Banking
From The Report: Egypt 2013
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Although the summer of 2013 saw increased political risk and uncertainty in the country’s broader macroeconomic environment, the positive financial results of Egypt’s banking sector over 2012 and into 2013 attest to its overall resilience. A history of conservative regulation has enabled the sector to ride out the economic crisis and most in the industry expect it to successfully weather the current political challenges. Public sector banks continue to play an important role. There are five state-owned banks, three of which control around 40% of the sector’s total assets. Since the 2011 uprising, the credit rating of Egypt’s domestic banks has been repeatedly downgraded, largely as a result of their perceived overexposure to sovereign debt. However, the sector’s funding and liquidity profiles garner a stable outlook from most agencies, thanks to the high proportion of customer deposits in relation to local and foreign funding. In the longer term, the macroeconomic fundamentals that have attracted Gulf banks to the market are expected to remain in place – a diverse economy, a large and young population, an anticipated 3.3% growth rate in 2014, and an underleveraged market.
This chapter contains interviews with Hisham Ramez, Governor, Central Bank of Egypt; and Ali Al Kuwari, Acting Group CEO, Qatar National Bank (QNB).

Articles from this Chapter

Overview

Holding steady: Despite systemic risks and ongoing political uncertainty, the sector is well placed to weather current challenges
OBG
plus

Although summer 2013 has seen increased political risk and uncertainty in the country’s broader macroeconomic environment, the positive financial results of Egypt’s banking sector over 2012 and into 2013 attest to its overall resilience. A process of regulatory reform, which began in 2004, underpins this solid performance, and continues to this day as the sector readies itself for the implementation of Basel standards. However, while the fundamentals of the banking sector have made it…

Overview

Holding steady: Despite systemic risks and ongoing political uncertainty, the sector is well placed to weather current challenges
OBG
plus

Although summer 2013 has seen increased political risk and uncertainty in the country’s broader macroeconomic environment, the positive financial results of Egypt’s banking sector over 2012 and into 2013 attest to its overall resilience. A process of regulatory reform, which began in 2004, underpins this solid performance, and continues to this day as the sector readies itself for the implementation of Basel standards. However, while the fundamentals of the banking sector have made it…

Interview

OBG talks to Hisham Ramez, Governor, Central Bank of Egypt
OBG
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Interview:Hisham Ramez What short-term solutions are you considering to help spur economic growth? HISHAM RAMEZ: It is the role of all Egyptians to be serious about the current position and the economic situation that we are in. There is a need for constructive criticism, dialogue and cooperation. We have a tremendous potential with the right fundamentals for this economy to grow, but we have to work together and look to the future good of the country. Before attracting foreign direct investment,…

Interview

OBG talks to Hisham Ramez, Governor, Central Bank of Egypt
OBG
plus

Interview:Hisham Ramez What short-term solutions are you considering to help spur economic growth? HISHAM RAMEZ: It is the role of all Egyptians to be serious about the current position and the economic situation that we are in. There is a need for constructive criticism, dialogue and cooperation. We have a tremendous potential with the right fundamentals for this economy to grow, but we have to work together and look to the future good of the country. Before attracting foreign direct investment,…

Interview

OBG talks to Ali Al Kuwari, Acting Group CEO, Qatar National Bank (QNB)
OBG
plus

Interview:Ali Al Kuwari What are Egypt’s comparative advantages as an investment destination? ALI AL KUWARI: While Egypt is currently facing some challenges, the long-term prospects of the country are encouraging. Egypt is an attractive destination due to its dynamic and educated labour force, sizable population, natural resources and diversified economy. With the appropriate mix of economic policy and investment incentives, it is widely recognised that Egypt has the potential to grow at…

Interview

OBG talks to Ali Al Kuwari, Acting Group CEO, Qatar National Bank (QNB)
OBG
plus

Interview:Ali Al Kuwari What are Egypt’s comparative advantages as an investment destination? ALI AL KUWARI: While Egypt is currently facing some challenges, the long-term prospects of the country are encouraging. Egypt is an attractive destination due to its dynamic and educated labour force, sizable population, natural resources and diversified economy. With the appropriate mix of economic policy and investment incentives, it is widely recognised that Egypt has the potential to grow at…

Analysis

Leading the way: A look at the top five players in the sector
OBG
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Ongoing political uncertainty, muted GDP growth and the threat of reduced business volumes that these factors carry with them has resulted in a number of ratings agencies giving Egypt’s banking sector a negative outlook. However, Egypt’s largest banks have demonstrated a high degree of resilience to date, with their bottom lines supported by the ready availability of government securities placed at high yields. What follows is a snapshot of the top-five players in the Egyptian banking sector.…

Analysis

Leading the way: A look at the top five players in the sector
OBG
plus

Ongoing political uncertainty, muted GDP growth and the threat of reduced business volumes that these factors carry with them has resulted in a number of ratings agencies giving Egypt’s banking sector a negative outlook. However, Egypt’s largest banks have demonstrated a high degree of resilience to date, with their bottom lines supported by the ready availability of government securities placed at high yields. What follows is a snapshot of the top-five players in the Egyptian banking sector.…

Analysis

Sourcing funds: A large-scale T-bill issuance has significantly altered the exposure profiles of local banks
OBG
plus

Effectively priced out of the international bond market, the Ministry of Finance has been compelled to turn to the domestic banking sector to meet the demands of the state budget. For local banks faced with reduced borrowing demand, the easy yield offered by a steady supply of treasury bills (T-bills) represents an attractive route to growth. However, the government has paid a high price for its reliance on local lenders. After ramping up its T-bill programme in 2011, yields on government debt…

Analysis

Sourcing funds: A large-scale T-bill issuance has significantly altered the exposure profiles of local banks
OBG
plus

Effectively priced out of the international bond market, the Ministry of Finance has been compelled to turn to the domestic banking sector to meet the demands of the state budget. For local banks faced with reduced borrowing demand, the easy yield offered by a steady supply of treasury bills (T-bills) represents an attractive route to growth. However, the government has paid a high price for its reliance on local lenders. After ramping up its T-bill programme in 2011, yields on government debt…

Analysis

Changing perspectives: As small businesses show increasing potential, lending attitudes are beginning to change
OBG
plus

Small and medium-sized enterprises (SMEs) have occupied a prominent place in government policy since 2002, when the Ministry of Finance introduced a more favourable tax regime for the segment. Since then, further government initiatives have sought to diversify the economy and provide employment for a rapidly expanding population by enhancing SMEs’ access to finance, as well as their ability to benefit from non-financial services, such as information and communications technology. Egypt’s…

Analysis

Changing perspectives: As small businesses show increasing potential, lending attitudes are beginning to change
OBG
plus

Small and medium-sized enterprises (SMEs) have occupied a prominent place in government policy since 2002, when the Ministry of Finance introduced a more favourable tax regime for the segment. Since then, further government initiatives have sought to diversify the economy and provide employment for a rapidly expanding population by enhancing SMEs’ access to finance, as well as their ability to benefit from non-financial services, such as information and communications technology. Egypt’s…

Analysis

View from abroad: A largely untapped market is drawing increasing international interest
OBG
plus

Entering Egypt’s banking sector has long been a challenging proposition. The large number of domestic players serving a bankable population limited by low salaries and high informal employment has left the Central Bank of Egypt (CBE) reluctant to license new lenders. The last major alteration to the sector’s ownership came in 2004, when the Central Bank of Egypt established a minimum capital requirement of LE500m ($71.2m), which resulted in a series of mergers and acquisitions and saw the…

Analysis

View from abroad: A largely untapped market is drawing increasing international interest
OBG
plus

Entering Egypt’s banking sector has long been a challenging proposition. The large number of domestic players serving a bankable population limited by low salaries and high informal employment has left the Central Bank of Egypt (CBE) reluctant to license new lenders. The last major alteration to the sector’s ownership came in 2004, when the Central Bank of Egypt established a minimum capital requirement of LE500m ($71.2m), which resulted in a series of mergers and acquisitions and saw the…