Bi-Weekly Report 29 January-11 February 2019


Banking sector bottom line improved in FY:18 amid a challenging operating environment

Bank profitability is set to reverse its upward trend in FY:19



Credit expansion strengthened in FY:18, despite the tighter monetary policy stance

The deposit base continued to expand in FY:18, in line with economic activity

The NBR limits the level of household indebtedness

The real estate market continued to improve in FY:18



Lending activity accelerated in FY:18, on easier credit standards

Deposit growth eased slightly in FY:18, aligning with credit growth

The real estate market "cooled-off" slightly in FY:18, due to supply-side factors



The underlying profitability of the banking system is estimated to have improved markedly in FY:18, with ROAE reaching a post-global crisis high



The 2018 Budget outperformed its deficit target of 2.8% of GDP by a wide margin -- 1.0 pp of GDP – due to under-executed capital spending and lower-than-budgeted goods & services

The envisaged fiscal deficit target of 2.6% of GDP for this year requires lower-than-planned spending



Economic growth is estimated to have reached a post-global crisis high of 4.3% in FY:18 -- up from 3.8% in FY:17—largely supported by a surge in electricity production

The pace of GDP growth is set to moderate slightly to a still high 4.0% in FY:19, as the impact from the past year's spike in energy production tapers off



Customer deposits declined for the first time in 4 years in 2018, mainly due to heightened depositor uncertainty ahead of the privatisation of Cyprus Cooperative Bank – completed in early-September

Private sector loans contracted by more than one fifth in 2018, due to the carve-out of CCB's NPEs, banks' continued efforts to clean up their loan books and constrained new lending

Tourist arrivals' growth eased to single digits in 2018 -- dragged down by the main source countries (the UK, Russia and Israel)



Constitutional amendments may allow President el-Sissi to remain in office until 2034

GDP growth on track to reach an 11-year high of 5.5% this fiscal year (ending in June 2019)

The IMF Executive Board completed the 4th review of Egypt's economic reform programme


Appendix: Financial Markets

Bi-Weekly Report 29 January-11 February 2019