Egypt - The Financial Regulatory Authority (FRA) has released divs for non-banking finance at the close of the first quarter of 2024. The FRA’s recent report indicates a significant increase in the balances of loans provided by non-banking entities. In March 2024, the total balance of loans for micro, small, and medium enterprises (MSMEs) surged to EGP 62.8bn, a notable rise from EGP 40.9bn in March 2023.

Microfinance companies and associations saw their balance sheets grow to approximately EGP 54.8bn from EGP 38.4bn. Despite this financial growth, the number of beneficiaries slightly decreased to 3.8 million from the previous year’s 3.9 million.

SME Financing and Real Estate Development

The FRA’s report further details that the balance of financing for small and medium enterprises (SMEs) reached EGP 7.9bn by March 2024, climbing from EGP 2.4bn in March 2023. The beneficiary count for this financing category rose to roughly 7,200, up from 2,800.

In the realm of real estate, the total financing provided by companies amounted to EGP 5.318bn in Q1 2024, a substantial increase of 140.4% from EGP 2.212bn in Q1 2023. The number of real estate financing contracts also increased, reaching 3,019, up from 1,319.

Financing Distribution and Consumer Finance Trends

The distribution of financing was categorized as follows: 125 contracts valued at EGP 1.147bn for regular clients, 193 contracts worth EGP 50m for fund clients, and 2,701 contracts totalling EGP 4.120bn for purchased portfolios. Contracts exceeding a value of EGP 3,500 represented EGP 5.29bn across 2,934 contracts.

Consumer finance companies reported providing EGP 12.072bn in financing during Q1 2024, marking an 18.9% increase from EGP 10.155bn in the same period of 2023. However, the total number of clients saw a 5.8% decrease to 804,800 from 853,900.

The consumer financing was predominantly for the purchase of cars and vehicles (35.80%), electrical appliances (15.70%), electronics (9.70%), single-invoice purchases from various stores and chains (8.30%), and clothing, shoes, watches, and jewellery (6%).

Leasing Contracts and Sector Breakdown

The value of leasing contracts experienced a downturn, decreasing to EGP 23.420bn in Q1 2024 from EGP 28.08bn in Q1 2023, a 16.6% decline. The number of contracts also reduced to 400 from 507.

Sector-wise, the majority of leasing was allocated to real estate and land (71.94%), followed by machinery and equipment (6.27%), transport vehicles (5.77%), heavy equipment (4.55%), production lines (3.40%), and private cars (3.17%).

Factoring Activities

Regarding factoring activities, the FRA observed an increase in the volume of factored papers to EGP 12.449bn in Q1 2024, up from EGP 10.729bn in Q1 2023, representing a 16% rise. The volume of recourse factoring reached EGP 8.225bn, an increase from EGP 6.509bn, while non-recourse factoring amounted to EGP 4.224bn, slightly up from EGP 4.219bn.

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