The Central Bank of Egypt (CBE) recently revealed the most prominent financial safety indicators for banks by the end of the third quarter (3Q) of this year.
According to the CBE, the total financial position of banks operating in the local market, other than the CBE, increased by about EGP 786bn to record EGP 10.823 trillion at the end of September, compared to EGP 10.037 trillion at the end of June.
In its quarterly report on indicators of financial safety of banks, the CBE stated that on the assets side, cash balances in banks at the end of September 2022 amounted to about EGP 75.523bn, and the balances of some banks inside the country amounted to EGP 1.757 trillion, while balances in banks abroad amounted to EGP 216.432bn.
It added that the balances of lending and discounting to clients recorded about EGP 3.695 trillion, while the securities portfolio and banks’ investments in treasury bills recorded EGP 4.058 trillion.
Regarding liabilities, the CBE stated that the bank’s capital amounted to EGP 288.804bn, and reserves recorded EGP 417.970bn, while the balance of provisions amounted to EGP 226.338bn.
Furthermore, banks’ obligations to each other in Egypt amounted to EGP 334.444bn, while their obligations to banks abroad amounted to EGP 255.861bn, and total deposits amounted to EGP 7.819 trillion. Meanwhile, the balances of bonds and long-term loans amounted to EGP 368.5bn.
The CBE said that the rate of non-performing loans recorded 3.2% of the total loan portfolio of banks operating in the Egyptian market by the end of September, with little change from June.
It also explained that the rate of non-performing loans amounted to 2.3% of the total loans at the 10 largest banks operating in the Egyptian market and reached 1.9% at the five largest banks.
Moreover, the CBE indicated that banks made provisions of 91.8% of their total non-performing loans, compared to 92.1%, and the percentage of these provisions reached 100% for the 10 largest banks operating in the Egyptian market.
“The volume of provisions made by banks to face doubtful debts amounted to about EGP 226.338bn by the end of September 2022, and the share of the ten largest banks in those provisions was EGP 165.908bn, while the volume of provisions in the five largest banks amounted to EGP 143.203bn,” according to the CBE.
The report added that the banks have formed reserves worth EGP 417.970bn, of which the share of the top ten reached EGP 324.832bn, while the volume of reserves of the five largest banks amounted to EGP 289.924bn.
The CBE also said that the private sector acquired 58.4% of the total loans granted by banks to their customers, compared to 58.1%.
It explained that the private sector acquired 50.2% of the total loans at the 10 largest operating banks in Egypt, while it acquired 46.1% of the loans at the five largest banks.
Additionally, the CBE pointed out that the ratio of loans to deposits in banks operating in the Egyptian market declined to 47.4%, compared to 48.6% in June 2022, and this ratio reached 484% with the 10 largest banks and 48.9% in the five largest banks.
Furthermore, the ratio of loans to deposits in local currency decreased to 44.1%, compared to 45.51%, and this ratio reached 44.3% for the 10 largest banks and 43.9% for the five largest banks.
The ratio of loans to deposits in foreign currencies in banks also declined to 66.6%, compared to 66.8%. This ratio recorded 73.5% in the top 10 banks and 82.9% in the top five banks.
The CBE also said that total deposits in banks jumped to about EGP 7.819 trillion, compared to EGP 7.353 trillion, an increase of about EGP 466bn, pointing out that the top 10 banks account for EGP 6.043 trillion of the deposits and about EGP 5.372tn at the five largest banks.
It added that the percentage of deposits to assets in banks amounted to 72.3%, compared to 73.4%, and this percentage reached 71.7% with the 10 largest banks and 71.5% with the five largest banks.
Furthermore, the CBE indicated that the average actual liquidity ratio in local currency at banks increased to 46.9%, compared to 43.5%, and this ratio recorded 47% for the top 10 banks and 46.9% for the top five banks.
On the other hand, the average actual liquidity ratio in foreign currencies at banks declined to 77.3%, compared to 78%. This ratio reached 77.5% for the top 10 banks and 77.3% for the top five banks.
Additionally, the CBE said that the volume of investments of banks operating in the local market in securities and treasury bills amounted to EGP 4.058 trillion, compared to EGP 3.739 trillion — an increase of about EGP 319bn.
It pointed out that the volume of investments of the 10 largest banks in these tools amounted to EGP 3.218 trillion and about EGP 2.914 trillion for the five largest banks.
According to the CBE, the percentage of banks’ securities portfolio, excluding treasury bills, declined to 25% of total assets, compared to 25.2%, and this percentage reached 27.4% for the largest 10 banks and 28.5% for the largest five.
Also, the ratio of the capital base to risk-weighted assets in banks declined to 20.5%, compared to 20.9%, and this ratio reached 19.6% for the 10 largest banks and 19.6% for the five largest banks.
The ratio of the first tranche of capital in banks to risk-weighted assets declined to 16.7%, compared to 17.1%. This ratio reached 15.5% for the top 10 banks and 15.3% for the top five banks.
According to the CBE, the ratio of banks’ continuous basic capital to risk-weighted assets reached 11.6%, compared to 12.2%. This ratio reached 10.5% for the top 10 banks and 9.9% for the top five banks.
Moreover, the leverage ratio in banks decreased to 6.7%, compared to 6.9%. This ratio reached 6% in the top 10 banks and 5.8% in the top five banks.
According to the CBE, the minimum set for this percentage is 3%.
In another context, the CBE revealed that the net open positions for foreign currencies reached -2.3% of the total capital base of banks operating in the Egyptian market, compared to -2.3%.
It explained that this percentage amounted to -3.2% in the 10 largest banks and -3.6% in the five largest banks.
It also stressed that the value of the total surplus or deficit in foreign exchange positions should not exceed 20% of the capital base.
As a result of the activity and strong performance of banks operating in the Egyptian market, they recorded net profits amounting to EGP 93.396bn, compared to EGP 56.8bn.
The CBE report revealed that the net return in banks amounted to EGP 225.807bn, compared to EGP 141.032bn.
According to the report, the net revenues of the activity amounted to about EGP 272.230bn, compared to EGP 171.462bn, while the total expenses recorded about EGP 178.8bn, compared to EGP 114.595bn.
The top ten banks acquired 78.29% of bank profits, recording EGP 73.125bn at the end of September, while the top five banks acquired 65.1% of the sector’s profits, recording EGP 60.894bn.
The list of these banks includes the National Bank of Egypt (NBE), Banque Misr, CIB, Banque du Caire, QNB Al-Ahly, Credit Agricole – Egypt, Faisal Islamic Bank of Egypt, and HDB.
The report revealed that the net revenues of the big five banks recorded EGP 144.194bn, net activity revenues of EGP 174.9bn, and total expenses of EGP 114.042bn by the end of September.
This comes at a time when the net returns of the top ten banks amounted to EGP 170.721bn, net revenues of activity amounted to EGP 206.980bn, while the total expenses amounted to EGP 133.8bn.
The CBE said that the return on average assets in banks recorded 1.2% at the end of September 2022, without significant change since the beginning of the year, and the return on average equity recorded 16.19%, while the net margin of return reached 4.2%
It pointed out that the return on average assets in the 10 largest banks amounted to 1.4%, and the return on average equity recorded 20.2%, while the net margin of return reached 4.3%.
Finally, the return on average assets of the five largest banks was 1.3%, and the return on average equity was 21%, while the net margin of return reached 4.3%.
