The Central Bank of Egypt (CBE) said that the nonperforming loan (NPL) ratio declined to 4.1% in the Egyptian banking sector in March 2020, compared to 4.2% in December 2019.
In its quarterly report on the financial soundness indicators of the Egyptian banking sector, the CBE said the NPL ratio amounted to 3.1% at the top 10 banks operating in Egypt, and 2.5% at the top 5 banks.
The CBE added that the ratio of loan provisions to NPLs in the banking sector stood at 97.2% in March 2020. The percentage reached 100% at both the top 10 and top 5 banks.
“The volume of loan provisions the banks provided to cover NPLs amounted to EGP 135.437bn in March 2020, with the share of the top 10 banks reaching EGP 90.321bn, while the volume in the top 5 banks reached EGP 73.329bn,” CBE said.
It stated that the banking sector’s reserves reached EGP 263.122bn in March 2020. The share at the top 10 banks amounted to EGP 199.07bn, while the volume of reserves at the top 5 banks amounted to EGP 161.944bn.
According to the CBE, the loans to deposits ratio in banks operating in Egypt increased to 45.9% in March 2020, compared to 44.8% in December 2019. The percentage reached 44.1% at the top 10 banks, and recorded 44.6% at the top 5 banks.
The CBE indicated that the loans to deposits ratio in local currency was 40.2% in March 2020, compared to 39.2% in December 2019. This ratio reached 38.4% with the top 10 banks, and recorded 38.1% at the top 5 banks.
The ratio of loans to deposits in foreign currencies declined to 69.6% in March, compared to 71.4% in December. This ratio came in at 73.6% in the top 10 banks, and 82.9% at the top 5 banks.
“The private sector acquired 62.7% of the total loans granted by banks to their customers until the end of March 2020, compared to 63.3% at the end of December 2019,” according to the CBE.
It added that the private sector acquired 55.5% of the total loans at the top 10 banks in Egypt, while it acquired 51.8% of the loans at the top 5 banks.
The CBE explained that the total deposits in banks reached about EGP 4.412trn in March 2020, with the 10 largest banks accounting for EGP 3.348trn. The volume of deposits at the five largest banks operating in Egypt reached about EGP 2.883trn.
It added that the deposits to assets ratio in banks amounted to 71.7% in March 2020, compared to 72.7% in December 2019. A total of 70.7% of this ratio was reported at the top 10 banks, and 70% at the top 5 in March.
The CBE noted that the liquidity ratio in the local currency at banks increased to 49.7% in March 2020, compared to 45.8% in December 2019. This ratio recorded 52.1% at the top 10 banks, and reached 52.5% at the top 5.
This comes at a time when the liquidity ratio in foreign currencies with banks declined to 71.2% in March, compared to 74% in December 2019. The ratio reached 71.5% with the top 10 banks, and 71.4% recorded in the top 5.
The CBE said the securities to assets ratio in banks, excluding treasury bills (T-Bills), reached about 23.2% in March 2020. This compared to the 20.5% reported at the end of December 2019. The percentage reached 25.8% at the top 10 banks, and 27.6% at the top 5 in March.
According to the CBE, the volume of bank investments in securities and T-Bills amounted to EGP 2.374trn in March 2020. These investments reached EGP 1.919trn with the top 10 banks, and recorded about EGP 1.686trn for the top 5 banks.
The CBE said that the total financial position of banks operating in the local market recorded EGP 6.156trn at the end of March 2020.
It said that the financial position of the 10 largest banks recorded about EGP 4.744trn, equivalent to about 76.95% of the total.
The five largest banks recorded a total financial position of EGP 4.126trn, amounting to about 66.92% of the total.
According to the CBE, the total capital of banks operating in the Egyptian market reached EGP 156.652bn in March 2020. Of this amount, about EGP 103.706bn belonged to the top 10 banks and about EGP 82.362bn to the largest 5 banks.
The CBE added that the ratio of the capital base to risk-weighted assets in banks increased to 18.6% in March 2020, compared to 18.4% in December 2019. The percentage of this reached 18.9% at the top 10 banks, and 19% in the largest 5 banks.
The ratio of the tier 1 capital to risk-weighted assets ratio in banks increased to 16.1% in March 2020, compared to 15.9% in December 2019. This ratio reached 16.3% at the top 10 banks and 16.2% at the top 5.
The CBE said that the going concern capital including conservation buffer should not be less than 6.625% in 2016, 7.25%, 7.875%, and 8.5% in 2017, 2018, and 2019, respectively.
It explained that the common equity to risk-weighted assets ratio reached 13% in March 2020, compared to 11.7% in December 2019. The ratio reached 12.8% at the top 10 banks and 12.2% at the top 5.
It added that the common equity including conservation buffer should not be less than 5.125% in 2016, 5.75%, 6.375, and 7% in 2017, 2018, and 2019, respectively.
The leverage ratio in banks declined to 7.3% in March 2020, compared to 7.4% in December, with the ratio reaching 6.9% in the top 10 banks and 6.6% at the top 5.
According to CBE, the lower margin for this percentage is 3%.
The report revealed that the net open position in foreign currencies to capital base reached -2.2% in banks operating in Egypt in March 2020, compared to 2.9% in December 2019.
The CBE indicated that this percentage reached -3.3% at the top 10 banks, and -4% in the largest 5 banks.
It also said that the net profits of banks in Egypt recorded about EGP 36.902bn in March 2020.
The rise in bank profits came against the background of increasing its net return to about EGP 90.474bn, while bank activity revenues increased to EGP 110.687bn. Bank expenses recorded about EGP 73.784bn.
According to the CBE, the top 10 banks in the Egyptian banking sector achieved net profits of about EGP 31.787bn by the end of March 2020. This is equivalent to about 86.138% of the total profits of banks as a whole.
The CBE pointed out that the largest five banks acquired more than 75.43% of the net profits of the total banks, recording recorded EGP 27.837bn in March.
Return on average assets in banks increased to 1.8% in March 2020, compared to 1.4% in December 2019. At the same time, the return on average equity reached 23.4% in March, compared to 19.2% in December. The net interest margin reached 4.1% in March, compared to 3% in December.
The return on average assets in the top 10 banks recorded 1.7% at the end of March 2020, compared to 1.3% at the end of December 2019. The return on average equity reached 23.5%, with the net interest margin reaching 4% at the end of March 2020. This compares to the 18.4% and 2.7%, respectively, reported at the end of December 2019.
The return on the average assets of the top five banks recorded 1.5% at the end of March 2020, compared to 1.1% at the end of December 2019. The return on average equity reached 21.6% at the end of March, compared to 16.3% at the end of December, while the net interest margin reached 3.8% at the end of March, compared to 2.3% at the end of December.
While the CBE has not revealed the names of the top banks in Egypt, it is known that they include: National Bank of Egypt, Banque Misr, Commercial International Bank – Egypt, Banque du Caire, QNB Alahli, Credit Agricole – Egypt, Faisal Islamic Bank of Egypt, and the Housing and Development Bank, Arab African International Bank, HSBC, and ALEXBANK.
