Circular dated July 1, 2024 regarding the gradual cancellation of the treatment of non-performing loans for small and medium enterprises according to the instructions of IFRS No. 9

Sir / Chairman of the Board July 1, 2024 Bank

Greetings,

With reference to the Circular Letter dated December 14, 2021, regarding the temporary exemption for the treatment of non-performing loans for small and medium enterprises according to the instructions of applying International Financial Reporting Standard No. 9, as well as the Circular Letter dated June 14, 2023, regarding the extension of the validity of this exemption until the end of June 2024, and in light of the continued repercussions of various crises and their impact on sectors, and out of its commitment and support for fulfilling its economic obligations, especially for the small and medium enterprise sector, in supporting this vital sector towards the banking sector and continuing work and production and preserving employment, the Board of Directors of the Central Bank of Egypt, in its meeting held on June 25, 2024, approved the following:

1. The gradual cancellation of the exemption regarding the inclusion of customers from the small and medium enterprise sector in Stage 3 over a period of 18 months until the end of December 2025, such that this category of customers will be included in Stage 3 in the event of non-compliance with the contractual conditions for the credit facilities granted to customers as follows:

• Existence of receivables equal to or exceeding 180 consecutive days until the end of December 2024.
• Existence of receivables equal to or exceeding 150 consecutive days until the end of June 2025.
• Existence of receivables equal to or exceeding 120 consecutive days until the end of December 2025. This will result in the inclusion of customers in Stage 3 when receivables equal or exceed 90 consecutive days starting from January 2026.

2. Extending the validity of the item regarding the upgrade of customers from Stage 3 to Stage 2 in the event of meeting all quantitative and qualitative elements of Stage 2 and paying the accrued/impaired returns (as applicable) and maintaining regular payments for a period of 90 days, until the end of December 2025.

Please accept the highest respect,

Hassan Abdallah