By Ahmed Kamel: High interest rates on savings have boosted deposits at the nation's banks since the currency float in November 2016. Bank deposits jumped 20.5 per cent, year-on-year, to LE3.329 trillion at the end of December 2017, compared to LE2.761 trillion a year earlier, data from the Central Bank of Egypt (CBE) showed. The bank deposits stood at LE2.123 trillion at the end of June 2016, according to CBE data. The deposits increased by LE65 billion in January 2018 alone to reach LE3.39 trillion at the end of the month, CBE data showed. The rise reflected the nation's fruitful reforms over the past three years. The increase in bank deposits has been driven by interest rate hikes by the CBE after free-floating the local pound on November 3, 2016. "Egypt has accomplished monetary and financial stability via the economic reforms, including the currency float," CBE Governor Tarek Amer was quoted as saying, by the local media. The household sector and the government deposits totalled LE2.86 trillion and LE529 billion at the end of January 2018, according to CBE data. The profitability of banks has also increased thanks to the economic overhaul. The profits of local banks jumped 32 per cent in the first quarter (Q1) 2018, a Beltone Financial report said. "Loans rose by four per cent in Q1 2018. Nonperforming loans fell by 11 per cent," it said. Loans stood at LE1.476 trillion at the end of January 2018, up from LE1.453 trillion in December 2017, CBE data showed. The loan/deposit ratio, standing at 43.5 per cent, is rather low compared to other world countries. The loan-to-deposit ratio (LTD) stood at 45.4 per cent at the end of September 2017. Lower rates are deemed an ideal solution to push private investment and increase the LTD. The CBE sought to ease risks by reducing credit exposure. In early 2016, it reduced the maximum limit for loans to customers and all their related members – subsidiaries – to 20 per cent of the capital base, down from 25 per cent for each client. The CBE has given banks three years' grace to adjust to this new rule. The local banks cannot provide loans that exceed 15 per cent of the capital base, according to CBE regulations. As for personal loans, the CBE has set a lending cap of 35 per cent of a customer's income after tax and social insurance have been deducted.
