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Jump in bank profits in the last six months - Daily News Egypt

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Jump in bank profits in the last six months

The Faisal Islamic Bank of Egypt stated that its profits for the first half of the current fiscal year totalled EGP 370.8m (nearly $53m), compared to EGP 283.6m during the first half of 2012.


Egypt’s banking sector witnessed a jump in profits during the first half of the current fiscal year in comparison to the same period last year, and even in comparison to the first quarter of this year.. (DNE Photo)
Egypt’s banking sector witnessed a jump in profits during the first half of the current fiscal year in comparison to the same period last year, and even in comparison to the first quarter of this year..
(DNE Photo)

Egypt’s banking sector witnessed a jump in profits during the first half of the current fiscal year in comparison to the same period last year, and even in comparison to the first quarter of this year.

The Faisal Islamic Bank of Egypt stated its profit margins increased 30.7% during the first half of the current fiscal year, compared to the same period last year, while the Misr Iran Development Bank stated that its profits for this period totalled EGP 176m, an EGP 81m increase during the first quarter, from a total of EGP 86m.

Bankers throughout the country expect that other institutions will also soon announce increases in their profit margins for the first half of this year, due to their subscription to government debt instruments, which have brought high returns over the last six months.

The Faisal Islamic Bank of Egypt stated that its profits for the first half of the current fiscal year totalled EGP 370.8m (nearly $53m), compared to EGP 283.6m during the first half of 2012.

Muhammad Al-Atrabi, Managing Director for the Egyptian Gulf Bank, stated that it had become a challenge for many banks to achieve profitability in recent months, especially considering the poor state of Egypt’s economy, which has weakened as a result of political strife and the recent closing of a number of factories.

He added that the rush to bring an end to Egypt’s transitional phase, in addition to working to integrate and include all of Egypt’s political forces in the country’s decision making processes would go far to help banks play their true role within the economy while at the same time achieving high profit margins.

He stated that the stabilisation of the country would allow banks to begin lending once again at higher rates, to both individuals and companies, which would help stimulate the economy, support banks and help them achieve higher profit margins.

Amro Tantawi, Chairman of the Retail and Branches Division within the Misr Iran Development Bank, said banks achieving higher profit margins would help strengthen the sector, which has remained

“patient and steadfast over the past two years.”

He added that many within the sector were optimistic about the potential for banks to witness higher profit margins, pointing out, however, that such a prospect was dependent upon the level of political stability seen throughout the country and the speed by which the government could exit its current transitional phase. The establishment of a permanent government, he said, would allow for banks to begin widening their economic activities.

Tantawi stated that Egypt’s banking sector was capable of withstanding difficulties set to be faced within the coming months, saying the sector’s performance over the last six months reflected that.

He stated that in the event that the country’s transitional period was extended and political turmoil was to continue, banks would see their profits drop slightly: a reflection of the lack of stability seen throughout the country since the outbreak of the 30 June protests. He added that recruitment channels for a number of banks have also weakened over the last two years.

He expressed his optimism, however, regarding the potential for economic growth rates to increase over the last quarter of the current fiscal year, along with general improvements seen within the country’s investment environment, the result of relative stabilisation seen recently throughout the country in recent weeks.

Ala Adli, Chairman of the Retail and Branches Division within the Faisal Islamic Bank of Egypt, said banks had been largely successful in reaping profits in recent months, attributing this to their “persistence in working to support and expand their activities.” He said, however, that some possessed reservations regarding the granting and opening up of new lines of credit as a result of recent instructions released by the Central Bank of Egypt.

He stated that increased profit margins for banks could be achieved through expansion of their investment portfolios, particularly into credit-based activities and the financing of development projects. He stated that granting loans to clients could potentially be more profitable than the purchase of government debt tools.

Adli stated that banks had recently begun to increase their lending rates and would work to stimulate the country’s retail banking sector over the coming months, which would help create new job opportunities and directly support bank profit margins.

Translated by Al-Borsa

Link: http://goo.gl/bVpU3L

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