, former deputy managing director and member of the board of directors of BLOM Bank Egypt.

He noted that keeping the inflation rates under control is the most important mission of the government in the upcoming period.

Metwally called on the government to keep on the facilitative policy the CBE has started to encourage the economic growth and increase banking loans.

“I believe that the interest rate cuts will not affect the inflow of foreign investment in debt instruments,” Metwally said, noting that the current interest rate is higher than the normal world rates, which would put Egypt as one of the most attractive destinations in the world for foreign investments in the debt instruments.

He pointed out that the recent interest rate cuts were expected amid the decline of inflation and the CBE’s plans to bring inflation rate to less than 10% in the upcoming period.

The government has revealed its intention to lower the internal and external public debt interest to EGP 502bn, representing 33% of total expenditure in the fiscal year (FY) 2019/20, compared to 37.8%, equivalent to EGP 541bn, of total expenditure in the current fiscal year. The government aims to achieve this level through cutting interest rates, decreasing budget deficit and public debt.

Banque Misr lowered the interest rates of the variable-yield saving instruments which are linked to the CBE’s interest rate by 1% to become 16% instead of 17% before the cut.

Banque Misr also lowered interest rates by 1% on its VIP current accounts, as the higher interest rate will reach 10%.

The Assets and Liabilities Committee (ALCO) of Banque Misr was set to convene on Sunday to discuss the fate of the interest rates of other saving instruments. It is expected that the bank will cut the interest rates of short-term deposits and saving accounts by 1%.

Most of the liquidity of Banque Misr are in individual-owned saving certificates, while companies dominate the larger share of deposits.

The interest rate on 30 types of saving certificates for three and five years issued by about 24 banks decreased on Sunday in response to the CBE’s interest rate cut.

Meanwhile, the analysts believe that the loans of companies related to the basic interest rate at the CBE are the main beneficiaries of the interest rate cut. However, they believe that the required increase in credit needs a decline in interest rates of no less than 3%, especially that the past three years have seen successive increases in CBE interest rates.

 

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International institutions acquired 30.7% of Egypt’s debts by end-June 2018 https://eklutdvotyzsri.dailynewssegypt.com/2019/02/17/international-institutions-acquired-30-7-of-egypts-debts-by-end-june-2018/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/17/international-institutions-acquired-30-7-of-egypts-debts-by-end-june-2018/#respond Sun, 17 Feb 2019 07:00:32 +0000 https://www.dailynewsegypt.com/?p=690056 Debts to Arab countries reached $23.1bn or 24.9% of total external debts: CBE

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International institutions account for 30.7% of Egypt’s total foreign debts by end of June 2018, according to the Central Bank of Egypt (CBE).

In its recent monetary policy report, the CBE said that there are $23.1bn of debts owed to Arab countries, including Saudi Arabia, the United Arab Emirates, and Kuwait, equivalent to about 24.9% of Egypt’s total foreign debt by the end of June 2018.

It added that the government has alone acquired 51.4% of total foreign debts, while banks’ debts reached $6bn.

According to the CBE, the short-term external indebtedness scored $12.283bn at the end of June 2018, which is about 27.8% of the foreign exchange (FX) reserves and 13.3% of Egypt’s total foreign debt.

It also pointed out that the external debt service has reached about $13.2bn in the fiscal year (FY) 2017/18, including $11.1bn to pay for the original debt and $2.1bn of interest.

Aiming to place Egypt’s external position on a more sustainable footing and encourage foreign investors back into the country, the CBE determined on 3 November 2016 to unpeg the Egyptian pound, allowing its value to float. Accordingly, bid and ask exchange rates would be determined by forces of demand and supply.

By floating the pound, the CBE would eventually be able to fully dismantle FX restrictions, and reduce disruptions to activity. Such a courageous move aims to quash the currency parallel market and attract the much-needed foreign capital.

This decision helped replenish international reserves through the official market.

Egypt’s transactions with the external world recorded an overall balance of payment (BOP) surplus of about $12.8bn during the FY 2017/18 against about $13.7bn in the previous FY.

The current account deficit narrowed by 58.6% to about $6bn from about $14.4bn.

The capital and financial account recorded a net inflow of about $22bn against about $31bn.

The decline in the current account deficit was mainly traceable to some developments, namely the services surplus surged by 98.1%, recording about $11.1bn, net unrequited current transfers scaled up by 21.2% to about $26.5bn, the trade deficit remained stable at about $37.3bn, and the income balance ran a deficit of about $6.3bn.

The capital and financial account revealed the net inflows of foreign direct investments (FDIs) in Egypt registered about $7.7bn, portfolio investment in Egypt decelerated, registering a net inflow of about $12.1bn, and other assets and liabilities achieved a net outflow of about $7.7bn.

Egypt’s international investment position (IIP) at end of June 2018 recorded net external liabilities (assets minus liabilities) of about $147.3bn, up by 12.4 % compared to end of June 2017.

Net international reserves (NIR) increased by around $13bn to reach $44.3bn, thus covering 8.4 months of merchandise imports at end of June 2018.

According to the CBE, the increase was a result of the rise in foreign currencies by about $11bn and in special drawing rights (SDRs) by $2bn. During the report’s preparation, NIR reached $44.5bn at end of October 2018.

Banks’ net foreign assets decreased by $2.7bn during FY 2017/18.

Foreign currency deposits with banks increased by 4.5% during the period concerned, reaching $40.2bn at end of June 2018. As a percentage of total deposits, they made up 23.8 %.

Total external debt recorded $92.6bn at end of June 2018, up by 17.2 % compared with about $79bn at end of June 2017.

The external debt remains within manageable limits, and its position continues to have a favourable structure, as 86.7% of the debt are medium- and long-term.

The weighted average of the interbank foreign exchange market rate revealed that the Egyptian pound interbank rate appreciated by 1.1 % during FY 2017/18, as the EGP reached 17.8878 per US dollar at end of June 2018, against EGP 18.0911 per US dollar at end of June 2017.

BOP Performance

The CBE stated that Egypt’s transactions with the external world recorded an overall BOP surplus of about $12.8bn during FY 2017/18 against about $13.7bn in the previous FY. The current account deficit narrowed by 58.6 % to about $6bn from about $14.4bn. The capital and financial account recorded a net inflow of about $22bn against about $31bn.

Moreover, the CBE noted that the decline in the current account deficit was mainly traceable to the services surplus which surged by 98.1%, recording about $11.1bn against about $5.6bn, and net unrequited current transfers scaled up by 21.2% to about $26.5bn versus about $21.8bn, while the trade deficit remained stable at $37.3bn, and the income balance ran a deficit of about $6.3bn against about $4.6bn.

Trade on Goods

The CBE pointed out that trade volume increased by 10.2 %, to reach $88.9bn (35.5% of GDP) during FY 2017/18. The trade deficit has stabilised at $37.3bn (14.9% of the GDP). This was driven by increased merchandise exports by 18.9% to reach $25.8bn, due to the increase in both oil exports by 33.1% to reach $8.8bn (34% of total exports) and non-oil exports by 12.7% to reach $17.1bn (66% of total exports).

As a result, the exports/imports ratio mounted to 40.9% from 36.8%.

Merchandise imports increased by 6.9% to reach $63.1bn, reflecting the increase in both non-oil imports by 7.7% to $50.6bn (80.2% of total imports), and oil imports by 3.9% to reach $12.5bn (19.8% of total imports).

“Hereunder is the geographical distribution of merchandise exports and imports: Egypt’s main trade partners in terms of exports were Italy; the UAE; the US; the UK; Turkey; India; Saudi Arabia; Germany; Switzerland, and Spain,” the report stated.

These countries combined, accounted for some 57.9% of total exports.

As for imports, Egypt’s trade partners were China; Saudi Arabia; the UAE; Russia; Germany; the US; the UK; France; Switzerland; Turkey; Italy, and Brazil.

These countries combined, accounted for some 52.4% of total imports.

Services Balance

Services surplus doubled to about $11.1bn against about $5.6bn, as the increase in services receipts outpaced the rise in services payments. Services receipts increased by 39.5%, to some $21.5bn against about $15.4bn, driven by the increase in tourism revenues to about $9.8bn (against about $4.4bn), driven by the increase in the number of tourist nights to 102.6 m nights (against 50.9 m nights). This was con-current with the increase in the average of tourist expenditure per night.

Transportation receipts also increased by 10.1% to about $8.7bn (against some $7.9bn), due to the increase in Suez Canal dues by 15.4% to about $5.7bn (against some $4.9bn), which increased, in turn, as a result of the rise in net tonnage by 9.8%, and the increase of SDR against the US dollar by 3.8%. Another contributing factor was the increase in the receipts of Egyptian navigation and airline companies.

Other services receipts increased by 0.2% to about $2.34bn against about $2.33bn, due to the increase in the receipts of constructions services, the agencies commissions, advertising and market research services.

On the other hand, government services receipts decreased by 18% to $636.7m against $776.4m, due to decrease in other governmental receipts.

Services payments rose by 5.9%, to about $10.4bn against about $9.8bn, driven by the increase government services payments by 32.9% to $1.5bn (against $1.1bn), reflecting the increase in the salaries of government employees seconded abroad, other governmental expenses, and the expenses of Egyptian embassies abroad.

Other services payments also increased by 7.6%, to about $4.9bn against about $4.6bn, driven by the increase in the amounts transferred abroad by foreign petroleum companies, communication services, royalties and license fees, computer services, and subscription to magazines and newspapers.

Furthermore, transportation payments rose by 11.1% to $1.5bn against $1.3bn, due to the rise in the amounts transferred by foreign navigation and airline companies, airplanes and ships’ rental fees, and amounts transferred as transportation services.

On the other hand, travel payments fell by 10.5% to about $2.5bn against about $2.7bn, due to the decline of e-card payments abroad.

Income Balance

The investment income balance ran a deficit of about $6.3bn in FY 2017/18 (against some $4.6bn), as an outcome of the rise of investment income payments, to register about $7.1bn (against some $5.1bn), 58.7% of which were profit transfers by oil and non-oil foreign companies operating in Egypt.

Meanwhile, the investment income receipts increased to register $835.4m (against $497.9m).

Unrequited Current Transfers (Net)

Net unrequited current transfers scaled up by 21.2% to about $26.5bn (from $21.8bn), mainly due to the increase in net private transfers from $21.7bn to $26.3bn, supported by the increase in workers’ remittances by about $4.6bn.

Capital and Financial Account

The capital and financial account recorded a net inflow of about $22bn in FY 2017/18 (against some $31 bn), as an outcome of several points, including total FDIs inflows registered about $13.2bn, while total outflows recorded about $5.4bn. Accordingly, net inflows of FDIs in Egypt registered about $7.7bn. Noteworthy, net inflows for the oil sector investments increased by 12.2%, to post about $4.5bn.

The sectorial breakdown of total FDIs inflows shows that the oil sector has the biggest share (67.3%). As for the other sectors, the majority of FDIs went to the services sectors, with 11.2% distributed to the communication and information technology, 3.4% to other services sectors, 2.9% to the real estate sector, 2.7% to the financial sector, and 1.9% to the tourism sector (0.3%).

The share of the manufacturing sector was 10%, the construction sector was 4.5%, the agricultural sector was 0.1%, and the remaining portion was acquired by undistributed sectors.

Portfolio investment in Egypt retreated, registering a net inflow of $12.1bn (versus $16bn). This was largely ascribed to the decrease in foreigners’ investments in Egyptian treasury-bonds (T-bonds), recording net purchases of about $6.5bn (against about $10bn), as a result of the withdrawals of foreign investors from the emerging markets (EMs).

Medium – and long-term loans and facilities recorded net disbursements of about $7.9bn (against about $8bn).

Short-term suppliers’ credit realised net disbursements of about $2.4bn (against about $1.7bn).

Other assets and liabilities achieved a net outflow of about $7.7bn (against about $2.5bn). This came on the back of the net change in the liabilities of the CBE to the external world, to post a net external repayment of about $3.9bn in the year under review (against a net disbursement of about $8.1bn) causing a decline in the CBE’s liabilities to the external world.

To summarise, the CBE stated that the tourism sector performance during 2017/18 points to an increase in tourist arrivals and nights and also shows a hike in receipts when compared with the previous year levels. Average expenditure per night increased from $86.1/night in the previous year to $95.6/night in 2017/18.

The tourism sector performance during the fourth quarter (Q4) of 2017/18: according to the BOP data during Q4 2017/18, tourism receipts recorded an increase of $1015m or 65.95% to $2554m compared with the same period last year. This is due to the 8.4% increase in the average expenditure per night, in addition to the 6.6% increase in average nights spent per visitor.

Egypt’s tourism sector activity witnessed a moderate increase quarter-over-quarter.

In Q4 of 2017/18, the number of tourist arrivals witnessed a 11.6 % increase, while tourist nights increased by 12.4%.

On the other hand, the average expenditure per night stayed the same at $95.6/night during Q3 and Q4 of 2017/18.

Data shows a slight increase in the number of average tourist nights (10.4 nights per person, compared to 10.3 nights per person).

Tourists coming from Africa and Middle Eastern countries topped the list in terms of the length of stay per visitor with 17.6 and 12.9 nights per visitor, respectively.

Hotel Sector Performance

As regards hotel sector performance and its regional comparison during the first seven months of 2018, Cairo hotels experienced a noticeable increase in terms of ‘revenue per available room’ which reached 20.2% compared with the same period last year.

It also witnessed a shift from diversification toward concentration in favour of the European region, as the Herfindahl-Hirschman Index (HHI) reached 0.6 in 2013/14. However, the index then fell down this year reaching 0.41 indicating more diversity, yet less diversified than the previous year which reached 0.35.

This draws attention to the fact that necessary steps should be taken towards a more diversified tourism market to be able to mitigate any future demand shocks. Nevertheless, Egypt’s market is still more diversified when compared to some neighbouring countries in the Middle East and North Africa (MENA) region.

Tourism Sector Performance

The ministry of tourism figures show that a total of 2,661,000 tourists came from all over the world and spent 26,712,000 nights in Q4 of 2017/18, with an increase of 46% in the number of tourist arrivals and an increase of 53.1% in the number of nights, compared with the same period of the previous year.

The increase in tourist arrivals resulted from more visitors coming from the European countries, 70.62% of total increase, Middle East region, 16.92%, African countries 7.11%, the Americas, 2.61% and Asia and the Pacific region 1.4%.

Meanwhile, the average expenditure per night increased from $88.2/ night in Q4 of 2016/17 to $95.6/night in Q4 of 2017/18.

The positive growth in the number of tourist nights, 12.4%, was behind the increase in tourism receipts by $283m or 12.5% to $2554m q-over-q in Q4 of 2017/18.

During Q4 of 2017/18, data shows that visitors stayed more nights, registering an average of 10.4 nights per person, compared to 9.8 nights per person in the corresponding quarter a year earlier.

Tourists coming from Africa headed the list in terms of the length of stay per visitor with an average of 17.6 nights.

The Middle Eastern countries were the runners-up with 12.9 nights/visitor, followed by the Americas with12.3 nights/visitor, Asia and Pacific region with 9.6 nights/visitor, and European countries with 8.9nights/visitor.

Hotel Sector Performance

In order to make a sound judgment on hotel sector financial performance over the time and across key Arab cities, the CBE combined occupancy rate with revenue per available room (RevPAR). 

The revenue per available room provides a convenient snapshot of how well a hotel is filling its rooms, as well as how much it is able to charge. As a matter of fact, there is a sharp increase in RevPAR during the first seven months of 2018, as compared to the same period of the previous year.

International Investment Position (IIP) at end of June 2018

Egypt’s IIP at the end of June 2018, recorded net external liabilities (assets minus liabilities) of about $147.3bn, up by 12.4% compared to end of June 2017.

Egypt’s preliminary IIP data at end of June 2018, showed an increase in both Egypt’s total assets and liabilities compared to the position at end of June 2017, to record net liabilities of about $147.3bn versus $131.0 bn.

The CBE noted that assets increased by 17.9% to reach about $78.2bn at end of June 2018, from about $66.4bn at end of June 2017.

The increase was mainly due to reserve assets increasing by 41.9% to about $43.5bn; foreign direct investments increasing by 3.7% to about $7.6bn; while portfolio investments abroad and other investment assets decreased by 15.5% and 3.7%, to about $1.4bn and $25.7bn respectively.

Liabilities increased by 14.2% to about $225.5bn at end of June 2018, from about $197.4bn at end of June 2017.

The increase was mainly driven by portfolio investments in Egypt increasing by 56.8% to about $33.6bn; other investment liabilities increasing by 11.9% to about $78.3bn; and FDIs in Egypt increasing by 7.2% to about $113.6bn.

Egypt’s negative net IIP to the GDP at end of June 2018 increased to about 58.9%, from about 55.8% at end of June 2017. Assets to liabilities increased to about 34.7% at end of June 2018, from about 33.6% at end of June 2017.

External Liquidity

With regards to NIRs, the CBE’s decision to unpeg the Egyptian Pound led to the steady accumulation of foreign currency reserves through the formal channels.

During FY 2017/18, NIRs remained on the rise, increasing by around $13bn (against $13.8bn a year earlier) to reach $44.3bn, thus covering 8.4 months of merchandise imports at end of June 2018.

The increase was a result of the rise in foreign currencies by about $11bn and in SDRs by $20bn. During the report’s preparation, NIRs reached $44.5bn at end of October 2018.

Net Foreign Assets of Banks (NFA)

Banks’ net foreign assets decreased by $2.7bn during FY 2017/18 (against a rise of $8bn a year earlier).

Foreign currency deposits with banks increased by 4.5% during the period concerned, reaching $40.2bn at end of June 2018.

Likewise, local currency deposits increased by 27.4%. As such, the ratio of foreign currency deposits to total deposits made up 23.8% at end of June 2018.

External Debt

External debt recorded $92.6bn at end of June 2018, up by 17.2% (compared with about $79bn at end of June 2017). This increase came as a result of the rise in net disbursements of loans and facilities by $13.2bn, alongside the depreciation of most currencies of borrowing versus the US dollar by $0.4bn.

By original maturity, external debt reaffirmed its usual pattern of long-term external debt predominance at end of June 2018. Long-term external debt accounted for $69bn or 74.5% of the total external debt, whereas medium-term external debt reached $11.3bn or 12.2% and short-term external debt accounted for $12.3bn or 13.3%.

By residual maturity, medium- and long-term external debt decreased to represent 74.1% of the total debt. In comparison, they accounted for 86.7% of the total by original maturity. Meanwhile, short term debt showed an increase, as it represented 25.9%, compared to 13.3% classified by original maturity.

Medium- and long-term external debt increased by about $13.6bn to about $80.3bn (86.7% of total debt) at end of June 2018, of which: rescheduled bilateral debt reached about $3.7bn or 4% of total debt. Other bilateral debt amounted to about $7.6bn or 8.2%. Buyers’& suppliers’ credit reached about $8.4bn or 9.1% of total debt. International and regional organisations’ debt reached about $28.4bn or 30.7% of total debt. Government bonds and notes reached about $14.3bn or 15.4% of total debt.

These include: $1bn of sovereign notes issued in April 2010 and are due in 2020 and 2040, $11.1bn of Eurobonds issued in June 2015, January 2017, May 2017, and February 2018; $2.2bn of euro-denominated bonds issued in April 2018 and falling due in 2026 and 2030.

Long-term deposits which have been placed at the CBE by some Arab countries posted $17.4bn (18.8 % of total debt).

Non-guaranteed debt of the private sector registered $459.9m (about 0.5% of total debt).

Short-term external debt increased by about $9.3m to about $12.3bn or 13.3% of total debt.

Measuring the currency composition of Egypt’s external debt is an important indicator that sheds light on the external debt exposure, to currency markets’ volatility.

The currency composition of external debt indicates that the US dollar is the main borrowing currency, with a value of $58.8bn. This includes other outstanding obligations in US dollar to creditors other than the US (such as the IMF, African Development Bank (AfDB), and the International Bank for Reconstruction and Development (IBRD).

Other important currencies recorded $32bn distributed as follows: the euro was the runner-up ($13.9bn), followed by the SDRs $10.5bn, the Chinese yuan $2.7bn, the Kuwaiti dinar $2.5bn, and the Japanese yen $2.4bn.

Debt distribution by creditor country indicates that $28.4bn was owed to international organisations (mainly IMF $9.3bn, IBRD $9.1bn, ADF & AfDB $2.6bn, EIB $2.4bn and other institutions $5bn), and that $23.1bn was owed to Arab countries (chiefly Saudi Arabia, the UAE, and Kuwait).

Meanwhile, $14.7bn came from five members of the Paris Club countries; namely Germany $7.1bn, Japan $2.3bn, France $2bn, the UK $1.9bn, and the US $1.4bn. In addition, $5.1bn of the total debt was owed to China.

The structure of Egypt’s external debt by debtor reveals that: Central and local government remains the main debtor, with a share of 51.4% of external debt at end of June 2018. Its debt increased by $12.8bn to amount to $47.6bn. Banks’ external debt increased by about $2bn to $6bn. Other sectors’ debt increased by about $2.6bn to $12.4bn. However, the monetary authority’s external debt decreased by about $3.8bn to $26.6bn at end of June 2018.

The ratio of short-term external debt to net international reserves decreased to 27.8% at end of June 2018 (from 39.2% at end of June 2017).

In addition, its ratio to total debt registered 13.3% (against 15.5%).

As for the external debt in terms of international comparison, the debt is within manageable limits, based on IMF classification, comparing Egypt’s key debt indicators with those of other regional country groups. Egypt’s debt stock to the GDP represented 37% at end of June 2018 (65.1% for Emerging and Developing Europe and 44.7% for Latin America and the Caribbean).

Egypt’s short-term external debt to total external debt at end of June 2018 represented 13.3% (21.1 % for Emerging and Developing Europe, and 14.2% for Latin America and the Caribbean).

Egypt’s debt-service ratio registered 28% during FY 2017/18 (49% for Emerging and Developing Europe, and 42% for Latin America and the Caribbean). Debt service reached $13.2bn during FY 2017/18 ($11.1bn for principal repayments and $2.1bn for interest payments).

Exchange Rate Developments

On 3 November 2016, the CBE took the decision of the liberalisation of the Egyptian pound exchange rate, to be quoted according to the dynamics of supply and demand.

This decision came as part of the economic reform programme.

The inter-bank rate: during FY 2017/18, the weighted average of the US dollar in the Egyptian interbank market depreciated by 1.1 % to record EGP 17.8878 at end of June 2018, (against EGP 18.0911 at end of June 2017).

Market rate: at end of June 2018, according to the foreign exchange market (buying price), the Swiss franc decreased by 4.7%, the US dollar, the Saudi riyal, and the UAE dirham decreased by 1.1 % each, and the Kuwaiti dinar decreased by 1.0 %.

On the other hand, the Chinese yuan increased by 1.4%, the euro by 1%, the Sterling pound by 0.8%, and the Japanese yen (100) by 0.5%.

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Business community calls on CBE to more cuts in interest rates https://eklutdvotyzsri.dailynewssegypt.com/2019/02/16/business-community-calls-on-cbe-to-more-cuts-in-interest-rates/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/16/business-community-calls-on-cbe-to-more-cuts-in-interest-rates/#respond Sat, 16 Feb 2019 18:35:30 +0000 https://www.dailynewsegypt.com/?p=690033 Decision to cut interest rates by 1% is good, yet values still relatively high, say investment experts

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Three investment experts agreed that Egypt’s interest rates are still relatively high, despite the latest decision of the Central Bank of Egypt (CBE) to cut interest rates by 1%. The Monetary Policy Committee of the CBE cut the overnight deposit rate and the overnight lending rate at 15.75% and 16.75%, respectively, during 2019’s first meeting on Thursday.

Alaa Omar, the former CEO of the General Authority for Investment and Free Zones (GAFI), welcomed the decision taken by the CBE to cut the interest rates by 1%. However, he also said that Egypt’s interest rates are still relatively high.

Egypt is ranked as the 10th country with the highest interest rates globally, according to Trading Economics, adding that Argentina is the first country with the highest interest rates with 43.49%, then Yemen with 27%, Suriname with 25%, Turkey with 24%, Venezuela with 22.40%, Haiti with 20%, Iran and Ukraine with 18%, Sierra Leone with 16.5%, Ghana and Uzbekistan with 16%, then Egypt and Angola in the 10th position with 15.75%.

More cuts on interest rates will encourage investors to inject more money into the market, instead of saving them in the banks, Omar told Daily News Egypt, adding that the latest decision is a step on the right track.

“We cannot expect the CBE’s plans regarding the interest rates in the coming period. It depends on several conditions, including inflation trends, and the dollar prices,” he affirmed.

Notably, the inflation in Egypt hiked after the flotation of the Egyptian pound in November 2016, as well as the cuts in fuel subsidy to a peak of 34.2% in July 2017.

The Egyptian authorities remain committed to reaching cost recovery for most fuel products by mid-2019 and implementing automatic fuel price indexation, according to the International Monetary Fund (IMF) on 6 February. The Aforementioned decision will increase the inflation rates, according to experts.

For his part, Gamal Bayomi, the former chairperson of Arab Investors Federation, said that the current values of interest rates are high in comparison with last years’ values, adding that the interest rates’ cut will positively affect the investment decisions and will narrow the state’s budget deficit.

Bayomi explained that the state will borrow from the banks with lower prices, which will bring down the local debts’ cost.

“It is logical that the CBE decided to cut the interest rates after the slowdown in inflation rates lately,” Bayomi added.

In December 2018, the CBE said it eyes inflation of 9% ± 3%, which puts it to 6-12% by the end of the fourth quarter of 2020.

Furthermore, the IMF amended its projection for the consumer prices indicator at the end of FY 2018/19 from 13.1% to 14.5%, while it is expected to reach 10.7% at end of FY 2019/20.

The consumer prices average for FY 2018/19 is expected to reach 15.8%, compared to 14.4% over third review projections of the IMF.

Additionally, Mostafa Ebrahim, the chairperson of Egypt Australia Business Council, called on the authorities for more cuts in the interest rates over the next period, adding, “I hope we will reach 10% to 12% by the end of this year which will encourage investments.”

The high interest rates are considered a big challenge which faces Egypt’s business climate, he affirmed, noting that lowering interest rates is a good sign for the economy’s improvement.

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Banks to discuss fate of deposit, lending interests this week following CBE rate cut https://eklutdvotyzsri.dailynewssegypt.com/2019/02/16/banks-to-discuss-fate-of-deposit-lending-interests-this-week-following-cbe-rate-cut/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/16/banks-to-discuss-fate-of-deposit-lending-interests-this-week-following-cbe-rate-cut/#respond Sat, 16 Feb 2019 18:23:44 +0000 https://www.dailynewsegypt.com/?p=690031 NBE, Banque Misr to keep interests of fixed-rate saving certificates stable, cut those of variable-rate certificates by 1%

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Banks operating in the Egyptian market will hold on Sunday high-level meetings of their asset-liability committees (ALCO) to discuss the fate of their deposit and loan interest rates after the Central Bank of Egypt’s (CBE) decision to cut the basic interest rate by 1%.

Meanwhile, two of the largest banks operating in the Egyptian market – the National Bank of Egypt (NBE) and Banque Misr – have decided to keep the interest rates of fixed-rate saving certificates unchanged and only change the interest rates of variable-rate certificates.

The NBE maintained the interest rate of its three-year fixed-rate certificates at 15% with the yield disbursed every month and kept a rate of 15.25% for the certificates with the yield disbursed every three months, said Yehya Aboul Fotouh, the bank’s vice chairperson.

Interests fell to 16% instead of 17% only for the bank’s variable-rate three-year certificates, with the yield disbursed every three months, Aboul Fotouh added, praising the CBE’s decision to cut interest rates, noting that it would attract investments to the Egyptian market.

“This decision comes in the light of the positive difference emerged between the announced inflation rates and banks’ interest rates,” Aboul Fotouh said, pointing out that the stability in dollar exchange rates by the Federal Reserve System – the central banking system in the United States – has helped the CBE cut the interest rates with abundance of foreign reserves.

Similarly, Banque Misr has decided to keep the yields of three-year certificates at the same level of 15%; fixed and paid monthly without changes. On the other hand, the bank has decided to reduce the interest rate of three-year variable-rate certificates by 1% to 16% instead of 17%.

This week, the two state-run banks will be holding some meetings to discuss the fate of the interest rate of the rest of saving instruments as well as loans.

In a related context, interest rates of many saving certificates and loan products related to the main prices of yield have declined once the CBE issued its decision to reduce these prices by 1%.

The CBE’s Monetary Policy Committee (MPC) decided last Thursday to cut the overnight deposit and lending rates and the rate of the main operations by 100 basis points (BPS) to 15.75%, 16.7%, and 16.25% respectively. The discount rate was also cut by 100 BPS to 16.25%.

According to the CBE’s statement, headline and core inflation rose to 12.7% and 8.6% in January respectively due to unfavorable base effects.

The MPC said that this step comes after headline inflation declined to 12.0% in December 2018 due to the reversal of the transitory supply shock related to vegetables. As a result, the CBE’s initial inflation target of 13% (±3%) for the fourth quarter (Q4) of 2018, which was announced in May 2017, has been achieved.

While real GDP growth increased slightly to 5.5% in Q4 2018 compared to 5.3% in Q3 2018, and the unemployment rate declined to 8.9% from 10.0%, its lowest level since December 2010.

Furthermore, the statement indicated that net external demand continued to support economic activity while private domestic demand remained contained.

On the other hand, the expansion of global economic activity weakened, and the tightening of financial conditions eased, and trade tensions continued to weigh on the global outlook.

“The MPC decided to cut key policy rates by 100 BPS. This remains consistent with tight real monetary conditions and with achieving the inflation target of 9% (±3%) in Q4 2020 and price stability over the medium term,” the statement concluded.

This comes at a time when the market is anticipating the trend of yield prices on the treasury bills and bonds to be launched this week in order to understand how much they were impacted by the decision of CBE to reduce interest rates.

According to Mohamed Abdel Aal, a board member of Suez Canal Bank and the Arab Sudanese Bank, the decision of CBE to reduce the main yield rates is expected to lead to a decrease in the cost of funding, hence, encourage economic growth. It might also lead to a decline in the yield of treasury bills and bonds launched by the government, which would help reduce local debt, hence, reduce the state budget deficit.

He added that reducing the interest rate and funding costs is expected to reduce the prices of locally produced goods which would help lower inflation rates.

“It is not expected for this reduction in the prices of interests to lead to any change in exchange prices, while a positive impact is expected on the performance of the Egyptian Exchange (EGX),” Abdel Aal said.

Haitham Abdel Fattah, head of the Treasury and Capital Market sector at the Industrial Development Bank (IDB), said that the decision of CBE was greatly expected after it had managed to boost its control over the inflation and reached its targeted levels.

With this decision, the CBE showed that it adopts expansionary monetary policies that target real and sustainable growth rates, Abdel Fattah added, noting that this decision will have a positive impact on all aspects of the economy.

He pointed out that ALCO at the IDB will hold a meeting this week in order to discuss the impact of the decision on all saving instruments of the bank.

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CBE cuts interest rates by 1% https://eklutdvotyzsri.dailynewssegypt.com/2019/02/14/cbe-cuts-interest-rates-by-1/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/14/cbe-cuts-interest-rates-by-1/#respond Thu, 14 Feb 2019 20:28:37 +0000 https://dailynewssegypt.com/?p=689910 Overnight deposit rate, overnight lending rate, rate of the main operation at 15.75% 16.75%, 16.25% respectively

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The Monetary Policy Committee (MPC) decided, on Thursday,  to cut the Central Bank of Egypt’s (CBE) overnight deposit rate, overnight lending rate, and the rate of the main operation by 100 basis points to 15.75%, 16.7%, and 16.25%, respectively.

The discount rate was also cut by 100 basis points to 16.25%.
According to CBE’s statement, headline and core inflation rose to 12.7% and 8.6% in January 2019, respectively, due to unfavorable base effects.

 

This comes after headline inflation declined to 12.0 percent in December 2018 due to the reversal of the transitory supply shock related to select vegetables. As a result, the CBE’s first inflation target of 13 percent (±3 percent) for 2018 Q4 that was announced in May 2017 has been achieved.

While real GDP growth increased slightly to 5.5% in 2018 Q4 from 5.3%  in 2018 Q3, and the unemployment rate declined to 8.9% down  from 10.0%, its lowest level since December 2010.

Furthermore, the statement indicates that net external demand continued to support economic activity while private domestic demand remained contained.

While, the expansion of global economic activity weakened, and the tightening of financial conditions eased, and trade tensions continued to weigh on the global outlook.
“MPC decided to cut key policy rates by 100 basis points This remains consistent with tight real monetary conditions and with achieving the inflation target of 9 percent (±3 percent) in 2020 Q4 and price stability over the medium term,” the statement concluded.

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IDB signs cooperation protocol with Alexandria governorate, MFF to fund social housing units https://eklutdvotyzsri.dailynewssegypt.com/2019/02/14/idb-signs-cooperation-protocol-with-alexandria-governorate-mff-to-fund-social-housing-units/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/14/idb-signs-cooperation-protocol-with-alexandria-governorate-mff-to-fund-social-housing-units/#respond Thu, 14 Feb 2019 06:30:01 +0000 https://www.dailynewsegypt.com/?p=689869 Agreement to fund 1,138 residential units within CBE initiative

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The Industrial Development Bank (IDB) has signed a cooperation protocol with the governorate of Alexandria and the Mortgage Finance Fund (MFF) in order to fund low-income individuals’ residential units in the governorate.

The new protocol aims to make the bank fund 1,138 units on a total area ranging from 63,000m to 65,000m for low-income citizens, with a 5-7% interest rate with a repayment period of 20 years, within the initiative of the CBE for real estate funding.

The agreement was signed by Abdelaziz Qansua, the governor of Alexandria, and Maged Fahmy, the chairperson and the managing director of the IDB, as well as Mai Abdelhameed, the CEO of the MFF, in the presence of a large number of the executive leaders in the governorate.

According to Fahmy, the protocol is in accordance with the state’s plan to provide low-income citizens with suitable homes with only 5% and 7% interest rates.

Fahmy pointed out that the IDB was one of the first banks to participate in the CBE’s initiative as it managed to offer funding worth EGP 845m for 8,048 clients, since the initiative was launched in 2014 until now.

He also explained that the bank played a role in delivering gas to homes as being the right of every citizen, as three agreements were signed with Natgas, Fayoum Gas, and Sinai Gas to fund the delivery gas to 375,000 residential units with a total funding of EGP 675m. The implemented ones so far have reached 127,000 in Alexandria, Fayoum, Beheira and Sharqeya, with funding worth EGP 335m. Additionally, gas was delivered to industrial units.

According to Hamdi Azzam, the deputy chairperson of the bank, the new protocol signed with the Alexandria governorate and the MFF is the culmination of a series of successes achieved by the bank in the retail banking file, to rank fifth among Egyptian banks and the banks operating in Egypt in the initiative of the CBE’s for real estate finance.

El Sayed Fathallah, the head of branches, retail banking, and real estate funding in the bank, said that the bank has managed to achieve a major success in the sector of real estate funding as it provided funding worth about EGP 119m in 2016, increasing it to EGP 340m in 2017 with a 187% growth, increasing to EGP 845m currently, with a 149% growth.

Fathallah explained that the bank funded 1,229 clients in 2016, then the number increased to 3,273 clients in 2017, with a 166% growth. The number then increased to 8,048 clients until now with a 146% growth. These rates confirm the extent of the achievements reached.

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CBE to review interest rates today in first 2019 meeting https://eklutdvotyzsri.dailynewssegypt.com/2019/02/13/cbe-to-review-interest-rates-today-in-first-2019-meeting/ https://eklutdvotyzsri.dailynewssegypt.com/2019/02/13/cbe-to-review-interest-rates-today-in-first-2019-meeting/#respond Wed, 13 Feb 2019 18:09:50 +0000 https://www.dailynewsegypt.com/?p=689810 Higher inflation in January shifts market expectations of interest stabilisation in this meeting

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Central Bank of Egypt’s (CBE) Monetary Policy Committee will hold today its first meeting in 2019 to review the interest rates at the bank, the most important indicator of interest rates direction in the domestic market.

The base interest rate at the CBE is now 16.75% for deposit, 17.75% for lending, and 17.25% for credit, debit, and open transactions.

Despite previous high expectations in the market that the CBE would decrease interest rates in its next meeting, the sudden rise in inflation at the end of January led many experts to project no change instead.

The Central Agency for Public Mobilization and Statistics (CAPMAS) disclosed on Sunday that the annual inflation rate has increased to 12.2% at the end of January, against 11.1% in last December, an increase of 1.1%.

The monthly inflation rate was up by 0.8% at the end of January, versus a decline of 4.1% in December 2018.

According to the CBE, the main consumer price index recorded a monthly average inflation of 0.4% at the end of January up from 0% in December 2018. The annual core inflation also rose by 8.6% in January from 8.3% in December.

A poll conducted by Daily News Egypt at the end of January has revealed strong expectations by analysts of the stability of interest rates until the second half of 2019, then to move down by 2-4%.

Mohamed Abdel Aal, a board member of the Suez Canal Bank and the Arab Sudanese Bank, said that the CBE will implement its same strict monetary policy to maintain the interest rates at the same level in spite of the factors pushing for a decline. “There are several reasons and factors calling on the CBE to continue to maintain a high interest rate within 2019.”

He added that the CBE may maintain high interest rates on pound to counter rising interest rates on the US dollar and to maintain investment flows from foreign investment funds and hedge funds in Egypt’s public debt instruments, in addition to keeping a high rate of return on household savings to compensate them for the current high inflation figures.

Abdel Aal added that the annual core inflation rate at the end of January reached 8.6%, which is also another factor to avoid cutting interest rates and to face any possible inflationary pressures due to the lifting of fuel subsidy and the recovery of global oil prices.

According to Abdel Aal, the main factors that could lead the CBE to cut interest rate is the stability of the interest rate on the US dollar, the desire to achieve growth indicators agreed upon with the IMF, and to reduce the cost of public debt.

“We believe that the slight increase in inflation does not threaten the inflation forecast, thus; we affirm our projection of continued accommodation of inflationary pressures in the first half of 2019, as recording a new low inflation level in December 2018 will also keep the rate at 14-15% in 2019,” Beltone said.

In a research note, Beltone said that as the inflation outlook continues to correlate with volatile food prices, it confirms its view of keeping rates at the Monetary Policy Committee meeting on Thursday and throughout the fiscal year (FY) 2018/19.

“We believe that next inflation readings in February and March 2019 will be the key to forecast whether there will be a chance to cut interest rates in the first half of 2019,” it stated.

According to Beltone, other key factors are foreign inflows in fixed income instruments in February 2019 to confirm the renewed appetite of investors on the fixed income market, which stresses limited pressure on the local currency, and the rate of depletion of net foreign assets with banks, which began to decline in December 2018, thus determines the need to support the local currency.

Beltone also affirmed its vision of high yields on treasury bonds regardless of the move of interest rates.

It pointed out that the rise in annual headline inflation in January was due to the increase in prices of food commodities by 12.5%, compared to an increase of 11.2% in December, driven by increased prices of vegetables and cereals in particular.

“At the same time, all other sectors maintained their stability, with the exception of the rise in the medical care sector to 5.1%, against 4.5% in December 2018,” it added.

Beltone pointed out that monthly inflation began to rise once again as it progressed by 0.6% after two consecutive months of decline, despite maintaining to date its historical rates.

On the other hand, HC Securities and Investment (HC) expected another cut in subsidy by July 2019, which may result in renewed inflationary pressures.

The report indicated that those expectations, in addition to the rise in the global interest rate, support the postponement of the resumption of the monetary easing policy to 2020.

HC projected a reduction of interest rate by 500 basis points in 2019, following its previous expectations of further cuts in interest rates in 2019.

The company added that after the expected resumption of the monetary easing policy in 2020, they foresee that private investment will be the main driver of economic growth, and believe that the moderation of inflation, coupled with increased employment, will support improved personal consumption.

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