Non-banking financial firms in Egypt offered EGP 145.3bn worth of funding during the first quarter (1Q) of 2023, according to the Financial Regulatory Authority.
The value of stock issuances amounted to nearly EGP 41bn in March. The value of issuances of securitized and corporate bonds amounted to nearly EGP 9.5bn during the same period.
Ayman Abou Hind, investment manager at Carter Capital, expected that non-bank financing companies will grow as a result of the high demand from individuals. The growth may be limited to a range of 2-3% as a result of the high interest rate, which led to an increase in the cost for companies.
The report indicated that the value of financing balances for medium, small and micro enterprises amounted to EGP 43.5bn.
Ahmed Al-Khatib, CEO of Abu Dhabi Islamic Company, explained that the microfinance sector was affected by the rise in interest rates, like all non-banking financial activities, but the growth expectations for the sector are still positive.
Regarding the expectations for the growth of activity, Al-Khatib stated that microfinance still maintains its average annual growth rates at 40%, and it is likely that growth during the current year will proceed in the same context.
He pointed out that the borrowing activities are small in size, which makes them vulnerable to the impact of interest rates. These companies require financing to maintain the continuity of their activities and meet their needs for raw materials and operational tools.
Al-Khatib explained that the impact will be less severe on microfinance activity because of the short-term activity business cycle.
Mortgage companies loaned EGP 2.21bn to customers during the first quarter of 2023, compared to EGP 3.46bn in the corresponding period in 2022, a decline of 36.17%.
He pointed out that the value of financial leasing contracts recorded EGP 28.1bn during the first quarter of this year, compared to EGP 10.8bn for discounted documents, and EGP 10.2bn for consumer financing.
Regarding the indicators of the insurance sector, the report indicated that the total value of insurance premiums amounted to EGP 18.2bn during the first quarter of 2023, as the value of premiums collected for the activity of property and liability insurance was about EGP 8.7bn. The value of premiums collected for the activity of people insurance and fund formation amounted to EGP 9.5bn.
The total value of compensation paid from the insurance sector amounted to EGP 7.7bn in the first quarter of 2023, as the value of compensation paid for property and liability insurance amounted to EGP 3bn, while the value of compensation paid to persons and fund formation amounted to EGP 4.7bn.
Property and liability insurance refers to property insurance against risks, such as fire or theft, insurance for homes, cars, warehouses, goods and other assets, and life insurance that includes insurance in case of death, or insurance against physical accidents and other different types of insurance.
In a related context, the non-banking financial services sector topped the ranking of the main listed stock sectors in terms of trading values (without transactions) during the past week’s transactions on the Egyptian Exchange, with a trading value of EGP 3.7bn, getting a market share of 24%, and a trading volume of 1.9 million.
