Political turmoil in Egypt has taken its toll on local businesses in more ways than one. On top of a struggling economy, analysis published earlier this year found that businesses in the nation are facing hurdles in paying overseas suppliers because of a foreign currency shortage.
Those problems are far from dissolved, but a new report by Financial Times says cash-flush banks in Egypt are ramping up their corporate lending practices, a trend that could ease some of the struggles local businesses have been facing.
Reports published Wednesday (Oct. 7) said that Egypt’s banks, after working to reduce the impact of bad checks and facilitating government loans to keep the economy afloat, have made financial institutions a resilient market in the nation following political upheaval.
[bctt tweet=”Egypt’s banks made FinServ a resilient market in the nation following political upheaval.”]
Now, the banks that have proven their strength are taking advantage of mending economic outlooks by expanding large corporate lending practices.
According to Commercial International Bank-Egypt Chief Executive Officer of Institutional Banking Hussein Abaza, a rise in financing large corporations began in June 2014 and has touched a range of industries.
“We are seeing a lot of multinationals that are working in Egypt now borrowing,” he told FT. “The loan growth we have is primarily from existing borrowers. It is a huge jump from 2012. It reflects confidence coming back. A lot of it is pent-up demand.”
The bank reported a 16.7 percent growth in lending last year, which is expected to reach 20 percent growth in 2015, according to reports. While lending capacity is still less than what it was before the political turmoil began in 2010, other banks are seeing a spike in corporate financing, too.
HSBC’s Egypt operations, for example, saw a 15 percent increase in corporate loans in the first half of this year coming from a range of industries, including manufacturing and construction. EFG-Hermes similarly told reporters that business lending levels are recovering. Plus, according to Moody’s analysis, bad loans are expected to decrease in Egypt to 8 percent, from 8.4 percent levels seen last December, reports said.
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