• Loan growth slows in April after an exceptionally strong March; but Y-o-Y growth is still strong at 16.8% Loan growth slowed in April to 1.6% M-o-M, down from 4.1% in March which was an exceptionally strong month due to the devaluation of the EGP in mid-March that led to a boost in the EGP value of USD denominated loans. Corporate loans increased by a solid 1.5% M-o-M in April (from 4.9% in March), which, excluding currency movements, is the strongest M-o-M growth seen so far in 2016. Y-o-Y loan growth slowed marginally to 16.8% in April, from 17.0% in March, with growth in both retail loans (+21% Y-o-Y) and private corporate loans (+13% Y-o-Y) decelerating slightly. Loan growth was an area of positive surprises for Egypt banks in 1Q16, but the macro backdrop suggests that loan growth might decelerate in the coming months.
• Y-o-Y deposit growth also slows slightly to 18.8% Total deposit growth M-o-M slowed in April to 0.5% M-o-M, from 3.6% in March. The slowdown is also the result of the March EGP weakness, and as such FX deposit growth M-o-M decelerated to 0.9% in April, from 14.2% in March. Y-o-Y deposit growth slowed to 18.8% Y-o-Y, from 19.3% Y-o-Y in March. Deposit dollarisation was unchanged M-o-M at 18.8%. The system loan-to-deposit ratio rose slightly to 46.4% in April, from 45.9% in March.
• M2 stable as accumulation of foreign liabilities continue Broad money supply M2 growth was largely stable in April at 18.0% Y-o-Y thanks mostly to expanding central government and public sector borrowing. Net foreign assets were further in the red in April driven by banks which accumulated USD1.1bn in foreign liabilities in order to avail FX liquidity to the local market. The economy now has a net foreign liability position of USD8.5bn. The number is set to increase further when Egypt receives a promised USD2bn deposit from the UAE in the coming few weeks.