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Industrial sector acquires 28% of bank loans in March - Daily News Egypt

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Industrial sector acquires 28% of bank loans in March

Most loans in the banking sector worldwide are granted to the industrial sector, says Ezz El-Din Hassanein

The industrial sector acquired 27.97% of the total loans granted by banks to customers in the public and private sectors in March 2016, according to an analysis by Daily News Egypt.

This is equivalent to EGP 237.1bn from a total bank loan portfolio of EGP 847.574bn in March.

The sector also acquired 34.2% of the total foreign currency loans, and 25.11% of local currency loans.

According to Ezz El-Din Hassanein, a banking expert and the general manager of an Arab bank operating in Egypt, most loans in the banking sector worldwide are granted to the industrial sector.

Hassanein explains that this sector is the most important engine for economic growth. It also increases employment rates and the foreign exchange reserves of export revenues. Therefore, the loan acquisition is normal, and needs to increase during the coming period.

The services sector acquired 23.1% of total loans in March, 20.8% of foreign currency loans, and 28.1% of local currency loans, according to the analysis.

Hassanein adds that the services sector is one of the key sectors in fulfilling the needs of citizens in the areas of energy, transportation, and communications.

Banks are keener on financing the above-mentioned sectors, including the household sector—specifically in retail banking—than giving loans to the agriculture sector.

According to the monitoring conducted by Daily News Egypt, the agriculture sector acquired only 1.1% of total loans in banks, 1.27% of loans in local currency, and 0.75% in foreign currency loans.

Hassanein believes that banks grant most of their loans to the industrial, services, and retail sectors, given their profitability and relatively low risk rate. However, if the state wants to achieve real development, it should fund the agriculture sector, Hassanein adds. In his opinion, the loans directed at this sector should not make up less than 15% of the total bank loans ratio, and should be considered as part of the trade sector account.

The increase in the volume of bank loans amounted to EGP 47.819bn in March, reaching EGP 847.574bn in total, compared to EGP 799.755bn in February, according to Daily News Egypt.

Hassanein further adds that more than 70% of these bank loans were granted to finance energy, oil, and giant industrial projects. Part of the loans were also granted to increase the limits of existing credit for some of the iron, cement, pharmaceutical, petrochemical, and fertilizer corporate sectors, and to fund the household sector.

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