Prominent bank leaders have stressed that banks play a major role in supporting the real estate sector and construction companies, expecting an increase in the volume of loans directed to the sector over the upcoming period with the implementation of a number of major national projects. Yehia Aboul Fotouh, vice president of the National Bank of Egypt (NBE), said that before the 25 January Revolution, the construction sector was on its way to collapse in a way that led a number of companies to exit the market. However, last year, several construction companies renewed all their tools and equipment after the activity returned strongly. He explained that during 2016, NBE increased the credit limit of the construction sector from EGP 20bn to EGP 30bn, then to EGP 40bn. Aboul Fotouh pointed out that the bank has injected EGP 5bn as letters of guarantee for small and medium construction companies. The sector owns the largest share in the portfolio of small and medium enterprises. He added that the bank has made great efforts to provide credit facilities to a number of troubled companies in the sector of construction, enabling several of them to resume their business and expand again. According to Mohamed Mashhour, the vice chairperson of Banque Du Caire, public banks are willing to launch an initiative to enhance the works of construction companies outside the country, which will ease liquidity of foreign currencies. He stressed that the construction sector is witnessing a great leap as a result of the state launching several national projects. Mashhour noted that the sector of construction is witnessing exceptional circumstances as a result of the increased prices of some materials after the liberalisation of the exchange rate, with contractors seeking to complete projects assigned to them. However, the stability of the exchange rate will be a solution for the crisis. Mohamed Fayed, deputy chairperson and managing director at Audi Bank Egypt, said that the real estate construction sectors acquire a good ratio of loan portfolios in banks. He noted that the movement of the sector and the state's interest in the national projects increased the finances allocated to the sector. Fayed explained that the bank's role is to be a consultant to a company, as it doesn't only provide it with loans. In most of the cases the funds allocated to the project are insufficient, which delays granting the loan to the contractor as the bank is keen on the repayment of the money to its depositors. Sahar El Damaty, deputy managing director at Emirates NBD denied the rumours about the inflexibility of banks with the construction sector and their rejection to provide the needed funds. She explained that the small and medium-sized enterprises (SMEs) operating in this sector obtained roughly EGP 10.8bn from banks. She added that the construction sector represents the largest financing ratio among the other sectors financed by banks. El Damaty noted that the bank has a credit policy to determine each sector's risks according to its financial solvency; however, banks are currently interested in the construction sector. When banks deal with SMEs or real estate financing companies, they consider many elements to determine the size of risks. The elements include the price fluctuations of construction materials, the financial lists, the size of the cost, the signed contracts with the parties, the extent of impact of the current economic conditions on the companies, their ability to repay the price differences, whether or not companies owe dues, and many other issues that should be answered.
