Karim Sous, head of the retail credit risk sector at National Bank of Egypt (NBE), said that the current volume of retail banking portfolio is about EGP 42bn, pointing out that the bank aims to reach EGP 43bn by the end of June 2017.
During his participation in a real estate finance seminar, held by the Egyptian Banking Institute a few days ago, Sous told Daily News Egypt that the bank aims to increase the size of the mortgage portfolio to EGP 5bn by the end of June 2018.
He explained that the bank made EGP 1.35bn available, to finance 13,500 housing units within the framework of an initiative launched by the Central Bank of Egypt (CBE) in February 2014 in an attempt to finance low- and middle-income housing.
The total size of the mortgage portfolio, including national housing projects and the CBE’s initiative, amounts to 1.8bn.
The bank received 30,000 requests to buy housing units from people with low or middle income, agreed upon 18,500 requests, and granted funds for 13,500, according to Sous.
He noted that the bank receives between 2,000 to 3,000 orders per month and postponed 10,000 requests to complete some of the paperwork and procedures for funding.
He said that the bank is currently transferring the micro-finance portfolio to the retail sector rather than to the small- and medium-enterprises (SMEs) sector. It is also working on training a number of workers in the retail sector on this type of funding, pointing out that the size of that portfolio currently amounts to EGP 500m and that it includes grants to 18,000 customers.
Sous explained that this portfolio is direct financing from the bank to clients of these projects, in which the large geographical spread of the bank was helpful.
Financing associations enter under the small- to mid-size enterprises financing, pointing out that the rates of default in these projects is very limited and almost negligible.
He confirmed that new programmes will be launched to fund these projects; however, he did not specify the targeted portfolio size to finance these projects in the coming period. He added that it will be determined with the beginning of the new fiscal year and after the completion of the transfer of the portfolio to the retail sector.
Sous said that the bank focuses on the industry sector largely during the current and coming period in order to support domestic products, reduce imports, increase exports, increase state resources from foreign exchange, and reduce the pressure on the local exchange market.
He added that there is a decline in demand for personal and automotive loans because of high interest rates on them after the pound flotation.
Growth in retail lending rates dropped significantly after the CBE’s decision released in January 2017. This decision states that the value of retail loans instalments should not exceed 35% of the total net monthly income of the client and could increase to 40% in the case of personal housing mortgage loans granted according to Law No. 148 of 2001.
He explained that the bank was growing at an annual rate of 18% in the retail business, and this growth declined to between 10% and 12% after that decision, pointing out that the decision to float the pound and the accompanying successive rises in interest rates increased the problems of the sector.
The NBE is working to revitalise the sector and increase its growth rate by focusing on young people and modernise electronic services to attract a new segment of customers, according to Sous.
He expects that the bank is to launch the M VISA service by the end of February, in order to spread the use of cards at grocers and small shops to reduce the use of cash. He pointed out that debit cards only will be used as a start when activating the service.