Only three banks provide direct loans to finance tourism trips in the Egyptian market. They are Banque Misr, the Arab Investment Bank (AIBK) and Al Baraka Bank—Egypt, among 22 banks that were included in the scan made by Daily News Egypt.
The scan showed that some banks have included these loans within the retail loans provided to their clients, while the rest of the banks have refrained from offering these kinds of loans.
After January 2011, banks were more inclined to reduce the number of retail products they made available before, including the loans to fund local and foreign trips.
Officials in the bank have attributed this to the low demand for these loans and the high risks of financing them. Banks refraining from offering these products has led to strong reliance by consumers on personal loans in order to achieve their funding purposes.
According to the most recent available data on Banque Misr’s website, the bank offers tourist trips loans to Egyptians working in government sectors, self-employed individuals, commercial and industrial activities, pensioners, and beneficiaries of savings owners.
The banks require the minimum age of the borrower to be 21, and the maximum to be 60, when the loan is collected for employees, and those aged 65 in the case of self-employed individuals and pensioners as well as owners of commercial and industrial activities. No maximum age was put forward for clients with saving funds.
The maximum value of the loan is estimated at EGP 100,000, and the repayment period of the loan is 120 months.
In order to obtain the tourism trips loan from Banque Misr, clients must submit a signed request to obtain the loan, with a copy of the valid national ID or a utility receipt, in addition to a valid offer made by the tourism company or companies that the client will take the trip through.
As for employees, they must submit a salary breakdown and a pledge from the employer to transfer the salary or monthly instalment.
In the case of self-employed individuals and owners of industrial and commercial activities, they submit a permit to practise the profession or a copy of the tax card, in addition to a recent document from the Commercial Register.
According to the bank, pensioners who want to obtain the loan must submit a statement of the value of the monthly pension transferred to banks or submit a pledge by the General Authority for Insurance and Pensions.
Al Baraka Bank-Egypt
As for Al Baraka Bank, it offers a programme to finance tourist trips and airline tickets.
According to the bank, the programme benefits classes between the age of 21 and 65 by the end of the funding period or until they are pensioners, including workers in government bodies, the public business sector, and the private sector—in addition to insurance companies, early pensioners, owners of trade activities, and self-employed.
The maximum amount of financing is EGP 200,000 with a 20% down payment of the funding value. The minimum monthly income of the borrower must be EGP 3,000, and the monthly instalment should not exceed 40% of the monthly income’s value.
The repayment period is 36 months. The bank allows borrowing without a salary transfer. The bank will a check for the tourism company with which clients will be travelling.
The Arab Investment Bank (AIBK) offers funding programmes for entertainment and for therapeutic and religious trips through major tourism companies.
The bank requires that the borrower be Egyptian with a total income of at least EGP 5,000.
The bank offers funding worth up to EGP 100,000, including interest rates with a maximum of 80% of the total cost of the trip. The repayment period could range from three months to one year based on the client’s desire.
The Housing and Development Bank (HDB) offers a diverse package of loans for personal needs, including allowances to tourists and for religious and entertainment trips.
According the bank, it finances about 75% of the required expenses with a payment programme up to 84 months in the case of the transfer of salary, instalment, or monthly pension to the bank.
The client is required to submit identity documents and others to guarantee the financial state and his job, including the national ID, and their gas, electricity, or phone receipt, or an ownership or rent contract of a home. Clients are also required to provide salary breakdowns from their employers.
As for owners of trade activities and the self employed, they provide their commercial registers, a 6-month bank statement and documents to explain the tax situation.
HSBC provides financing for different purposes, including tourist trips.
The bank provides personal funding without guarantees if the client is an employee who gets a paycheck, with the option to choose between funding with fixed or changing rates.
In the case of transferring the salary or the loan instalment, the bank provides funding worth up to EGP 1m, depending on the monthly income of the client and the period he has been in his job.
The repayment period can reach up to 84 months with a fixed return rate and 60 months for a changing return rate. The repayment period in case of not transferring the salary ranges between 6 and 60 months.
Bank Audi provides a wide range of financing programme that meets the needs of most clients, including travel finance.
The bank offers diverse financing programmes to employees, entrepreneurs, bank employees, doctors, armed forces officers, and Audi Premiere customers.
The guarantees offered by the bank are diverse, including loans with salary transfer guarantees or instalment transfers without salary transfer.
The bank also accepts different kinds of incomes, including a bank statement, an HR letter, income alternatives, or any other document to prove extra income, such as leases.
According to the bank, clients obtain the approval on loans within 48 hours, and the value of loans range between EGP 10,000 and EGP 1.5m, with a 96-month payment period.
To obtain the loan, a client must submit a loan application, a copy of the national ID, a recent receipt sent to the current place of residency, and proof of income.
No return to these loans
For his part, an official in one of the banks that previously provided entertainment loans has excluded the possibility of returning to these kinds of loans again amid the difficult economic circumstances in Egypt which led to major increases in prices and higher risks of non-payment of loans.
He added that the controls put forward by the Central Bank of Egypt (CBE) for consumer loans that stipulate monthly instalments paid by clients must not exceed 35% of their monthly income are also an obstacle for offering such loans.
“The Egyptian government market currently does not accommodate any new loans, especially if they are entertainment loans, where expanding these loans depends on demand and the ability to face their potential risks,” the source said. He added that most of the clients depend on personal loans to meet their own personal needs, including purchasing cars, homes or paying education fees.
On the other hand, an official in the retail banking sector in one of the banks said that the Egyptian market accommodates several diverse retail banking products; however, banks do what suits them. He noted that recreational products are launched based on the strategy of each bank and the nature of the segments it deals with.
He explained that banks are currently focusing on restructuring the products of personal loans in a way that suits the controls of the CBE regarding retail loans.
The source said that personal loans enable clients to meet their own needs and purchase what the desire.