Banks operating in Egypt are hedging against the expected repercussions of the novel coronavirus (COVID-19), by making provisions and increasing their reserves. The steps have been taken off the back of a decrease in their profits in the first quarter (Q1) of 2020, and in anticipation of any future risks.
Daily News Egypt conducted a survey of the business results for 16 banks operating in the Egyptian market. The survey revealed that 12 banks achieved a decline in profits by the end of March 2020 compared to March 2019, while only four banks escaped this slump.
The banks whose profits decreased are: Commercial International Bank – Egypt (CIB); Faisal Islamic Bank; Banque du Caire; BLOM Bank – Egypt; Emirates NBD; National Bank of Kuwait (NBK); ALEXBANK; Abu Dhabi Islamic Bank (ADIB); Al Baraka – Egypt; Credit Agricole – Egypt; Suez Canal Bank (SCB); and the Housing and Development Bank (HDB).
In contrast, the four banks that achieved a rise in profits were: QNB Alahli; saib Bank; Al Ahli Bank of Kuwait – Egypt (ABK); and EG Bank.
CIB – Egypt
Financial statements from CIB showed that the bank’s net profit fell 9% during Q1 of 2020, to about EGP 2.398bn. This compared to the EGP 2.64bn reported in March 2019.
The decline comes despite the 25% increase in net income from returns to EGP 6.195bn in March 2020, compared to EGP 4.939bn in March 2019. CIB also reported an increase in the return on loans and similar revenues, which reached EGP 10.687bn, compared to EGP 10.278bn in the comparison period.
CIB Chairperson and Managing Director Hisham Ezz Al-Arab explained that the bank has incurred many expenses following the coronavirus’ emergence. This included investments made over a short period of time to facilitate remote work, with investments also made in infrastructure.
The commitment made by the bank’s Board of Directors and employees has, however, eased the burdens the pandemic imposed on the local economy.
In statements following the release of CIB’s results, Ezz Al-Arab added that the bank has put into effect certain accounting standards. These give banks the ability to set expectations for future events and create cushioning against and potential jolts. On that basis, they build reserves or allocations based on the industries they operate in, rather than letting this fall on the shoulders of customers instead.
He continued, “We may have set less conservative considerations at the beginning of the year before the spread of the coronavirus, but these expectations have now been renewed, moving from medium to more precautionary.”
Banque du Caire
Banque du Caire’s business results showed a 30% decline in net profit to EGP 838m during Q1 of 2020, compared to about EGP 1.218bn in Q1 of 2019.
The decrease in the bank’s profits came despite the rise in net income from revenues to EGP 2.4bn in Q1 of 2020. This compared to the EGP 2bn reported in Q1 of 2019, a growth of 19%.
The net income from fees and commissions increased by about 30% to EGP 433m in Q1 of 2020, compared to EGP 333m in the same period last year. This led to a 23% increase in operating revenues to reach EGP 2.9bn, compared to EGP 2.4bn.
Tarek Fayed, Chairperson and CEO of Banque du Caire, said the bank operates according to precautionary policies and procedures to face the current events. It has injected an EGP 739m increase into the provisions for impaired losses, which led to a decline in its net profits during Q1 of this year.
Credit Agricole – Egypt
Crédit Agricole Egypt’s consolidated financial indicators revealed that its post-tax profit decreased 36.6% to reach EGP 439.96m in March 2020, compared to EGP 693.75m in March 2019. The bank’s interest income decreased during the period, recording EGP 1.36bn at the end of March, compared to EGP 1.52bn during the same period in 2019.
ALEXBANK
ALEXBANK’s financial statements revealed a decrease in the bank’s net profit by EGP 71.6m (or 7.7%) on an annual basis, to register EGP 860.8m in Q1 of 2020. This compared to the EGP 932.4m reported in the same period in 2019.
According to ALEXBANK’s financial statements, its pre-tax earnings recorded EGP 1.074bn in March 2020, down from EGP 1.218bn in March 2019, a 12% decrease year-on-year (y-o-y).
The net income from fees and commissions rose to EGP 162m during Q1 of 2020, compared to EGP 160m in Q1 of 2019, a y-o-y growth of 1.3%.
Net income from revenue also decreased 1.3% to EGP 1.465bn in Q1 of 2020, compared to EGP 1.484bn in Q1 of 2019.
Faisal Islamic Bank of Egypt
Faisal Islamic Bank of Egypt revealed it achieved pre-tax profits of EGP 594.774m during Q1 of 2020, down from EGP 1.266bn in December 2019. The net profits for Q1 of 2020 also declined to EGP 469.023m, compared to EGP 1.043bn in December 2019.
The net income from returns declined by about EGP 950.369m in March 2020, compared to EGP 1.0516bn in December 2019. The return on Murabaha and similar revenues also decreased to EGP 2.186bn in March 2020, compared to EGP 2.208bn in December 2019, a decrease of EGP 22.054m.
The cost of saving vessels and similar costs increased to EGP 1.235bn in March 2020, compared to EGP 1.156bn in December 2019.
BLOM Bank – Egypt
BLOM Bank – Egypt reported a decline in net profits to EGP 207.08m in March 2020, compared to EGP 276.261m in March 2019. The bank’s financial statements revealed that its profit before tax recorded EGP 291.07m in March 2020, compared to EGP 355.86m in March 2019.
The bank’s total administrative expenses increased by EGP 137.19m in March 2020, compared to EGP 116.9m in March 2019. The net income from returns amounted to about EGP 408.59m in March 2020, compared to EGP 380.8m in the same period last year. The return on loans and similar revenues recorded about EGP 1.132bn, down from EGP 1.206bn in the comparison period.
The cost of deposits and similar costs amounted to EGP 723.5m in March 2020, compared to EGP 825.18m in March 2019.
Emirates NBD – Egypt
The bank reported an EGP 326.01m decline in net profits in March 2020, compared to EGP 377.9m in March 2019. The bank’s financial statements revealed pre-tax earnings declined to EGP 463.9m in March 2020, compared to EGP 485.8m in March 2019.
The net income from returns amounted to EGP 762.9m in Q1 of 2020, up from EGP 688.2m in Q1 of 2019. Income taxes incurred by the bank increased to EGP 137.9m in Q1 of 2020, compared to EGP 107.9m in Q1 of 2019. Administrative expenses increased by about EGP 301.9m in March 2020, compared to EGP 261.8m in March 2019.
NBK – Egypt
NBK-Egypt announced that net profits decreased to EGP 402.7m in March 2020, compared to EGP 509.9bn in March 2019. The bank’s financial statements revealed that its pre-tax profits amounted to EGP 577.5m in Q1 of 2020, down from EGP 663.3m in Q1 of 2019.
The bank’s income taxes increased to EGP 174.7m in March 2020, compared to EGP 153.3m in March 2019. The bank’s net income from activities recorded about EGP 882.4m in Q1 of 2020, compared to EGP 923m in Q1 of 2019. The net income from return amounted to EGP 728.5m in March 2020, down from EGP 769.9m in March 2019.
ADIB – Egypt
The bank’s consolidated financial indicators showed that, during Q1 of 2020, its profits decreased by 18% to EGP 230.35m, compared to EGP 279.44m in Q1 of 2019.
This comes despite the increase in the bank’s returns from Murabaha and similar revenues to EGP 1.79bn, compared to EGP 1.59bn in the comparison period.
Al Baraka – Egypt
The consolidated financial statements reported by Al Baraka Bank-Egypt showed its profits fell during Q1 of 2020 to EGP 264.24m, compared to EGP 266.28m in Q1 of 2019. This comes despite the increase in the bank’s net income from returns to EGP 562.18m during Q1 of 2020, compared to EGP 494.33m in Q1 of 2019.
SCB
SCB’s financial statements revealed that, for Q1 of 2020, its net profit decreased 11% to EGP 114.35m, compared to EGP 128.56m in Q1 of 2019. The bank recorded an increase in net income from interest and commission fees to EGP 422.21m in March 2020, compared to EGP 370m in March 2019.
The return on loans and similar revenues amounted to EGP 1.134bn in Q1 of 2020, down from EGP 1.214bn in Q1 of 2019. The cost of deposits and similar costs came in at EGP 774.962m in March 2020, down from EGP 928.223m in March 2019. The net income from returns increased to EGP 359.340m in March 2020, compared to EGP 286.322m in March 2019.
HDB
HDB reported pre-tax profits of EGP 757.782m during Q1 of 2020, compared to EGP 781.648m during Q1 of 2019. The bank’s net profits increased by EGP 1.567m to EGP 604.584m in Q1 of 2020, compared to EGP 603.017m in Q1 of 2019.
In a statement to the Egyptian Exchange (EGX), the bank highlighted the Central Bank of Egypt (CBE) decisions in Q1 of 2020 dealing with the negative effects of COVID-19 on Egypt’s economy and banking sector.
HDB pointed out that this affected its income, while the costs of some investments, such as time deposits, remained the same until their maturity is renewed. This will see a decrease in the bank’s short-term profitability.
In the statement, the bank noted, “Despite these situations that saw a state of instability, our main goal is based on the continuous provision of comprehensive banking services without interruption to clients. This will come after applying preventive measures to protect the safety of workers and customers, and ensure the strength of the bank’s financial position is maintained despite additional precautionary reinforcements of credit allocations in Q1 of 2020, to increase coverage in anticipation of the decline in credit quality in the coming financial periods until the end of 2020. “
The bank indicated that the cash flow from operating activities decreased 127.6% to EGP 964m in March 2020, compared to EGP 3.489bn in March 2019.
QNB Alahli
QNB Alahli achieved profits of EGP 2.742bn in Q1 of 2020, compared to EGP 2.549bn in the same period in 2019. The bank’s financial data revealed that its net profit amounted to EGP 1.920bn in March 2020, slightly up from EGP 1.912bn in March 2019.
Net income from returns increased to EGP 3.848bn in March 2020, compared to EGP 3.213bn in March 2019, with a growth rate of 19.7%. On the other hand, the return on loans and similar revenues decreased to EGP 8.105bn, compared to EGP 8.146bn. The cost of deposits and similar costs recorded EGP 4.257bn, compared to EGP 4.932bn.
saib Bank
saib Bank achieved pre-tax profits of $12.818m in March 2020, compared to $10.881m in March 2019, with a growth rate of 18%.
The bank’s net profits recorded about $4.115m in March 2020, compared to $785,000 in March 2019, with a growth rate of 424%. The bank’s retained earnings were about $29.474m, compared to $33.469m in the comparison period.
Al Ahli Bank of Kuwait – Egypt
ABK – Egypt reported a 22% increase in its net profits during Q1 of 2020, to EGP 140m, compared to Q1 of 2019. In a statement, the bank said that its net operating profits amounted to EGP 316m in March 2020, compared to EGP 212m in March 2019.
NBK – Egypt Chairperson Ali Maarefi said the working team showed great determination and perseverance considering the economic and social challenges on the back of the pandemic.
Khaled Al-Sallawi, NBK – Egypt’s CEO and Managing Director, said, “The bank was able to maintain the pace of growth during Q1 of 2020, despite the unprecedented conditions in Egypt’s banking market, and the instability that the world is going through as a result of the spread of the pandemic.”
EG Bank
EG Bank’s business results revealed that its pre-tax profits increased to EGP 248.378m in March 2020, compared to EGP 245.646m in March 2019, an increase of EGP 2.732m.
The net profits increased to EGP 153.632m in Q1 of 2020, compared to EGP 148.201m in Q1 of 2019, an increase of 4%.
In a statement to the EGX, the bank noted that it has activated risk management practices for its banking business in light of possible future disturbances due to the coronavirus pandemic.
