The Central Bank of Egypt (CBE) has revealed that the percentage of non-performing loans (NPLs) at banks working in the Egyptian market recorded 3.4% in September 2020.
The latest result, reported in the CBE’s quarterly report on the financial health indicators of banks, compared to the 3.9% recorded in June 2020.
The report outlined the most important indicators for the financial safety of banks operating in the Egyptian market, the quality of credit, the strength of their financial positions, and the profits achieved in September 2020.
The CBE said that the non-performing loan ratio reached 2.5% of the total loans at the 10 largest banks operating in the Egyptian market, whilst reaching 2% at the top five banks.
It also indicated that banks made allocations covering 96.4% of their total non-performing loans in September 2020. At the same time, these provisions covered 100% of NPLs within the top 10 banks and the five largest banks in the Egyptian market.
According to the CBE, the volume of allocations that banks formed to deal with doubtful debts amounted to about EGP 152.999bn in September 2020. The share of those allocations at the top ten banks working in the Egyptian market stood at EGP 103.491bn, while the volume of allocations in the five largest banks amounted to EGP 84.465bn.
It added that banks created reserves worth EGP 313.086bn in September 2020, with the top 10 banks in Egypt accounting for EGP 233.917bn of this figure. At the same time, the volume of reserves at the five largest banks amounted to about EGP 196.809bn.
The CBE said that the ratio of loans to deposits in banks operating in the Egyptian market rose to 47.4% in September 2020. This compared to 47.1% in June 2020, with the ratio reaching 45.6% for the top 10 banks, and 45.9% for the top five banks.
It added that the ratio of loans to deposits in local currency rose to 43.4%, compared to 42.8% in the same comparison period. This ratio reached 40.4% in the top 10 banks, with 39.9% recorded at the top five banks.
The ratio of loans to foreign currency deposits in banks also increased to 70.6% in September, compared to 68.9% at the end of June 2020. This ratio was recorded at 76.2% in the top 10 banks, and 86.5% in the top five banks.
According to the CBE, the private sector’s share decreased to 61% of the total loans granted by banks to their customers until the end of September 2020, compared to 61.9% at the end of June 2020.
The private sector acquired 52.7% of the total loans at the 10 largest banks operating in Egypt, compared to 48.7% of the loans in the five largest banks.
The CBE said that the top 10 banks accounted for about 77.715% of the total deposits in the Egyptian banking sector by the end of September 2020.
It added that the total deposits in banks amounted to about EGP 5.035trn in September 2020, compared to EGP 4.686trn in June 2020. This indicates that the top 10 banks account for EGP 3.913trn, while the volume of deposits at the five largest banks amounted to about EGP 3.436trn. This is equivalent to 68.246% of total bank deposits.
The CBE said that the ratio of bank deposits to assets decreased slightly by the end of September 2020 to 73.2%, compared to 73.3% at the end of June 2020. This ratio reached 73.4% at the top 10 banks and 73.7% in the five largest banks.
It stated that the average actual liquidity ratio in local currency at banks decreased in September 2020 to about 53.4%, compared to 54.3% at the end of June 2020. This ratio stood at 55.5% in the top 10 banks, and 54.7% with the five largest banks.
This comes at a time when the average actual liquidity rate in foreign currencies at banks increased to 76.8% in September, compared to 70.3% in June. This rate recorded 76.9% in the top 10 banks, and 77.3% in the top five banks.
The CBE said that the bank’s portfolio of securities, not including investment in Treasury bills (T-bills), reached about 23.6% of total assets in banks by the end of September 2020, compared to 23.1% at the end of June 2020. This reached 26.1% for the top 10 banks, and 27.3% for the top five Banks.
According to CBE, the volume of bank investments in securities and T-bills increased to about EGP 2.784trn in September 2020. This compared to the EGP 2.622trn recorded in June 2020.
The volume of investments at the top 10 banks reached about EGP 2.27trn, whilst they reached about EGP 1.994trn at the top 5 banks.
The CBE revealed that the total financial position of banks increased to about EGP 6.889trn by the end of September 2020. This compared to about EGP 6.408trn by the end of June 2020, reflecting an increase of about EGP 481bn.
It added that cash balances increased to EGP 55.209bn in September 2020. At the same time, the balances at banks in Egypt recorded EGP 881.430bn in September 2020, while the balances in banks abroad amounted to about EGP 294.325bn.
Loans and debit balances to clients recorded about EGP 2.382trn, while the stock portfolio and bank investments in treasury bills recorded EGP 2.784trn.
At the level of liabilities, bank capital reached EGP 174.672bn by the end of September 2020, and reserves recorded EGP 313.086bn. Meanwhile, the balance of allocations amounted to about EGP 152.999bn.
Liabilities before banks in Egypt recorded about EGP 229.627bn, and their obligations before banks abroad were EGP 121.674bn, while total deposits amounted to about EGP 5.035814trn.
The CBE revealed that the total financial position of the 10 largest banks operating in the local market reached EGP 5.336trn by the end of September 2020.
While the CBE did not disclose the names of these banks, it is known that they are led by: the National Bank of Egypt (NBE); Banque Misr; the Commercial International Bank (CIB); Banque du Caire; QNB Alahli; the Arab African International Bank (AAIB); HSBC Egypt; Faisal Islamic Bank – Egypt; AlexBank; and Credit Agricole Egypt.
According to the CBE, the investments of the 10 banks in securities and T-bills amounted to about EGP 2.270trn. At the same time, loans and debit balances for clients reached EGP 1.778trn by the end of September 2020.
The balances of the top 10 banks with other banks operating locally amounted to EGP 680.772bn, while their balances with banks abroad recorded EGP 254.660bn, and the volume of cash they had reached is EGP 42.058bn.
The CBE indicated that the capital of the 10 largest banks operating in the Egyptian market reached about EGP 120.822bn in September 2020, while their reserve balances amounted to EGP 233.917bn, and allocations of EGP 103.491bn.
The volume of long-term bonds and loans in the 10 banks amounted to EGP 184.502bn, while their total deposits amounted to EGP 3.913trn.
According to the CBE, the liabilities of these banks towards other banks in Egypt recorded EGP 187.962bn. At the same time, their liabilities to banks abroad reached EGP 111.871bn by the end of September 2020.
At the level of the total financial position of the five largest banks operating in the local market, the CBE revealed that it had reached EGP 4.665trn by the end of September 2020.
The CBE explained that the five banks’ investments in securities and T-bills amounted to EGP 1.994trn, while loans and debit balances for clients reached EGP 1.573trn in September 2020.
The local balances of those banks amounted to EGP 588.168bn, while their balances abroad recorded EGP 225.640bn, while the volume of their cash reached EGP 32.813bn.
The CBE indicated that the capital of the five largest banks operating in the Egyptian market reached about EGP 98.432bn by the end of September 2020. Their reserve balances reached EGP 196.809bn, along with allocations of EGP 84.465bn.
The volume of long-term bonds and loans in the five banks amounted to EGP 175.599bn, while their total deposits amounted to about EGP 3.436trn.
According to the CBE, the liabilities of these banks towards banks in Egypt recorded EGP 177.565bn, while their liabilities to banks abroad reached EGP 96.726bn by the end of September 2020.
In the same context, the CBE said that the net profits of banks operating in the Egyptian market recorded about EGP 45.549bn by the end of September 2020.
It explained that the net return of banks amounted to EGP 110.670bn, while the net revenues of the activity amounted to about EGP 132.208bn. Meanwhile, total expenditures recorded about EGP 86.659bn by the end of the third quarter (Q3) of 2020.
The CBE added that the profits of the top 10 banks in the Egyptian market amounted to about EGP 29.852trn, accounting for 65.5% of the total profits of the banking sector as a whole.
The net return of the top 10 banks amounted to about EGP 73.975bn, whilst the net activity revenues amounted to about EGP 87.521bn, and the total expenses came in at about EGP 57.669bn.
Atop the list of those banks is the NBE, Banque Misr, CIB, Banque du Caire, QNB – Al Ahly, Credit Agricole – Egypt, Faisal Islamic Bank, and the Housing and Development Bank (HDB).
This comes at a time when the net profits of the five largest banks recorded about EGP 21.022bn, to account for 46.1% of the total profits. The net return of the five largest banks recorded about EGP 53.194bn, while net activity revenues amounted to about EGP 63.215bn. At the same time, total expenditures recorded about EGP 42.193bn by the end of September 2020.
On the level of asset quality, the CBE said that the average return on equity was 23.4%, and the net margin of return was 4.1%, unchanged from June and March 2020.
The return on average assets of the top 10 banks was 1.7% by the end of September 2020, while the return on average equity was 23.5%. The net margin of return was 4%, while the return on average assets of the top 5 banks was 1.5%. The return on average ownership rights is 21.6%, while the net profit margin is 3.8%.
With regard to the bank capital adequacy index, the CBE said that the ratio of the capital base to assets weighted by risk weights at banks was 19.8% at the end of September 2020. This compared to 20.1% at the end of June 2020, with the ratio standing at 19.6% for the top 10 banks, and 19.4% for the top 5 banks.
The ratio of the first tranche of bank capital to risk-weighted assets decreased to 17.3% at the end of September, compared to 17.7% at the end of June. This ratio reached 17.2% for the top 10 banks, and 17% for the 5 largest banks.
The CBE said that the total of the first tranche plus hedging pillar should not be less than 6.625% for 2016, 7.25% for 2017, 7.875% for 2018, and 8.5% for 2019.
It noted that the ratio of banks’ continuing basic capital to risk-weighted assets was 12.8% at the end of September 2020, compared to 13.1% at the end of June. This ratio was 12.3% for the top 10 banks, and 11.6% for the top five banks.
The CBE’s instructions stipulate that the continuing basic capital plus the precautionary pillar must not be less than: 5.125% for the year 2016; 5.75% for the year 2017; 6.375% for the year 2018; and 7% for the year 2019.
The leverage ratio in banks decreased to 7.4% by the end of September 2020, compared to 7.6% in June. This ratio reached 6.8% at the top 10 banks and 6.5% in the top 5 banks.
According to the CBE, the minimum set for this percentage should not be less than 3%.
In another context, it revealed that the net open positions of foreign currencies recorded 0.5% of the total capital base at banks operating in the Egyptian market by the end of September 2020, compared to -1.9% in June 2020. The CBE explained that this percentage reached 0.5% in the top 10 banks, while the largest five banks recorded 0.8%.
