Egypt Economy, Banking Sector And Opportunities In SMES

EGYPT MAIN ECONOMIC INDICATORS

2

3

Real GDP Growth

3,2%

Jun-03

7,2%

Jun-08

4,7%

Jun-09

5,1%

Jun-10

1,9%

Jun-11

2,2%

Jun-12

Source: CBE,, EIU

WHILE ECONOMIC GROWTH IS 2.2% IN FY 2012, IT’S EXPECTED TO RAMP UP TO 5% BY YEAR 2016

4

USD Million Trade Balance

-16,789-15,598

-31,698

-27,103-25,120-25,173

-23,415

-6,615

Dec-11 *

Jun-12Jun-11

Jun-10Jun-09Jun-08Jun-03 Dec-12 *

Source: CBE* 6 months Jul/Dec

TRADE BALANCE DEFICIT INCREASED NOTICEABLY AFFECTED MAINLY BY A SURGE IN IMPORTS

5

Export Proceeds

Dec-12 *

13,448

7,015

6,433

Jun-12

26,977

Jun-11

26,993

13,847

12,136

14,857

13,130

Jun-08 Jun-09 Jun-10

29,356

14,473

14,883

25,169

11,005

14,164

23,874

10,259

13,615Non-Petroleum Exports

Petroleum Exports

Dec-11 *

13,589

6,739

6,850

Source: CBE, EIU * 6 months Jul/Dec

USD Million

EXPORT PROCEEDS MAINTAINED THE SAME LEVELS AS 2011, AND EXPECTED TO REACH USD 27.9 BN IN FY 2013

6

Import Payments

Source: CBE * 6 months Jul/Dec

USD Million

WHILE GOVERNMENT ARE TAKING MEASURES TO CURB IMPORTS ON UNNECESSARY GOODS

-7,032

-43,310

-48,993

-5,161

-43,832

-23,802

-29,187

Jun-08 Jun-09

-11,775

Jun-11

-54,096

-44,834

-9,262

Non-Petroleum Imports

Petroleum Imports

Dec-12 *

-30,236

Jun-10

-52,771

-9,561

-43,210

-50,342

-23,533

-6,703

Jun-12

-58,674

-46,899

Dec-11 *

-5,385

7

Current Account Balance

Source: CBE * 6 months Jul/Dec

USD Million

CURRENT ACCOUNT LARGELY IMPACTED BY TRADE BALANCE WHILE SERVICES SECTORS AND REMITTANCES ARE MAKING NEW HIGHS

-3,044

-4,054

-7,928

-6,088

-4,318-4,424

888

Jun-10 Jun-11Jun-09Jun-08 Dec-12 *Dec-11 *

Jun-12

8

Suez Canal Revenues

2,6312,683

5,2085,053

4,5174,7215,155

2,236

Dec-12 *Jun-03 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Dec-11 *

Source: CBE * 6 months Jul/Dec

USD Million

SUEZ CANAL REVENUES CONTINUES NOT TO BE IMPACTED AND TO MAKE NEW HIGHS IN YEAR 2013

9

Tourism Revenues

5,5835,061

9,419

10,58911,591

10,48810,827

3,796

Dec-12 *Jun-03 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Dec-11 *

Source: CBE * 6 months Jul/Dec

USD Million

TOURISM REVENUES IMPROVING, AND EXPECTED TO RECORD USD 11.2 BN IN FY 2013, UP 20% FROM LAST YEAR AND TO REACH PRE-CRISIS LEVELS

10

Remittances of Egyptians Working Abroad

9,1767,899

17,970

12,593

9,753

7,8068,559

2,063

Dec-12 *Jun-03 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Dec-11 *

Source: CBE* 6 months Jul/Dec

USD Million

REMITTANCES OF EGYPTIAN WORKING ABROAD MAKING NEW HIGHS, AND EXPECTED TO RECORD USD 21 BN IN FY 2013

11

Overall Balance Of Payment

Source: CBE * 6 months Jul/Dec

USD Million

AS A RESULT, OVERALL BALANCE OF PAYMENTS REDUCED SIGNIFICANTLY TO JUST 0.5 BN IN DECEMBER 2012 IN COMPARISON WITH 8 BN IN DECEMBER 2011 AND 11 BN IN JUNE 2012

-552

-8,005

-11,278

-9,754

3,356

-3,378

5,420

Jun-10 Jun-11Jun-09Jun-08 Dec-12 *Dec-11 *

Jun-12

12

Net International Reserves

Mar-13

13,4

Jun-12

15,2

Jun-11

26,6

Jun-10

35,2

Jun-09

31,3

Jun-08

34,6

Jun-03

14,8

Apr-13

14,4

Source: CBE

USD Million

…STOPPING DRAINAGE ON RESERVES WHICH STARTED TO RISE AGAIN IN APRIL 2013

13

Total Debt % of GDP

External debt to GDP factoring in the informal sector (around 50% of GDP) can be as low as 10% of GDPSource: Ministry of Finance

AND WITH LOW FOREIGN DEBT AS LOW AS 16% OF GDP ALLOWS EGYPT TO WEATHER THROUGH ANY CRISIS

External DebtTo GDP

2009

84,5%

17,4%

2008

86,0%

19,0%

70,6%67,1% 67,0%Internal Debt To GDP

67,0%

2012

90,5%

15,6%

2011

85,0%

14,4%

2010

83,4%

16,4%

74,9%

BANKING SECTOR INDICATORS

14

15

Aggregate Deposits

278,179

124,965

403,144

Jun-03

552,079

195,120

747,199

Jun-08

598,587

211,107

809,694

Jun-09

686,052

206,440

892,492

726,940

230,097

957,037

Jun-11

778,476

245,041

1,023,517

279,857

1,110,610

Jun-12

830,753

Jan-13

LCY

FCY

+8%

Jun-10

A VERY RESILIENT BANKING SECTOR, DEPOSITS CAGR REPORTED 8% NOT AFFECTED BY ANY CRISIS

Source: CBE

EGP Million

16

503,218471,288463,880

427,454399,481

283,445

524,000+6%

Jan-13Jun-12Jun-11Jun-10Jun-09Jun-08Jun-03

Gross Loans

LOANS REPRESENT ONLY 33% OF GDP, WITH AMPLE OPPORTUNITIES TO GROW

Source: CBE

EGP Million

17

Total Assets

1,4411,366

1,2701,221

1,0921,083

578

+6%

Jun-03 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Dec-12

ASSETS GROWTH OF 6% CAGR MIRRORING GROWTH IN LOANS

Source: CBE

EGP Billion

18

Jun-11

10,5%

Jun-10

13,6%

Jun-09

13,4%

Jun-08

14,8%

Jun-12

9,9%

NPLs / Gross Loans

NPLs ON A DECLINE DUE TO RIGOROUS RISK MANAGEMENT CONTROLS

Source: CBE

19

95,7%

Sep-12

92,1%

Jun-08

100,4%

Jun-09

92,5%

Jun-10

94,5%

Jun-11

95,4%

Jun-12

Loan Provisions / NPLs

PROVISIONING GAP COMPLETELY CLOSED, ESTIMATED TO BE AROUND EGP 102 BN BEFORE THE BANKING SECTOR REFORM (2000-2003)

Source: CBE

20

82,4%

Sep-12

82,4%

Jun-03

83,9%

Jun-08

81,0%

Jun-09

80,5%

Jun-10

81,0%

Jun-11

82,2%

Jun-12

Loans to Private Sector / Total Loans to Customers

PRIVATE SECTOR LOANS CONSTITUTE MOST OF THE LENDING

Source: CBE

21

71,26470,44067,345

59,049

46,59841,550

37,576

Jun-09Jun-08 Jun-11Jun-10 Jun-12 Dec-12Sep-12

OVER THE PAST FEW YEARS BANKS HAVE DOUBLED THEIR CAPITAL

EGP Billion

Source: MOF

Capital of banking Sector

22

13,9%

Sep-12

10,0%

Jun-03

11,5%

Jun-08

12,0%

Jun-09

12,7%

Jun-10

13,3%

Jun-11

13,6%

Jun-12

Tier 1 Capital / Risk-Weighted Assets

RESULTING IN A WELL CAPITALIZED BANKING SECTOR, TIER 1 CAPITAL TO RISK WEIGHTED ASSETS WAS 13.9% IN SEPTEMBER 2012, ESTIMATED TO BE 15% ON TIER 2 CAPITAL

Source: CBE

23

57,7%

Sep-12

31,0%

Jun-03

34,5%

Jun-08

43,4%

Jun-09

44,7%

Jun-10

55,6%

Jun-11

56,0%

Jun-12

Liquidity Ratio (Local Currency)

A VERY LIQUID BANKING SECTOR ON LCY

Source: CBELiquidity ratio is calculated by dividing (cash, surplus in reserves balance held at CBE, cheques, T-bills and bonds and CP) by (due cheques, deposits, due to banks)Minimum liquidity ratio of LCY is 20%

24

55,4%

Sep-12

48,1%

Jun-03

46,8%

Jun-08

41,0%

Jun-09

40,6%

Jun-10

51,8%

Jun-11

53,9%

Jun-12

…AND IN FCY

Source: CBELiquidity ratio is calculated by dividing (cash, balance held at CBE, cheques, due from banks, T-bills and bonds issued by FI) by (due cheques, deposits, due to banks)Minimum liquidity ratio of FCY is 25%

Liquidity Ratio (Foreign Currency)

NBE PERFORMANCE - SNAPSHOT ON 2012 FIGUERS

25

26

NBE MADE REMARKABLE ACHIEVMENTS IN JUNE 2012 , PBT INCREASED BY 46% TO EGP 6.1 BN

3,667

2,219

6,088

4,1703,670

1,737

466

Dec-12 * Dec-11 * Jun-08 Jun-09 Jun-10 Jun-11 Jun-12

+90%+46%

Profit Before TaxesEGP Million

* 6 months Jul/Dec

27

5,383

3,815

8,388

4,606

5,542

3,457

2,507

Dec-12 *Dec-11 *Jun-08 Jun-09 Jun-10 Jun-11 Jun-12

+35%+82%

SUPPORTED BY 82% GROWTH IN NET INTEREST INCOME

Net Interest IncomeEGP Million

* 6 months Jul/Dec

28

340,7

Dec-12

225,1

Jun-09

300,0

Jun-10

306,4

Jun-11 Jun-12

+9%321,5

259,1

Jun-08

+5%

TOTAL ASSETS INCRESED BY EGP 96.4 BN SINCE 2008 TO REACH EGP 321.5 BN IN JUNE 2012

Total Assets

EGP Billion

29

Customer Deposits

286,0

Dec-12

50,9

235,1

131,8

41,8

173,6

Jun-08

170,5

48,4

218,9

Jun-09

196,3

48,4

244,7

Jun-09

210,8

50,3

261,1

Jun-11

226,9

52,0

278,8

Jun-12

Local

Foreign

+13%

NBE DEPOSITS INCREASED BY EGP 105.2 BN FROM 2008 UNTIL JUNE 2012 IN COMPARISON WITH EGP 276.3 BN INCREASE IN THE BANKING SECTOR , CAPTURING 38% OF THE GROWTH IN THE MARKET

EGP Billion

30

23,2

Dec-12

4,9

Jun-08

11,5

Jun-09

16,0

Jun-10

18,2

Jun-11

21,2%

Jun-12

+44%

Settlements for NPL

NBE MADE SETTLEMENTS FOR NON PERFORMING LOANS , WHICH HAVE HAD A NEGATIVE IMPACT ON CAPITAL

EGP Billion“Cumulative”

31

NPL

6,7

Dec-12

23,4

June 2008

21,1

June 2009

19,9

June 2010

8,4

June 2011

6,5

Jun-12

-27%

AND DECREASED NON PERFORMING LOANS TO EGP 6.5 BN IN JUNE 2012 COMPARED WITH EGP 23.4 BN IN 2008

EGP Billion

32

19,1

Dec-12

7,7

Jun-08

10,5

Jun-09

13,9

Jun-10

13,0

Jun-11

13,6

Jun-12

+15%

Equity

NBE SUCCEDED IN INCREASING EQUITY TO EGP 13.6 BN IN JUNE 2012 COMPARED WITH EGP 7.7 BN IN 2008

EGP Billion

33

NBE MODERNIZED THE LOOK AND FEEL OF ITS BRANCH NETWORK

34

1,469

1,253

1,087990

631507

Dec-12Jun-08 Jun-09 Jun-10 Jun-11 Jun-12

+25%

ATMs

AND INCREASED THE NUMBER OF ATMS TO REACH 1,496 MACHINES IN DECEMBER 2012 CAPTURING MORE THAN THIRD OF THE MARKET

THE DEVELOPMENT OF SMES IN EGYPT

35

36

FACTS AND FIGURES (1/2)

SMES IN EGYPT

As per latest statistics, SMEs are employing 7.5 mn people representing 33.7%

of the employed workforce

Increased in GDP contribution over the last ten years from 40% to 70% of GDP

Estimated gap in financing for SMEs around EGP 30 bn in FY 2012

37

FACTS AND FIGURES (2/2)

SMEs in Egypt

Served by Banks60%

Unserved Clients40%

NBE22%

Other Banks78%

Served by NGOs49%

Unserved Clients51%

Formal Sector10%

Informal Sector90%

SMEs Market Formal Sector

Informal Sector SMEs Clients Served by Banks

38

STRATEGIC IMPORTANCE OF SMES IN EGYPT

Providing new job opportunities to reduce the unemployment rate

Raising social welfare to reduce poverty

Contribution to social, economic and political stability

Supporting innovation and creativity

Providing feeding industries

Promoting real economic growth

Improving country’s trade balance

39

NBE INITIATIVES TO PROMOTE SMES

• Providing more delegation to branches and regions to ensure efficient and timely

processes

• Providing different products (e.g. Leasing, Factoring, Islamic Finance, Equity Finance)

• Launching consultancy and advisory department and call center

• Cooperation with donors and external funds in different fields like: Manufacturing,

Services and Agriculture (operating 13 fund programs providing about EGP 5 bn)

40

ACCORDINGLY PORTFOLIO DOUBLED IN LESS THAN 3 YEARS

NBEs SMEs Portfolio of Performing Direct Loans

EGP Billion

Dec-12

7,70

Jun-12

6,50

Jun-11

5,00

Jun-10

4,50

Mar-13

8,40

41

AND CAPTURED 40% OF DIRECT FINANCING NEEDS

NBE40%

Other Banks60%

NBEs Client Share in Terms of Direct Finance

42

AS CLIENTS ACQUISITIONS GREW TO 13.7K IN MARCH 2013

+36%

8.700

Mar-13

6.400

13.733

Dec-12

9.728

Jun-12Jun-11

NBEs SMEs Client Acquisition

43

VISION FOR SMES FUTURE

Providing USD 500 mn annually to finance new startups and mature enterprises

promoting the creation of 315 k new job opportunities

Establishing an SME council for all parties operating in the field

Unifying SMEs definition across the country

Assisting in the conversion from the informal sector to the formal sector through

creation of strong incentive schemes

Developing industrial and rural clusters in addition to incubators and industrial

malls

Expanding in Venture Capital

Expanding in credit guarantee schemes

Expanding in technical assistance support programs

Thank You