Egypt\u2019s recent increase in its expat remittances has had a positive effect on recipient households, on the broader economy as well as Egyptian banks as it supports their deposit-based funding profile and enhances their lending capacity, according to Moody\u2019s.<\/p>\n
On 15 March, the Central Bank of Egypt (CBE) reported that monthly workers\u2019 remittances for the six months leading up to December 2020 went up by 13.5 percent, totalling $15.5 billion, up from $13.7 billion a year earlier.<\/p>\n
In its credit outlook report, Moody\u2019s said that the increased remittances, alongside the bank\u2019s access to long-term funding from foreign financial institutions, back Egypt\u2019s foreign-currency liquidity at a time when traditional sources of foreign currency have slumped as a result of the COVID-19 crisis.<\/p>\n
The report pointed out that Egyptian banks are primarily funded by customer deposits, and increased remittances are credit positive for the banks because they contribute to higher deposit inflows, provide a stable and low-cost funding base as well as diversify the depositor base.<\/p>\n
Moreover, technological advances, greater use of electronic channels \u2013 which reduce transaction costs \u2013 and pandemic-related limitations on travel by overseas Egyptian workers, which have increased their ability to save, have facilitated growth in remittances, according to the report.<\/p>\n
Moody\u2019s expected remittance inflows to Egypt maintain their positive momentum thanks to the wider use of electronic transfers.<\/p>\n
In addition, the positive effect on household incomes creates new lending opportunities for banks and supports households\u2019 debt repayment capacity, according to the report.<\/p>\n
Increased remittances also support Egyptian banks\u2019 foreign-currency liquidity, while the pandemic severely depresses other foreign-currency sources, such as tourism revenues.<\/p>\n
Furthermore, banks’ ongoing access to long-term funding from international banks and financial institutions also bolsters their foreign-currency liquidity.<\/p>\n
According to the report, over the past 12 months, several Egyptian banks have obtained foreign currency funding from international funders.<\/p>\n","protected":false},"excerpt":{"rendered":"
Egypt\u2019s recent increase in its expat remittances has had a positive effect on recipient households, on the broader economy as well as Egyptian banks as it supports their deposit-based funding profile and enhances their lending capacity, according to Moody\u2019s.<\/p>\n","protected":false},"author":4,"featured_media":321613,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[24,33],"tags":[95],"class_list":["post-321612","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-development-partners","category-main","tag-moodys"],"yoast_head":"\n