The National Bank of Egypt (NBE) has opened letters of credit to finance import operations for the bank’s clients worth $18.5bn during the period between 3 November 2016 and 5 December 2017, i.e. within 13 months, according to Yehia Aboul Fotouh, vice president of the bank.
Aboul Fotouh told Daily News Egypt that the bank managed to fund these operations after foreign exchange earnings increased significantly following the liberalisation of the exchange rate, noting that the total amount of foreign exchange earnings in the bank reached about $17bn since 3 November 2016 and until 5 December 2017.
In response to a question about the extent to which the bank may resort to launching foreign bonds to enhance the liquidity of foreign exchange, Aboul Fotouh said that it is a high possibility at any moment. The idea of receiving loans from abroad or making agreements with foreign banks to cover import operations and provide funds or loans is part of the bank’s everyday work. However, the bank is delaying the step of launching bonds until the conditions of global markets improve, as well as the conditions of the Egyptian economy, in order to launch bonds with a proper non-exaggerated return, added Aboul Fotouh.
NBE launched bonds worth $600m to the global markets in August 2010. The interest rate of these bonds was 5.25%.
In March 2015, the bank’s Extraordinary General Assembly approved the issuance of bonds in the global market.
According to a previous statement by Hisham Okasha, NBE chairperson, the bank was expected to issue these bonds in the first quarter of 2017, however, this has not happened yet.
Aboul Fotouh said that anyone who tracks the bonds recently issued by the government will find that the interest rate for the second launch was less than the first, which reflects the confidence international institutions have in the Egyptian economy, and is an indication that any Egyptian bonds that may be launched in the future would have a much lower interest rate.
On another note, Aboul Fotouh said that the value of the bank’s high-yield savings certificates issued in November 2017 reached about EGP 410bn on Tuesday.
In November 2016, NBE issued two savings certificates; the first for three years bearing a 16% interest rate and another for 18 months with an interest of 20%. They aim to attract liquidity from the local market to cut high inflation rates and also encourage Egyptians to sell using dollars and obtain the high-yield certificates instead, following the decision to float the pound.
According to Aboul Fotouh, the bank does not intend to reduce the interest rate it offers on these certificates now, noting that it will be linked to inflation rates, despite the bank bearing the high cost of these certificates.
Meanwhile, he said that the bank’s executive committee will meet mid-week to study the number of loan applications made to the bank, whether directly granted by the bank or by other banks, to various economic sectors.
NBE has been marketting and managing syndicated loans worth EGP 58bn in the first nine months of 2017, Aboul Fotouh said.
He noted that the syndicated loans arranged by the bank have been channelled to different economic sectors, including the building materials, electricity, petroleum, and real estate development sectors.
Bloomberg International had named NBE the best bank in Egypt and Africa for the syndicated loans it manages. NBE has also been ranked sixth across the Middle East and North Africa as co-financing agent.
According to Aboul Fotouh, the bank has a great interest in mega-projects related to vital sectors in the various energy fields, as well as the building materials, contracting, food, real estate development, tourism, transportation, and communication sectors. These sectors play an important role in creating added value for the Egyptian national economy and creating jobs that drive development.