In a dynamic banking landscape, smaller banks continue to outpace their larger counterparts in growth. Abu Dhabi Commercial Bank (ADCB) leads the pack with a remarkable 35% market share, driven by robust growth and effective cost-control strategies.
The bank’s assets grew by an impressive 78% annually, reaching EGP 86.1bn by the end of 2022. The bank’s loan portfolio increased by 40.33%, reaching EGP 29.78bn, and its net profits surged by 64.6%, reaching approximately EGP 2.88bn by the end of December, compared to EGP 1.75bn in December 2021.
AIB turns losses into profits with cost management
The focus on cost management and expanding lending activities has propelled the Arab Investment Bank (AIB) to the second position in the growth index. The bank turned its fortunes around, recording profits of EGP 525m in 2022 compared to losses estimated at EGP 871m in 2021. This turnaround was attributed to controlling operational expenses despite high inflation and reducing held provisions to EGP 480m compared to nearly EGP 1bn.
The Arab African International Bank ranked third, boasting assets exceeding EGP 326bn, making it the fifth-largest bank in Egypt. However, its growth was relatively modest at 22%, causing an 8% contraction in its market share, preventing it from topping the fastest-growing index.
NBE and Banque Misr stand out among larger banks
Despite the larger banks benefiting from higher interest rates and their ability to attract depositors, smaller banks have maintained their edge in growth rates. The depreciation of the local currency against the dollar has impacted larger banks, resulting in significant growth in foreign currency portfolios when translated into local currency.
However, in 2022, the performance of the two largest banks, the National Bank of Egypt and Banque Misr, stood out. The National Bank of Egypt’s assets doubled those of the Commercial International Bank, growing at a rate of 34%. Meanwhile, Banque Misr’s assets increased by over 600 billion pounds, a growth rate of 40%. Both banks managed to increase their already substantial market shares.
Market share for Banque Misr increased by 6%, making it the third-largest expanding bank, with a 48% growth in income from returns. Al Ahli Bank also exhibited noteworthy figures, with a 47% increase in loans, a 2% market share growth, and a 49% increase in net income from returns.
Banking sector overview
Various factors have influenced the performance indicators, including the ratio of foreign assets to total assets, currency valuation gains, and interest rate hikes. Some banks have opted to curtail loan growth and shift towards lower-risk assets, while others have seized the opportunity to increase their market share in individual and corporate financing.
According to Central Bank data, the banking sector’s assets grew by 32.13% in 2022, reaching EGP 11.3trn compared to EGP 8.6trn in the previous year. Loan-to-asset ratios stabilised after growing at the same rate, reaching EGP 4.1trn.
The high growth rates of smaller banks highlight the significant variation in the sizes of Egyptian banks, with two dominating over half of the sector’s assets, namely the National Bank of Egypt and Banque Misr.
The Business News banking growth index is based on the annual financial statements of 26 banks operating in Egypt, covering 99% of the sector’s assets. The index measures the growth rates of assets, loans, deposits, net profits, and market shares of each bank, and assigns a weighted score to rank them accordingly. The index also includes sub-indices for net profit growth, loan growth, and market share expansion.
Six banks achieved profit growth of over 100%, including Arab Investment Bank (159%), the Export Development Bank (140%), saib Bank (136%), First Abu Dhabi Bank (129%), Emirates NBD (122.2%), and the National Bank of Kuwait (104.8%).
