The Central Bank of Egypt (CBE) has revealed the most important financial soundness indicators for banks operating in the local market in the first quarter (1Q) of 2023.
In a recent report, the CBE said that the percentage of non-performing loans increased slightly by end of Q1 2023 to 3.5% of the total loan portfolio of banks operating in the Egyptian market in March 2023, compared to 3.4% in December 2022.
It explained that the non-performing loans to the total loans amounted to 2.7% at the 10 largest banks operating in the Egyptian market, and reached 2.4% at the five largest banks.
The CBE also said that loan provisions to non-performing loans reached 93.3% in March 2023, compared to 91.6% in December 2022. The percentage of these provisions reached 100% in the 10 largest banks and the five largest banks operating in the Egyptian market.
“The loan provisions amounted to EGP 295.444bn in 1Q 2023. The share of the top 10 banks of those provisions amounted to EGP 219.431bn, while the volume of loan provisions in the five largest banks amounted to EGP 190.592bn,” the CBE said.
Banks had reserves worth EGP 488.708bn, of which the share of the top 10 banks was estimated at EGP 376.447bn, while the volume of reserves of the five largest banks amounted to EGP 325.018bn.
The CBE said that the ratio of loans to deposits in banks operating in the Egyptian market increased to 48.9% in 1Q 2023, compared to 47.9% in 4Q 2022. This percentage reached 42.9% at the 10 largest banks, and recorded 51.5% at the five largest banks.
According to the CBE, the ratio of loans to deposits in local currency decreased to 43.1% in March 2023, compared to 44% in December 2022. This ratio reached 42.9% at the 10 largest banks, and recorded 43.2% at the five largest banks.
On the other hand, the ratio of loans to deposits in foreign currencies in banks increased to 71.5% in March, compared to 66.8% in December. This ratio recorded 79.1% in the top 10 banks, and reached 87% in the top five banks.
The CBE said that the private sector acquired 55.3% of the total loans granted by banks to their customers until the end of March 2023, compared to 56% in December 2022.
The CBE explained that the private sector acquired 47.2% of total loans at the 10 largest banks operating in Egypt, and acquired 43.8% of loans at the five largest banks.
The CBE also reported that total deposits in banks jumped to about EGP 9.189trn in 1Q 2023, compared to EGP 8.562trn in 2022, an increase of EGP 627bn. It pointed out that about EGP 7.186trn belongs to the top 10 banks, while the volume of deposits with the five largest banks reached EGP 6.316trn.
In its quarterly report on the financial soundness of banks, the CBE stated that the percentage of deposits to assets in banks amounted to 70.9% in March 2023, compared to 75.2% in December 2022, and this percentage reached 69.8% at the 10 largest banks and 69.5% at the top five.
The CBE said that the average liquidity ratio in local currency decreased with banks in March 2023 to 39.7%, compared to 43.3% in December 2022. This ratio recorded 38.7% for the top 10 banks, and reached 37.8% for the top five.
The average ratio of liquidity in foreign currencies at banks declined to 75.3% in March, compared to 77.9% in September. This ratio reached 74.4% for the top 10 banks, and it recorded 73.6% for the top five.
The CBE said that the volume of investments of banks operating in the local market in securities and treasury bills amounted to about EGP 4.817trn in March 2023, compared to about EGP 4.428trn in December 2022, an increase of about EGP 389bn.
He pointed out that the volume of investments of the 10 largest banks in these tools amounted to EGP 3.956trn, while it amounted to about EGP 3.580trn at the top five banks.
According to the CBE, the percentage of bank securities portfolio, not including treasury bills, declined to 26.3% of total assets in banks in March 2023, compared to 27.5% in December 2022, and this percentage reached 29.1% for the 10 largest banks, and 31.1% for the top five.
The CBE said that the capital base to risk weighted assets in banks declined to 17% in 1Q 2023, compared to 19% in 2022, and this percentage reached 16.2% for the 10 largest banks, and 15.7% for the top five banks.
It added that the tier 1 capital to risk-weighted assets declined to 13.8% in March 2023, compared to 15.6% in December 2022. This ratio reached 12.7% for the 10 largest banks and 12.2% for the top five.
The common equity to risk-weighted assets reached 10.8% in March, compared to 11.1% in September. This ratio reached 10% for the top 10 banks and 9.2% for the top five banks.
The leverage ratio in banks decreased to 6.2% in March, compared to 6.5% in December, and this ratio reached 5.6% in the top 10 banks and 5.3% 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 -2.8% of the total capital base of banks operating in the Egyptian market in March 2023, compared to -0.9% in December 2022.
The CBE explained that this percentage amounted to -4.5% in the top 10 banks, while it reached -5.1% at the top five banks.
The CBE 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 achieved net profits amounting to about EGP 55.279bn in 1Q 2023.
The CBE indicated that the net revenues in banks amounted to EGP 117.616bn in March 2023, while the net activity revenues amounted to EGP 134.194bn, and the total expenses recorded about EGP 78.915bn.
According to the CBE, the top 10 banks acquired about 66.51% of the total profits of banks, to record about EGP 36.769bn in March 2023. The top five banks acquired about 46.28% of the sector’s profits, to record EGP 25.587bn.
The list of these banks is topped by NBE, Banque Misr, CIB, Banque du Caire, QNB Alahli, Credit Agricole – Egypt, Faisal Islamic Bank of Egypt, and HDB.
The report revealed that the net rate of return of the top 10 banks recorded during 1Q 2023 was about EGP 86.892bn, and net activity revenues about EGP 96.031bn. Their total expenses amounted to EGP 59.262bn.
This comes at a time when the net rate of returns of the top five banks amounted to EGP 72.147bn, and net activity revenues amounted to EGP 75.857bn, while their total expenses amounted to EGP 50.170bn in September.
The CBE said that the return on average assets in banks recorded 1.2% in March 2023, with little change from the full year 2022, and the return on average equity recorded 17.7%, while the net interest margin reached 3.8%.
It pointed out that the return on average assets in the 10 largest banks amounted to 1.2%, and the return on average equity recorded 19.5%, while the net interest margin reached 3.6%.
According to the CBE, the return on average assets of the five largest banks was 1.1%, and the return on average equity was 18.7%, while the net interest margin reached 3.4%.
