The Central Bank of Egypt (CBE) reported a robust rise in the total financial position of banks operating within the local market. Excluding the central bank itself, the combined asset value surged to EGP 15.165trn by the end of October 2023.
The report delves into the composition of this financial strength. Cash balances in banks reached EGP 105.959bn by October’s end, while their holdings within Egypt amounted to EGP 2.617trn and abroad reached EGP 328.039bn. Lending and discount balances for customers totalled a robust EGP 5.197trn, showcasing active engagement in the market. Additionally, banks held EGP 5.045trn in treasury bills, demonstrating a prudent investment strategy. Other assets, not further detailed by the CBE, contributed EGP 1.889bn to the overall picture.
On the liabilities side, the CBE stated that banks’ capital amounted to about EGP 399.986bn, reserves reached EGP 464.045bn, and provisions stood at about EGP 338.737bn. The banks’ commitments domestically amounted to about EGP 757.246bn, while their commitments to foreign banks reached EGP 432.307bn.
Furthermore, the total deposits amounted to about EGP 9.863trn, while the balances of long-term bonds and loans reached EGP 550.744bn. Other liabilities, not detailed by the Central Bank of Egypt, amounted to about EGP 2.359trn.
Credit Facilities
Further analysis reveals a significant increase in credit facilities granted by banks to their clients. By October 2023, this figure reached EGP 5.179trn, representing a growth of EGP 380.7bn compared to June 2023.
Credit facilities encompass loans, documentary credits, and letters of guarantee used in import transactions. The CBE attributes this positive development to a rise in credit facilities granted to both non-government entities (EGP 141.4bn, 5.2% increase) and the government (EGP 239.3bn, 11.5% increase).
According to the Central Bank of Egypt, the increase in balances granted to the government is due to the increase in balances in foreign currencies by EGP 92.7bn and balances in local currency by EGP 146.6bn.
The CBE noted that the private sector accounted for 61.9% of the total credit facilities granted to non-government entities by the end of October 2023. According to economic activity sectors, the industrial sector accounted for 28.9% of these balances, followed by the services sector at 27.7%, then the trade sector at 9.5%. The agriculture sector accounted for only 2%, while unallocated sectors accounted for 31.9%, with 31.7% going to the family sector.
Customer Deposits
The Central Bank of Egypt reported a positive trend in customer deposits, highlighting a significant increase by the end of October 2023. Compared to September, total deposits reached EGP 9.885trn, representing a rise of approximately EGP 97bn.
The report breaks down deposits by source, revealing EGP 2.161trn from government entities and EGP 7.724trn from non-government sources. Within government deposits, EGP 1.858trn was in local currency and EGP 302.322bn was in foreign currencies. For non-government deposits, EGP 6.118trn was in local currency and EGP 1.606trn was in foreign currencies.
The CBE further details the breakdown of non-government deposits by sector. The public sector acquired EGP 155.982bn, while the private sector acquired EGP 1.134trn. The family sector, however, played a dominant role, accounting for a significant EGP of 4.789trn and representing 74.7% of total deposits. This sector’s share was even higher in local currency deposits, reaching 78.8%, while its participation in foreign currency deposits was 59.1%.
The central bank stated that the growth rate in total deposits in banks reached about 19.9% in October 2023. The growth rate in deposits in local currency was 15.7%, while the growth rate in deposits in foreign currencies reached 39.6%.
Overall, deposits grew by 19.9% in October, with local currency deposits experiencing a 15.7% increase and foreign currency deposits witnessing a more significant 39.6% jump. This growth contributed to foreign currency deposits reaching 20.47% of the total deposit pie by the end of October.
Local Liquidity
The Central Bank of Egypt reported a trend in the local liquidity of the Egyptian banking sector, with a 5.3% increase to approximately EGP 8.682trn between July and October 2023. This growth is attributed to expansions in both quasi-money and money supply.
Quasi-money: This category, consists of non-current deposits and foreign currency deposits.
Money supply: This category, encompasses current deposits and cash outside banks
The CBE explained that this increase reflected growth in quasi-money by about EGP 229.1bn, at a rate of 3.7%, and in the money supply by about EGP 205bn, at a rate of 9.9%.
The increase in quasi-money resulted from an increase in deposits in foreign currencies by about EGP 48.9bn, at a rate of 3.2%, and non-current deposits in local currency by about EGP 180.2bn, at a rate of 3.9%.
The increase in money supply resulted from the rise in current deposits in local currency by about EGP 176.5bn, at a rate of 16.8%, and the increase in cash outside banks by about EGP 28.5bn, at a rate of 2.8%.
The CBE attributed this rise in local liquidity to two main factors, the increase in net domestic assets and a decrease in foreign assets in the banking system.
The Central Bank of Egypt revealed an increase in net domestic assets in the Egyptian banking sector by about EGP 438.7bn, or 4.8%, from July to October 2023, as a result of an increase in domestic credit by about EGP 1.006trn, at a rate of 11.5%, and a decrease in net budget items by about EGP 567.3bn.
Moreover, the report indicated that domestic credit increased due to an increase in net government claims by about EGP 849.4bn, claims from the private sector by about EGP 72.7bn, claims from the public sector by about EGP 72bn, and claims from the family sector by about EGP 11.9bn.
On the other hand, the CBE revealed a decrease in net foreign assets in the banking system by about EGP 4.6bn during that period.
The report attributed this decrease to an increase in net foreign assets at the central bank by about EGP 44bn and an increase in net foreign assets at banks by about EGP 39.4bn.
The CBE also pointed out an increase in reserve money by about EGP 56.7bn, or 3.7%, during the period from July to October 2023, reaching approximately EGP 1.585trn.
It explained that this increase was the result of an increase in bank deposits in local currency at the central bank by about EGP 38.3bn, at a rate of 8.6%, and a decrease in cash outside the central bank by about EGP 18.4bn, at a rate of 1.7%.
The increase in reserve money, representing the central bank’s liabilities to commercial banks, resulted from an increase in net government claims by about EGP 442.5bn, net bank claims by about EGP 122.5bn, a decrease in net foreign assets at the central bank by about EGP 44bn, and a decrease in net budget items by about EGP 464.3bn.
