The Central Bank of Egypt (CBE) has revealed the financial soundness indicators (FSI) for banks operating in the Egyptian market, including asset quality, capital adequacy, and earnings in 2019.
In its quarterly FSI report, the CBE stated that non-performing loans (NPLs) amounted to 4.2% of the total loan portfolio of banks in Egypt at the end of December 2019, compared to 4.5% in September 2019.
It explained that the ratio of NPLs to total loans amounted to 3.3% at the top 10 banks in the local market, and 2.7% at the top 5 banks.
The CBE indicated that the ratio of loan provisions to total NPLs reached 97.6% at the end of December 2019, with the percentage reaching 100% at the top 5 and 10 banks in the local market.
According to the CBE, the loan provisions that banks created to face doubtful debts amounted to EGP 127.473bn at the end of last December. The top 10 banks, alone, accounted for EGP 83.24bn, with the top five banks holding EGP 66.294bn.
It added that the banks have total reserves of EGP 245.112bn in December 2019. The share of the top 10 reached EGP 157.716bn, while the top 5 banks accounted for EGP 142.821bn.
The CBE said that the loan-to-deposit ratio (LDR) in the Egyptian market banks increased to 44.8% in December 2019, compared to 44.1% in September of the same year. This percentage reached 43% at the top 10 banks and 43.6% at the top 5 banks.
It explained that the LDR in local currency rose to 39.2% in December, compared to 38.9% in September. The ratio reached 36.3% with the top 10 banks, and 35.8% with the largest 5 banks.
The report added that the LDR in foreign currencies also increased to 71.4% in December, compared to 67% in September, with this ratio recording 76.6% at the top 10 banks, and 80.8% at the top 5 banks.
The private sector accounted for 63.3% of the total loans granted by banks to their customers until the end of December, compared to 64% in September, the CBE said.
It explained that the private sector acquired 56.5% of the total loans granted by the top 10 banks in Egypt, and 53% of the loans provided by the top 5 banks.
The CBE also said that the 10 largest banks held about 74.98% of total deposits in the Egyptian banking sector in 2019.
The total deposits in banks amounted to about EGP 4.222trn in 2019. Of this figure, the top 10 banks held EGP 3.166trn, including EGP 2.699trn by the top 5 banks, accounting for 63.92% of the total deposits.
The report noted that the deposits to asset ratio in banks reached 71.4% last December, compared to 46.5% in September, with this ratio reaching 70.8% at the top 10 banks and 69.9% at the top 5.
The CBE pointed out that the liquidity ratio in the local currency at banks recorded 45.8% in December, unchanged from September. This ratio was 47.5% at the top 10 banks and 47.3% at the top 5.
The liquidity ratio in foreign currencies increased to 74% in December, compared to 73.9% in September and 68.6% in June. This ratio reached 75.5% with the top 10 banks and 76.3% in the top 5 banks.
The CBE said that the banks’ securities portfolios, not including treasury bills, reached about 20.5% to total bank assets in December, compared to 19.2% in September. This percentage reached 22.6% with the top 10 banks, and 24.2% in the top 5.
According to the CBE, the volume of banks’ investments in securities and treasury bills amounted to EGP 2.071trn in December 2019, compared to EGP 1.995trn in September. The top 10 banks accounted for about EGP 1.643trn of these investments in December, and the top 5 banks had roughly EGP 1.421trn.
The CBE said that the total capital of banks operating in the local market amounted to EGP 156.236bn at the end of December 2019.
It added that the capital of Egypt’s top 10 banks stood at about EGP 100.306bn, while the capital of the top 5 banks was EGP 82.506bn.
While the CBE did not reveal the names of the top banks in Egypt, the National Bank of Egypt (NBE) and the Commercial International Bank – Egypt (CIB) are known as leading banks in Egypt, alongside Banque du Caire, QNB Alahli, Arab African International Bank, HSBC, Faisal Islamic Bank of Egypt, Alexandria Intesa San Paolo, and Credit Agricole – Egypt.
The CBE has said, though, that locally operating banks achieved a net profit of EGP 83.18bn at the end of 2019, compared to EGP 60.758bn in September.
It added that the top five banks accounted for about 50.1% of the total profits achieved by the banks, as their profits amounted to EGP 41.679bn.
The top 10 banks made profits amounting to EGP 58.791bn, equivalent to about 70.67% of the banks’ total profits.
Topping this list are the NBE, CIB – Egypt, Banque du Caire, QNB Alahli, Credit Agricole – Egypt, Faisal Islamic Bank of Egypt, and the Housing and Development Bank.
According to the CBE, the net interest income achieved by banks operating in Egypt amounted to EGP 154.952bn in 2019. Of this, the top 10 banks achieved EGP 107.665bn, equivalent to 69.494%, with the top 5 banks reaching EGP 80.467bn, equivalent to 51.93%.
The CBE said that the return on average assets (ROAA) in banks operating in the Egyptian market reached 1.4% in December 2019, unchanged from September of the same year.
It added that the ROAA at the top 10 banks recorded 1.3% and 1.1% in the top five banks.
The CBE also said that the return on average equity (ROAE) reached 19.2% in December, also unchanged from September, or 18.4% for the top 10 banks, and 16.3% for the top 5.
The net interest margin reached 3% in the whole sector, 2.7% at the top 10 banks in Egypt, and 2.3% at the top 5.
It added that the net operating income (NOI) in banks reached about EGP 189.785bn in December 2019, with the top 10 banks acquired EGP 130.744bn, equivalent to 68.89%.The shares of the top five banks reached EGP 97.964bn, equivalent to 51.618%.
On the other hand, bank expenses amounted to EGP 106.601bn at the end of 2019, of which about EGP 71.953bn was spent by the top 10 banks, equivalent to 66.559%, and about EGP 56.286bn by the top 5 banks, equivalent to 52.8%.
As for capital adequacy, the CBE said that the Capital Base to Risk weighted assets increased to 18.4% at the end of December 2019, compared to 18.1% at the end of September of the same year. This was a ratio of 18.4% with the top 10 banks, and 18.5% at the top 5.
Tier 1 capital to risk-weighted assets ratio also increased to 15.9% at the end of December, compared to 15.5% at the end of September, with this ratio reaching 15.9% at the top 10 banks and 15.8% at the top 5 banks.
The CBE said the going concern capital including conservation buffer should not be less than 6.625%, 7.25%, 7.875%, and 8.5% in 2016, 2017, 2018, and 2019 respectively.
It added that the ratio of common equity to risk-weighted assets reached 11.7% in December 2019, compared to 11% in September, with the ratio reaching 11.2% at the top 10 banks and 10.7% at the top 5 banks.
The CBE noted that the common equity including conservation buffer should not be less than 5.125%, 5.75%, 6.375, and 7% in 2016, 2017, 2018, and 2019 respectively.
The leverage ratio in banks increased to 7.4% at the end of December, compared to 7.2% in September, and this ratio reached 6.9% in the top 10 banks and 6.7% in the top 5 banks. According to the CBE, the percentage is with a lower margin stated by 3%.
In another context, the CBE revealed that the net open positions in foreign currencies to capital base decreased to 2.9% in December 2019, compared to 3.5% in September.
The CBE indicated that this percentage reached 4% at the top 10 banks, while it recorded 4.5% at the top 5 banks.
