The Central Bank of Egypt (CBE) announced that the total financial position of banks operating in the local market increased to about EGP 13.798trn in the first half (1H) of 2023, according to its quarterly report on banks’ financial health.
The report showed that on the assets side, banks had cash balances of nearly EGP 106.241bn, and balances in local and foreign banks of EGP 2.326trn and EGP 308.623bn, respectively, in June 2023.
Banks also had customer lending and debit balances of EGP 4.798trn and securities portfolio and bank investments in treasury bills of EGP 4.855tn. The other assets, which CBE did not specify, amounted to EGP 1.402bn.
On the liabilities side, the report stated that banks’ capital was EGP 323.776bn, reserves were EGP 492.386bn, and provisions were EGP 305.455bn.
Banks’ obligations towards each other locally and abroad were EGP 575.767bn and EGP 450.686bn, respectively, and the total deposits were EGP 9.450tn. The bonds and long-term loans were EGP 541.945bn, and the other liabilities, which CBE did not detail, reached EGP 1.657tn.
Non-performing loans ratio declines
The report also revealed that the ratio of non-performing loans to the total loan portfolio of banks declined to 3.3% in June 2023, compared to 3.5% in March 2023.
This ratio was 2.6% at the 10 largest banks and 2.3% at the five largest banks operating in the Egyptian market.
The report indicated that banks covered 91.1% of their total non-performing loans with provisions in June 2023, compared to 93.3% in March 2023. This coverage ratio was 99.9% at the 10 largest banks and 100% at the top five largest banks.
The report added that the total provisions that banks made to deal with doubtful debts were EGP 305.455bn in June 2023, of which EGP 230.192bn belonged to the 10 largest banks and EGP 200.667bn to the five largest banks.
Banks also had reserves worth EGP 492.386bn, of which EGP 377.942bn were held by the 10 largest banks and EGP 326.422bn by the five largest banks.
Loan-to-deposit ratio increases
The report said that the loan-to-deposit ratio in banks increased to 50.9% in June 2023, compared to 48.9% in March 2023. This ratio was 52.8% at the 10 largest banks and 54.6% at the top five banks.
The report explained that the loan-to-deposit ratio in local currency increased to 44.7% in June 2023, compared to 43.1% in March 2023. This ratio was 44.9% at the 10 largest banks and 45.5% at the five largest banks.
The loan-to-deposit ratio in foreign currency in banks also increased to 76.4% in June 2023, compared to 71.5% in March 2023. This ratio was 86.3% at the 10 largest banks and 96.7% at the top five banks.
The report said that the private sector accounted for 53.6% of the total loans granted by banks to their customers in June 2023, compared to 55.3% in March 2023.
The private sector’s share of the total loans was 45.4% at the 10 largest banks and 41.9% at the five largest banks.
Banks’ deposits rise to EGP 9.450trn
CBE announced that the total deposits in banks operating in the local market rose to about EGP 9.450trn in the first half (1H) of 2023, according to its quarterly report on banks’ financial health.
The report showed that the deposits increased by about EGP 261bn from EGP 9.189trn in the first quarter of the same year. The 10 largest banks held EGP 7.385trn of the total deposits, while the five largest banks had EGP 6.470tn.
The report also stated that the deposits to assets ratio in banks decreased to 68.6% in June 2023, compared to 70.9% in March 2023. This ratio was 67.5% at the 10 largest banks and 67.2% at the five largest banks.
The report revealed that the average actual liquidity ratio in local currency in banks declined to 37.6% in June 2023, compared to 39.7% in March 2023. This ratio was 36.1% at the 10 largest banks and 35.8% at the five largest banks.
The average actual liquidity ratio in foreign currency in banks also declined to 70.1% in June 2023, compared to 75.3% in March 2023. This ratio was 68% at the 10 largest banks and 65.9% at the five largest banks.
Banks’ investments in securities & T-bills grow
The report said that the total investments of banks in securities and treasury bills amounted to EGP 4.855trn in June 2023, compared to EGP 4.817trn in March 2023, an increase of about EGP 38bn.
The report explained that the 10 largest banks invested about EGP 3.948tn in these instruments, while the five largest banks invested about EGP 3.580trn.
According to the report, the securities portfolio, excluding treasury bills, accounted for 24.4% of the banks’ total assets in June 2023, compared to 26.3% in March 2023. This percentage was 27.1% at the 10 largest banks and 31.1% at the five largest banks.
Capital base to risk-weighted assets ratio improves
The report said that the capital base to risk-weighted assets ratio in banks improved to 17.5% in June 2023, compared to 17% in March 2023. This ratio was 16.9% at the 10 largest banks and 16.1% at the five largest banks.
The report indicated that the first tranche of banks’ capital to risk-weighted assets ratio improved to 14.3% in June 2023, compared to 13.8% in March 2023. This ratio was 13.4% at the 10 largest banks and 12.6% at the five largest banks.
The report added that the continuing core capital to risk-weighted assets ratio declined to 10.6% in June 2023, compared to 10.8% in March 2023. This ratio was 10% at the 10 largest banks and 9.1% at the five largest banks.
The financial leverage ratio in banks increased to 6.3% in June 2023, compared to 6.2% in March 2023. This ratio was 5.7% at the 10 largest banks and 5.4% at the five largest banks.
The report stated that the minimum required for this ratio was 3%.
CBE revealed that the net open positions in foreign currencies were -1.3% of the total capital base of banks in June 2023, compared to -2.8% in March 2023.
This percentage was -2.3% at the 10 largest banks and -2.4% at the five largest banks.
CBE also stressed that the total surplus or deficit in foreign currency positions should not exceed 20% of the capital base.
Banks’ net profits reach EGP 126.910bn
CBE announced that the net profits of banks operating in the local market reached EGP 126.910bn in the first half (1H) of 2023, according to its quarterly report on banks’ financial health.
The report showed that the net revenue in banks was EGP 254.575bn, the net activity revenue was EGP 299.313bn, and the total expenses were EGP 172.403bn in June 2023.
The report also stated that the 10 largest banks accounted for 75.045% of the total bank profits, recording EGP 95.240bn, while the five largest banks accounted for 59.635% of the sector’s profits, recording EGP 75.683bn.
The list of these banks included NBE, CIB, Banque du Caire, QNB Alahli, Credit Agricole – Egypt, Faisal Islamic Bank of Egypt, and HDB.
The report revealed that the net revenue of the 10 largest banks was EGP 193.867bn, the net activity revenue was EGP 224.271bn, and the total expenses were EGP 129.031bn in June 2023.
The report added that the net revenue of the five largest banks was EGP 162.871bn, the net activity revenue was EGP 185.095bn, and the total expenses were EGP 75.683bn in June 2023.
The report said that the return on average assets in banks was 1.2%, the return on average equity was 17.7%, and the net return margin was 3.8% in June 2023.
The report indicated that the return on average assets in the 10 largest banks was 1.2%, the return on average equity was 19.5%, and the net return margin was 3.6% in June 2023.
The report stated that the return on average assets in the five largest banks was 1.1%, the return on average equity was 18.7%, and the net return margin was 3.4% in June 2023.
