By Asmaa Nabil
With the arrival of Ramadan during the summer, several bank divisions are expected to suffer from a period stagnation, in contrast to the usual stability of this time of year. Banks traditionally see an increase in demand for credit that coincides with Egyptians returning from abroad. In addition, banks often reduce their hours during Ramadan, leading to less business overall.
Helmy Said, an investment official in one of the public banks, stated that a number of bank divisions have been negatively impacted by Ramadan, as clients reorganise their priorities during the month. For instance, credit departments tend to suffer weak demand, leading other clients to postpone borrowing until the conventional rate of demand returns. In addition, banks have difficulty completing work during shortened working hours, leading to a decrease in overall business.
Said added that charitable investments during Ramadan attract more interest from both clients and the banks themselves. As such, demand for credit decreases.
Another credit official with Audi Bank stated that the first half of Ramadan usually sees a decline in bank finance. In addition, an increased demand for consumer goods reduces cash flow to banks as families withdraw their savings. Family savings represent more than 65% of banks’ total deposits.
He added that during the second half of the month the demand usually increases in preparation for the return of regular working conditions, and as the demand for imports increases.
He stressed that the timing of Ramadan this year will reduce the normal rates of growth during the summer months. The problem is worsened in the current year because of the difficult economic circumstances facing the country since the events of January 25.
He expected recovery and growth in the banking sector during the coming months, particularly when the new government is appointed, and after it develops a clear and precise vision for the goals of the coming period.
Amr Elalfy, a credit official with Alwatany Bank of Egypt, said that Ramadan has a significant impact on credit departments, especially those doing business in retail loans. He noted that the demand for banking transactions, both credit and deposit services, tends to increase during the summer months, but that Ramadan will confound the trend this year.
Elalfy added that deposits will witness an noticeable decline because of heightened expenditure during Ramadan, reversing the trend of previous years. He predicted, however, a gradual growth of banking transactions during the coming few months.