2015 loan growth at 18.8% Y-o-Y; we expect a slowdown in loan growth in 2016: 2015 was a strong year for credit growth at Egyptian banks. Total loans increased 18.8% Y-o-Y, up from 13.7% in 2014, with all segments seeing an acceleration in growth. Loan growth was boosted partly by the depreciation of the Egyptian pound versus the USD during 2015, which led to a higher EGP value of FX-denominated loans. At constant exchange rates, we estimate loan growth in 2015 stood at 15.5% Y-o-Y. Loans to private corporate sector increased 15.4% Y-o-Y, up from 9.5% in 2014. Retail loans increased 22.9%, compared to 18.3% in 2014. The public business sector saw also strong growth of 30.5% Y-o-Y in 2015, driven by large loans to the Egyptian Electricity Holding Company and the Egyptian General Petroleum Corporation. Credit growth strengthened in December to 1.7% M-o-M compared to 0.8% M-o-M in November, despite December being seasonally weak for credit demand as corporates tend to repay loans ahead of their year-end financial reporting. We believe loan growth will decelerate 2016, as the shortage of FX continues to have a negative impact on imports, corporate investment and lending demand. Retail loan growth is also likely to slow down, following recent caps by the CBE on debt servicing ratios for households.    Deposit growth at 20.4%; dollarisation falls to 17.3%: System deposit growth also picked up to 20.4% in December 2015 from 17% in December 2014, with deposits in local currency up 20.7% Y-o-Y (from 19.3% Y-o-Y in 2014) and deposits in foreign currencies up 19% Y-o-Y (+7% Y-o-Y in 2014). The loan-to-deposit fell to 45.5% in 2015 compared to 46.8% in 2014. Deposit dollarisation declined slightly to 17.3% in December 2015, compared to 17.5% in November 2015, and 17.5% also in December 2014.   Money supply growth slows; NFA position further into the red: Broad money supply (M2) slowed to 18.6% Y-o-Y in December from 19.3% in November, driven primarily by a deceleration in lending to the government – through bills and bonds – as well as the public sector. Depletion of net foreign assets continued, with the total balance falling into a deficit of USD2.2 billion. The CBE has accumulated additional foreign liabilities of USD600 million in December as it covered another portion of importers’ temporary FX loans bringing the total to USD1.6 billion. We expect further decline in the country’s NFA position in 2016 as both the CBE and banks accumulate further foreign liabilities as they seek to ease foreign exchange shortages and avail FX financing for CAPEX. With lending growth likely to slow down, in light of weaker macro conditions and the recent banking regulations curtailing consumer lending demand, we see money supply growth slowing in 2016. (Central Bank of Egypt, Elena Sanchez-Cabezudo, Mohamed Abu Basha, Rajae Aadel)