The Central Bank of Egypt (CBE) reported the key financial soundness indicators for banks in the Egyptian market in the third quarter (Q3) of 2023.
A recent CBE report showed that the percentage of non-performing loans in banks remained at 3.3% of their total loan portfolio in Q3 2023, unchanged from Q2 2023.
The percentage of non-performing loans was 2.6% of the total loans at the 10 largest banks in the Egyptian market, and 2.3% at the five largest banks.
Provisions for non-performing loans
CBE stated that banks set aside 88.6% of their total non-performing loans as provisions in September 2023, down from 93.391.6% in June 2023. The percentage of these provisions was 94.69% in the 10 largest banks and 100% in the five largest banks.
CBE added that the total provisions for non-performing loans amounted to about EGP 324.725bn in Q3 2023. The share of the 10 largest banks was EGP 246.493bn, while the share of the five largest banks was EGP 217.294bn.
The banks also accumulated reserves worth EGP 505.325bn, of which the share of the top 10 was EGP 397.410bn, and the share of the five largest banks was EGP 346.467bn.
Loan-to-deposit ratio
CBE indicated that the loan-to-deposit ratio in banks increased to 52.4% in Q3 2023, up from 50.9% in Q2 2023. This ratio was 54.8% in the 10 largest banks, and 56.6% in the five largest banks.
It explained that the loan-to-deposit ratio in local currency rose to 46.1% in September 2023, up from 44.7% in June 2023. This ratio was 46.5% in the 10 largest banks, and 47% in the five largest banks.
The loan-to-deposit ratio in foreign currencies also increased to 78.3% in September, up from 76.4% in June. This ratio was 90.6% in the 10 largest banks, and 102.1% in the five largest banks.
Private sector’s share of loans
CBE revealed that the private sector accounted for 52.2% of the total loans granted by banks to their customers in September 2023, down from 53.6% in June 2023.
It said that the private sector received 43.9% of the total loans from the 10 largest banks in Egypt and 40.4% of the loans from the five largest banks.
Growth in deposits
The Central Bank reported that total deposits in banks increased to EGP 9.765tn in September 2023, up from EGP 9.450tn in June 2023, a rise of about EGP 315bn. The top 10 banks held about EGP 7.599tn of those deposits, representing 77.8% of the total deposits. The five largest banks had about EGP 6.690tn in deposits, with a share of 68.57%.
The deposit to asset ratio in banks was 66.3% in September 2023, down from 68.6% in June 2023. This ratio was 65.1% at the 10 largest banks and 64.9% at the five largest banks.
CBE noted an increase in the average actual liquidity ratio in local currency at banks in September 2023 to 38.5%, up from 37.6% in June 2023. This ratio was 37.3% at the 10 largest banks, and 36% at the five largest banks.
Meanwhile, the average actual liquidity ratio in foreign currencies at banks decreased to 69.9% in September, down from 70.1% in June. This ratio was 67.2% at the 10 largest banks, and 64.7% at the five largest banks.
Investment in securities and treasury bills
CBE stated that the volume of investment of banks in the local market in securities and treasury bills reached EGP 5.018tn in the third quarter of 2023, up from EGP 4.855tn in the second quarter, an increase of about EGP 163bn.
The 10 largest banks invested about EGP 4.025tn in these instruments, while the five largest banks invested about EGP 3.603tn.
According to CBE, the percentage of banks’ securities portfolio, excluding treasury bills, dropped to 22.3% of the banks’ total assets in September 2023, down from 24.4% in June. This percentage was 24.3% at the 10 largest banks, and 26% at the five largest banks.
Capital base
CBE revealed that the capital base to risk-weighted assets ratio in banks rose to 18.1% in the third quarter of this year, up from 17.5% in the second quarter of the same year. This ratio was 17.3% at the 10 largest banks, and 16.1% at the five largest banks.
CBE indicated that the first tranche of banks’ capital to risk-weighted assets ratio increased to 14.9% in September 2023, up from 14.3% in June 2023. This ratio was 13.8% at the 10 largest banks and 13.1% at the five largest banks.
The continuing core capital to risk-weighted assets ratio was 10.5% in September, down from 10.6% in June. This ratio was 9.7% at the top 10 banks and 9% at the top five banks.
The financial leverage ratio in banks increased to 6.6% in September, up from 6.3% in June. This ratio was 5.9% in the 10 largest banks and 5.6% in the five largest banks.
CBE said that the minimum for this ratio is 3%.
Open positions in foreign currencies
In a different context, CBE disclosed that the net open positions in foreign currencies were -1.6% of the total capital base mechanism in banks in the Egyptian market in September 2023, down from -1.3% in June.
CBE explained that this percentage was -2.7% in the 10 largest banks, and -2.8% in the five largest banks.
It stressed that the value of the total surplus or deficit in foreign currency positions should not exceed 20% of the capital base.
