Flotation drives deposits at banks to EGP 490bn, loans to EGP 313.3bn in November 2016

137.2% growth in foreign currencies deposits in flotation month, drops to 18.3% after excluding impact of the decision

The Central Bank of Egypt's (CBE) decision to float the national currency on 3 November 2016 caused a jump in the size of deposits and loans at banks operating in the market in that same month. It also led the total financial position of banks to increase by over EGP 857bn.
According to a recent report by the CBE, the size of deposit portfolios at banks increased by EGP 490.2bn in November 2016 to reach EGP 2.714tn, up from EGP 2.224tn at the end of October 2016—an increase of 22.04%.
The CBE stated that growth rate in deposits at banks in November registered 41.27%, which drops to 20.47% after excluding the impact of the decision.
This hike in deposits was supported by the reevaluation of the foreign currencies deposits, where the non-government deposits increased from EGP 330.849bn in October 2016 to EGP 660.365bn in November, registering a hike of EGP 329.516bn. Meanwhile, government deposits in hard cash increased in value from EGP 102.944bn in October to EGP 197.909bn in November, marking an increase of EGP 94.967bn.
Moreover, the CBE noted that deposits in foreign currencies at banks increased by 137.2% in November. The figure falls to 18.3% after excluding the impact of flotation.
The CBE also pointed out that the decision of raising interest by 3%—which drove banks to issue saving vessels with returns of over 20%—also contributed to increasing the size of deposits. It noted that the size of non-government deposits in local currency increased in November to EGP 1.579tn, up by EGP 71bn from EGP 1.507tn in October 2016.
According to the CBE, the growth ratio of deposits in local currency reached 20.9% in November.
The household sector accounted for 74.7% of all deposits at banks. The sector also accounts for 78.7% of total deposits in the local currency and 65.2% of deposits in foreign currencies.
The CBE's report also revealed that the size of loans granted by banks to clients reached EGP 1.289tn in November 2016, up from EGP 975.8bn at the end of October 2016—indicating an increase of EGP 313.3bn.
Similarly, the CBE explained that the hike in the credit portfolio was mainly caused by the reassessment of the size of credit granted in hard cash after the flotation, where the value of loans granted to non-government clients in hard cash increased from EGP 199.533bn in October to EGP 394.396bn in November, with an increase of EGP 194.863bn.
The size of loans granted to the government in hard currencies also hiked from EGP 87.2bn in October to EGP 178.57bn in November, up by EGP 91.3bn.
Furthermore, the CBE said that the size of the non-government loan portfolio in local currency increased by EGP 22.8bn in November to settle at EGP 609.6bn, up from EGP 586.8bn in October. Government loans in local currency also increased from EGP 102.2bn to EGP 106.5bn.
According to the CBE, the private sector accounted for 77.8% of total loans granted from banks to their clients in November 2016, with the industry sector taking the largest share, followed by services and trade, with agriculture on the tail of the list.