Banking
From The Report: Egypt 2019
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Egypt has been a regional banking powerhouse for more than a century and is home to the biggest bank¬ing sector in North Africa. The industry is also one of the region’s most stable, surviving both the economic turbulence that followed the Arab Spring and a more recent foreign currency crisis that saw government auctions of US dollars and the growth of a parallel market for foreign currency. The resolution of the currency challenge through the flotation of the Egyptian pound in 2016 has helped strengthen bank profitability, and a positive economic outlook for 2019 underwrites the continuance of this trend. However, the sector also faces near-term challenges, including a looming deadline for a bold small and medium-sized enterprise lending target, the introduction of new accountancy standards and the probable implementation of a significantly revised banking law. This chapter contains interviews with Hisham Ezz Al Arab, Chairman, Federation of Egyptian Banks and Commercial International Bank; and Dante Campioni, CEO, AlexBank.

Articles from this Chapter

Overview

Leading the way: New digital and financial technology initiatives help the country maintain its edge in regional financial services
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Egypt has been a regional banking powerhouse for more than a century and is home to the biggest banking sector in North Africa, according to the Union of Arab Banks. The industry is also one of the region’s most stable, surviving both the economic turbulence that followed the Arab Spring and a more recent foreign currency crisis that saw government auctions of US dollars and the growth of a parallel market for foreign currency. The resolution of the currency challenge through the flotation…

Analysis

A matter of interest: Currency stabilisation efforts have sparked debate on interest rate hikes implemented by the central bank
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As the Central Bank of Egypt (CBE) has attempted to stabilise the country’s currency in recent years, the banking sector has been placed in a challenging position. At the macro level, an overvalued Egyptian pound following the 2011 revolution acted as a brake on investment and undercut economic growth, with the consequence being a reduced appetite for loans. A devaluation of the currency in late 2016 led to an almost immediate 50% drop in the currency’s value, which restored investor…

Analysis

Opening doors: Lending initiatives are increasing access to finance for small and medium-sized enterprises
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Attempts by the Central Bank of Egypt (CBE) to boost lending to small and medium-sized enterprises (SMEs) dates back more than a decade. The Access to Finance initiative was one of the pillars of the second Egyptian banking reform plan – which was in effect over the 2008-11 period – and introduced the idea of exempting banks from a portion of their reserve requirement, equivalent to the direct facilities they extended to SMEs. This era saw a dedicated SME unit established in the Egyptian…

Analysis

By the book: Broadening the reach of the financial sector requires a keen understanding of the regulatory landscape
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Taken together, the Central Bank of Egypt and the Banking Law No. 88 of 2003 act as prudent enablers for the domestic banking industry. However, much of the nation’s increasingly complex financial arena is governed by other bodies and regulations. Many of the non-core activities of Egypt’s banks fall into what is collectively known as non-banking financial services, which are overseen by the Financial Regulatory Authority (FRA) and governed by a patchwork of legislation. Real estate finance,…

Interview

Branching out: Hisham Ezz Al Arab, Chairman, Federation of Egyptian Banks and Commercial International Bank, on regulatory frameworks and international influence within the sector
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Interview:Hisham Ezz Al Arab How are borrowing costs affecting the demand of domestic players that are looking to secure loans in the local market? HISHAM EZZ AL ARAB: After the currency floatation in November 2016 interest rates were raised to combat soaring inflation. While this created external demand for Egyptian debt, driven in large part by the competitive currency, private sector demand for credit shrank. Consumers have been facing high inflation, increased costs of financing and a…

Interview

Growing exposure: Dante Campioni, CEO, AlexBank, on increasing financial inclusion and the benefits of technological innovation
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Interview:Dante Campioni How can banks continue to encourage more companies to join the formal sector? DANTE CAMPIONI: Increasing financial inclusion and attracting enterprises to join the formal sector is not something that banks can do alone. Success in this field will be the result of full collaboration between the financial sector and relevant governmental institutions. The solution to convincing companies to operate formally through banks is to offer products and solutions that are attractive…