The National Bank of Egypt (NBE) is studying granting funds of approximately EGP 6bn to 32 large companies. A final decision on this matter is expected within six months, according to Ayman Yassin, Head of Corporate Banking Group at the NBE.
In an exclusive interview with Daily News Egypt, Yassin explained that the bank granted in fiscal year (FY) 2014/2015 credit facilities to around 30 large companies. Only five of these are public sector companies, with the remaining 25 companies coming from the private sector.
What is the role of the Corporate Banking Group at the NBE?
The group is responsible for funding companies with annual revenues of not less than EGP 500m, working in the different economic activities.
What is the loans’ volume that have been granted to the large companies?
The loans portfolio granted by the bank to the big companies only amounted to EGP 88.2bn, by the end of the last FY that came to an end last June, compared to EGP 68bn in June 2014, with a growth rate of about 29%. The total loans portfolio granted to the big and medium companies reached EGP 105bn last June, compared to EGP 82.9bn in June 2014, with a growth rate of 27%, which is considered one of the highest growth rates in the Egyptian banking market.
What are the most prominent sectors the bank funded in the last period?
The bank funds all the activities contributing to the growth of the Egyptian economy. There are sectors where the bank achieved high growth rates in their funds; we are talking here about the big companies only. The growth rate in the loans granted to the real estate sector for example reached about 112% in last June, registering EGP 1.3bn, compared to EGP 598bn in June 2014. This rate came as a result of assigning an independent sector by the bank for the real estate development, specialising in
funding the big companies that work in the field of real estate development. The bank targets increasing the volume of the loans granted to that sector to reach EGP 3bn in June 2016.
The growth rate in the loans granted to the contracting sectors amounted to 67%, where it reached to EGP 3.6bn in June 2015, compared to EGP 2.01bn in June 2014. The loans granted to the transportation sector increased by about 66%, registering EGP 3.2bn in last June, compared to EGP 1.9bn in June 2014. The size of loans, offered for merchants, increased by 54% to reach EGP 310m in June 2015, instead of EGP 197m in June 2014.
As for the finance of fertilisers and food sector, it reached almost EGP 3.5bn, instead of EGP 2.8bn in June 2014, recording an increase of 22%. The offered funds for the sector of building materials increased from EGP 5.5bn, in June 2014, to EGP 6.3bn, in June 2015, which means an increase of 12%. The tourism sector achieved only a growth rate of 10%. Its loans increased from EGP 4bn, in June 2014, to EGP 4.5bn in June 2015, under the critical circumstances that this sector faces.
What about the petroleum sector?
It alone acquired EGP 40bn out of the total loans for the major companies, for which the bank offered loans over the past fiscal year (FY) 2014/2015, compared to EGP 27bn over the FY 2013/2014.
Does the Egyptian General Petroleum Corporation (EGPC) still acquire the largest share of the bank’s loans?
No. The situation is not as before. There is a trend in the bank not to concentrate only on the public sector companies, and to support private sector’ companies. This is exactly what happened. The bank financed many private petroleum companies, especially over the last period. The most notable ones were: PICO; TAQA; Emarat Misr; and MIDOR among others. Last year the bank granted loans to approximately 30 companies, only five out of which belonged to the public sector, while the remaining 25 belonged to the private sector.
What about the new loans that the corporate finance sector is currently studying?
We are currently studying the requests of around 32 companies, which requested loans from the bank. It is expected that the size of funds to be launched would reach approximately EGP 6bn. Some categories of this fund are in US dollars. The decision will be made within a maximum of six months.
Are there any loans which the bank is already about to provide?
Yes. The bank’s Board of Directors approved a loan of EGP 200m to Al-Kharafi for Constructions. Another loan of EGP 120m, which could be increased, will be provided to a senior company which works in the food sector.
What is the growth rate you hope to achieve in financing large companies?
We are initially targeting achieving a 10% increase in major companies’ loans portfolio. I am very optimistic about the growth of the economy, and increasing the demand for loans in the coming period. This will mean that we may achieve a growth rate of 30% during the current FY 2015/2016, taking into considers loans to be repaid throughout the year which reduces the achieved growth rate. We have all the capabilities that allow us to achieve this, especially as the NBE is the main bank in all syndicated loans arranged in the Egyptian market.
What about the bank’s role in financing projects that have been put forward in March during the Economic Summit, and projects of the Suez Canal development axis?
First of all, we are awaiting the launch of the Suez Canal development axis projects. However, there are several projects that were put forward in the Economic Summit, which the bank has already been studying. We have received offers from a number of investors, mostly from the Gulf, asking the bank for support in the establishment of a number of projects that have been put forward during the conference, some of which is linked to the Suez Canal. We are currently studying those proposals as well.
Does the NBE need another increase in its capital to be able to grant more loans?
The NBE has the largest capital base amongst all banks operating in the Egyptian market. It is enough to say that the capital base of the bank, qualifies it to grant about EGP 6bn loans per client. The usually does not happen, since there is no one client who needs this entire amount from the Bank.
What does the NBE seek to expand it in the coming period?
We are seeking to expand in the activity of issuing securitisation bonds, which is issued for some companies. The bank currently has a portfolio of such bonds that are worth about EGP 4bn. There is a tendency to put forward new bonds worth EGP 800bn during the next two months for the benefit of one company. The bank is also working to put other bonds worth EGP 2bn in favour of two companies that operate in real estate financing and contracting by EGP 1bn for each before the end of the current fiscal year.
Does the bank have any trouble providing dollar loans?
Despite the problem of the US dollar’s availability, [which is being] experienced by everyone, the National Bank of Egypt has sufficient dollar liquidity to cover dollar loans.