Egypt's Banking Sector Poised for Another Leap Year Amid Surging Interest Rates

We believe that Egyptian banks are well positioned to benefit from the current macroeconomic conditions, and we expect another year of exceptional profits with impact starting to appear in 1Q24.

Key Factors Driving Strong Growth: 

• Stronger NIMs: supported by higher yield on treasury investments even on stable exposure.
• Strong non-interest income growth will be driven by stronger FX gains on the revaluation of financial assets in FC.

The EU will provide Egypt with a EUR7.4 billion (over USD8 billion) package varying between grants and loans. 

Egypt has recently released a portion of accumulated goods across various ports totaling USD3 billion, Prime Minister stated during a cabinet meeting.

Prime Minister said that there are indicators of improved liquidity as the confidence of citizens, tourism companies, and Egyptians abroad in the EGP improved, increasing the transfers and concessions on the USD.

A member of the General Importers Department of the General Federation of Chambers of Commerce, said that banks have accelerated the pace of release for priority sectors, such as food, medicines, and production supplies, since the beginning of this week.

Egypt has collected USD685 million from the second phase of the initiative to facilitate the import of cars for Egyptians abroad since its launch at the end of October.

The government raised the price of wheat supply during the coming season by 25% compared to the indicative price it set at the beginning of the season to reach EGP2,000 for ardeb.

South Valley Petroleum Holding Company added new oil reserves to its recoverable production of about 46 million barrels since July 2023 until March 2024.

SWDY reported 4Q23 and FY23 consolidated results recording attributable earnings of EGP2.0 billion (-12% YoY, -18% QoQ), leading to FY23 earnings of EGP10.1 billion (+87% YoY). At the current market price, SWDY is trading at FY24e P/E of 10.8x and EV/EBITDA of 4.6x.

10 banks raised the limit for international purchases through credit cards after the CBE directed banks to lift restrictions on the use of cards. 

EFG Finance, HRHO’s subsidiary, has obtained a license from the FRA to launch its new subsidiary, which will specialize in providing an innovative package of financial solutions and services specifically designed to meet the financial needs of SMEs in Egypt. The new company is expected to begin operations over 2Q24.

Several companies including CNFN, MNT-Halan’s Tasaheel, GB Capital, and Rawasi Urban Development are in talks with the Financial Regulatory Authority (FRA) to move ahead with sukuk issuances worth a combined EGP10 bn. 

CNFN’s Contact Pay customers will now be able to make use of OPay’s channels, which includes over 90k points of sale and payment kiosks.

Adnoc and BP’s USD2 billion bid for Israeli natural gas giant NewMed Energy has been put on ice, amid uncertainty created in the external environment. 

The Oil Ministry has devised a plan that will see state-owned firm Egyptian Petrochemicals Holding Company (ECHEM) producing the country’s first sustainable aviation fuels (SAF).

According to local media, the Pharmaceuticals Division of the Federation of Egyptian Chambers of Commerce intends to ask the Egyptian Drug Authority that the approved increase in drug prices that the Authority will agree on should be around 50% at least, to absorb a large portion of the expected increase in production costs after the floatation.