Circular Letter Dated September 14, 2020 Regarding Postponement of Customers' Credit Dues

Dear Sir / Chairman of the Board, Greetings,

With reference to the circular letter dated March 16, 2020, under which all customers' credit dues were postponed for 6 months without applying additional penalties for the postponement, and to the addendum issued on April 16, 2020, regarding the mechanism for settling the value of returns calculated during the credit dues postponement period, which confirmed the importance of ensuring that postponed dues are settled in proportion to customers' ability to pay, and not demanding customers to pay the postponed return value with the first due date after the postponement period. I would also like to refer to the circular letter dated July 13, 2020, which included responses to banks' inquiries regarding the postponement of dues, stating that the intended postponement of dues for 6 months means deferring all repayment schedules for 6 months from the date of issuance of the Instructions.

Given that the credit dues postponement period ends during the current month of September, and in light of the Central Bank of Egypt's monitoring of economic conditions and working to stabilize the banking sector, and with the goal of continuing to support customers whose cash flows were affected during the current crisis, banks must comply with the following:

1. Each bank must conduct a detailed review of existing credit facilities and study the status of all customers and their future cash flows, with the aim of determining appropriate measures to be taken to deal with them, ensuring that those measures align with their ability to pay, and without representing pressure on the liquidity of companies, enabling them to continue their operations, as well as individuals whose incomes have been negatively affected.

2. Banks must restructure customers' debts with the aim of reaching a new credit facility structure that aligns with their current repayment capacity, paying special attention to customers whose activities were affected during the previous period. This must be done through one of the following alternatives, by way of example and not limitation:

   • Increasing the duration of credit facilities.
   • Rescheduling due installments without calculating any penalties.
   • Capitalizing the value of returns.
   • The possibility of granting a grace period to companies based on the nature of their activities and future cash flows, without affecting their liquidity.

3. The necessity of complying with the instructions issued regarding the basis for evaluating customers' creditworthiness and the formation of provisions issued by a decision of the Board of Directors of the Central Bank of Egypt in its meeting held on May 24, 2005, as well as the instructions issued on February 26, 2019, regarding the application of International Financial Reporting Standard (IFRS) 9, taking into consideration that in the case of debt restructuring and regularity therein, it is not considered an indicator of significant increase in credit risk - without financial difficulties on the part of the customer.

4. The necessity of each bank studying and analyzing the overall risks associated with the current crisis, conducting stress tests to determine the impact of the crisis on the credit portfolio and on different economic sectors, and developing plans to deal with any potential losses.

Please be kind enough to alert to the full compliance with the above.

Accept my highest regards,

Tarek Amer