Banking
From The Report: Egypt 2017
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Egypt’s banking sector has shown itself capable of weathering difficult economic circumstances in recent years. However, profitability has been challenged by a range of forces, including significant changes made in 2016 to the regulatory framework surrounding lending activity and a shortage of foreign currency that negatively affected the daily operations of banks and wider investor sentiment. The sector is also undergoing something of a shake-up in terms of ownership, following an announcement in 2016 by the Central Bank of Egypt that the country intends to sell stakes in two state-owned lenders. Egypt’s banking sector is likely to continue to face some significant changes in 2017-18. The country’s lenders are still well placed to weather volatility, and are generally in good health, but the coming months will test their ability to adapt to changing circumstances.

This chapter contains an interview with Khalid Elgibali, Division President, Mastercard MENA.

Articles from this Chapter

Overview

Standing strong: Industry adjusts to economic headwinds and regulatory changes
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Consistently posting robust financial stability data, Egypt’s banking sector has shown itself capable of weathering difficult economic circumstances over recent years. However, profitability has been challenged by a range of forces, including significant changes made in 2016 to the regulatory framework surrounding lending activity and a shortage of foreign currency that negatively affected the daily operations of banks and wider investor sentiment. Banks now face a period of adjustment, both to…

Interview

Digital direction: Khalid Elgibali, Division President, Mastercard Middle East and North Africa, on encouraging the growth of electronic payments systems
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Interview:Khalid Elgibali What impact is technology having on the payments industry globally? KHALID ELGIBALI: Significant changes are taking place in the payments landscape worldwide that are positively impacting the way in which merchants accept payments for purchases, as well as how consumers interact with merchants and businesses to select and pay for goods and services. Advances in technology and the ubiquity of mobile phones are opening new realms of possibility in payments, creating…

Analysis

Currency needs: Faced with a shortage of US dollars, the central bank floats the pound to increase liquidity
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The Egyptian banking sector faces two diverging trends in terms of liquidity, depending on whether it is being measured in local currency or foreign currency. Despite the challenging economic environment, the industry remains adequately liquid in local currency terms. The core liquid assets of Egypt’s lenders, made up of cash held and deposits with the central bank and foreign banks, accounted for 23% of total deposits at the end of November 2015, according to Bank Audi. This figure represented…

Analysis

New rules: Lending regulations with stricter criteria have been introduced, while small business credit is set to see a boost
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In early 2016 the Central Bank of Egypt (CBE) introduced new regulations that established maximum loan limits for corporate borrowers and imposed affordability criteria for new retail borrowers. The new regulations mark a significant macro-prudential advance – international ratings agency Moody’s stated in January 2016 that their overall effect would be credit positive because they will contain the credit risk in banks’ rapidly expanding retail portfolios as well as reduce banks’ asset…

Analysis

Pause for thought: Basel III prompts emerging market banks to reassess the one- size-fits-all prescription and their own development goals
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The Basel III banking accords mark the latest step in the long process of harmonising financial regulations across markets, but the nature of their focus – and some of the problems they seek to solve – means that their relevance to the Middle East and Africa’s emerging and frontier markets can sometimes be somewhat limited. The majority of the banking sectors in the Middle East and Africa’s economies – South Africa aside – are far more straightforward, with activities focused on the…

Analysis

Routes to finance: Private equity and venture capital players expanding financing options for smaller companies
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Despite strenuous economic circumstances in recent years, Egyptian banks displayed a relatively robust performance in 2016 in terms of profitability, which has, in turn, led to a jump in credit for small and medium-sized enterprises (SMEs) and start-ups. While healthy sector numbers and regulatory reforms have helped foster an increase in lending from traditional players, there is still a funding gap, which has resulted in the emergence of private equity and venture capital industries. While lending…