Finance leasing in Egypt grew 12% in first quarter of 2016 year-on-year

Ahram Online , Sunday 31 Jul 2016

Real estate and land transactions represented 73% of the financial lease contracts

Real estate
Real estate and land transactions represented 73% of the total number of financial lease contracts in the second quarter of 2016. (File Photo: Reuters)

Finance lease activity grew by 12 percent in the first quarter of 2016 year-on-year, to EGP 11 billion, the head of the Egyptian Financial Supervisory Authority said on Sunday.

The authority's head, Sherif Samy, said in press statement on Sunday that the number of contracts for financial leasing had decreased from 1,367 to 1,239, MENA reported.

Financial leases enable businesses to rent an asset such as real estate or eqipment for a certain period of time from a leasing company which owns the asset, enabling businesses to avoid freezing their capital by purchasing assets.

The Central Bank of Egypt devalued the Egyptian pound - used in the EFSA’s data - by 14% against the dollar in March, which means its value in the second quarter of 2016 is different from the its value in the comparable second quarter of 2015.

The real estate and land transactions represented 73% of the total financial lease contracts, followed by machines and equipment with 9.4%, while trucks came third with 8.2% out of all contracts.

The number of lease companies registered with the EFSA is 222, up from 219 last year. Twenty-seven companies were active this quarter compared to 23 companies in the same quarter last year.

In terms of factoring activities, transactions amounted to EGP 2.4 billion in the first quarter of 2016, an increase of 14% compared to last year’s first quarter, and broke down to 91% local factoring and 9% international.

The funding outstanding balances for the seven licenced factoring companies by the EFSA were about EGP 2.7 billion end of June 2016, a 62% increase year-on-year.

The companies who benefited from the factoring were 237 by the end of June, compared to 191 companies last year.

Mortgage financing in the first quarter of 2016 was worth EGP 540 million from companies, down from EGP 542 million last year, while the funding outstanding balances at mortgage financing companies were of EGP 2.7 billion in 2016, an increase by 5 percent year-on-year.

The Egyptian Mortgage Refinance Company’s transactions were worth EGP 74 million the second quarter of 2016.

Mortgage financing customers whose income is over EGP 3,500 monthly represent 87 percent of overall customers in the second quarter of 2016, while customers who earn between EGP 2500 and EGP 3500 represent 10 percent.

The housing units of more than 86 square meters represented 70 percent of the number of mortgage financing contracts.

Mortgage financing for residence purposes represented 96 percent of the contracts.

Purchased portfolios from real estate development companies represented 58 percent of the total value of contracts for mortgage financing companies, the rest being for direct customers.

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