The Central Bank of Egypt (CBE) said the total financial position of banks operating in the domestic market rose to about EGP 5.822trn by the end of September 2019, against EGP 5.516trn by the end of June 2019, making an increase of EGP 306bn.
The CBE, in its quarterly report on the financial safety of banks, explained that the financial position of the biggest 10 banks recorded about EGP 4.373trn by the end of September, against EGP 4.1trn by the end of June, an increase of about EGP 273bn.
The 10 largest banks account for about 75.11% of the total financial position of the banks operating in the Egyptian market.
That comes as the financial centre of the biggest five banks recorded a rise of about EGP 206bn, reaching about EGP 3.733trn by the end of September 2019, compared to about EGP 3.527trn by the end of June.
The share of the five big banks reached about 64.11% of the total financial position of the banks operating in Egypt.
Regarding the quality of the bank loan portfolio, the CBE said the rate of non-regular loans recorded 4.5% of the total loan portfolio of banks operating in the Egyptian market by the end of June 2019, compared to 4.2% by the end of June 2019.
The CBE explained that the ratio of irregular loans reached 3.5% of total loans of the top 10 banks operating in the Egyptian market, while it reached 2.8 % by the five largest banks.
The CBE indicated that banks made 97.4% allocations of their total non-regular loans by the end of June 2019. The percentage of these allocations reached 100% with the major 10 banks and the five banks operating in the Egyptian market.
The volume of allocations made by banks to face the doubtful debts reached EGP 124.646bn by the end of September 2019, and the share of the 10 big banks from these allocations was EGP 79.728bn.
According to the CBE, the volume of allocations in the major five banks hit EGP 63.987bn.
The CBE added that the banks have formed reserves of EGP 243.029bn by the end of September 2019, of which the share of the big 10 reached EGP 189.965bn. In addition, the volume of reserves by the major five banks reached about EGP 158.475bn.
The ratio of loans to deposits in banks operating in the Egyptian market declined to 44.1% by the end of September 2019, compared to 46.5% in June, which reached 42.2% for the major 10 banks, and 42.5% with the top five banks.
The CBE explained that the ratio of loans to local currency deposits declined to 38.9% by the end of September, compared to 40.1% in June, which reached 35.8% at the largest 10 banks, and recorded 35.3% at the top five banks.
The ratio of loans to foreign currency deposits in banks dropped to 67% by the end of September, compared to 71% in June. This figure recorded 71.4% for the top 10 banks, reaching 80.8% for the top five banks.
“The private sector has accounted for 64% of the total loans granted by banks to their clients until the end of September 2019, compared to 61.5% by the end of June,” the CBE stated.
It explained that the private sector acquired 57.4% of the total loans at the top 10 operating banks in Egypt, while 53.9% of the loans were at the top five banks.
“Total bank deposits by the end of September 2019 reached EGP 4.14trn, the top 10 banks accounted for about EGP 3.083tn, while the volume of deposits at the largest five banks operating in Egypt is about EGP 2.623trn”, according to the CBE
By the end of September 2019, the bank’s deposit rate reached about 71.3%, the CBE added, compared to 46.5% by the end of June. This made 70.7% for the top 10 banks and 70.4% for the top five banks.
The CBE reported a rise in the average real liquidity ratio in the local currency of banks in September 2019 to 45.8%, compared to 41.9% in June. The rate was 49.4% for the top 10 banks, and 50% for the top five banks.
At the same time, the average percentage of real foreign currency liquidity at banks rose to 73.9% in September, compared to 68.6% by the end of June. The rate was 74.8% for the top 10 banks, with 75.3% for the top five banks.
CBE said that the bank’s securities portfolio, which is not included in the treasury bills (T-Bills), reached about 19.2% of the total bank assets by the end of September 2019, compared to 16.6% at the end of June. This was 21.6% at the top 10 banks, and 23.6% at the top five banks.
According to the CBE, the volume of banks’ investments in securities and T-Bills reached EGP 1.995tn by the end of September 2019. The volume of investments of the 10 major banks with about EGP 1.603tn and about EGP 1.402tn with the major five banks.
“The total capital of banks operating in the Egyptian market reached EGP 156.236bn by the end of September 2019, compared to EGP 152.661bn by the end of June.
The bank explained that the capital of the big 10 banks hit about EGP 104.172bn in September, compared EGP 100.378bn in June, while the capital of the big banks reached about EGP 82.516bn, compared to EGP 82.733bn.
While the CBE did not disclose the names of the five or ten major banks, it is known that they are topped by the National Bank of Egypt (NBE), the Commercial international bank (CIB), Qatar National Bank, Arab African International Bank, HSBC, Faisal Islamic Bank, Alexandria Bank, and Credit Agricole.
With regard to the capital adequacy index of banks, the CBE explained that the ratio of capital base to risk-weighted assets rose to 18.1% by the end of September 2019, compared to 16.9% by the end of June, which reached 18.1% at the top 10 banks, and 18.2% the five major banks have.
The rate of the first tranche of bank capital to risk-weighted assets rose to 15.5% by the end of September, compared to 14% by the end of June, which reached 15.6%
The CBE said the total of the first tranche plus the precautionary support should be at least 6.625% for 2016, 7.25% for 2017, 7.875% for 2018, and 8.5% for 2019.
According to the CBE, the ratio of continuous capital in banks to risk-weighted assets at 11% risk weights by the end of September 2019, compared to 10.4% by the end of June. The rate was 10.4% for the top 10 banks and 9.8% for the top five banks.
The CBE instructions state that the continuing capital base plus the precautionary pillar must be at least 5.125% for 2016, 5.75% for 2017, 6.375% for 2018, and 7% for 2019.
The bank’s leverage ratio rose to 7.2% by the end of September, compared to 6.7% in June, 6.8% in the top 10 banks and 6.5% in the top five banks.
According to the CBE, the minimum set for this rate must be at least 3%.
In another context, it was disclosed that net foreign exchange positions reached 3.5% of the total capital base in banks operating in the Egyptian market by the end of September 2019, compared to 0.4% in June.
CBE explained that this ratio reached 4.7% with the biggest 10 banks. In the top five banks, it rose to 5.8%.
This is the second time that the CBE has included the statement on the banks’ foreign exchange positions in this report.
The CBE stressed that the value of the total surplus or deficit in foreign currency centres should not exceed 20% of the capital base.
Earlier documents of the International Monetary Fund (IMF) revealed that the CBE will not allow exceeding the limits of the foreign exchange centres open in banks in the coming period within the framework of reducing the risk of exposure to exchange rate fluctuations.
In November 2017, the CBE amended the currency positions cap on banks operating in the local market, for the value of a bank’s surplus or deficit in foreign currency positions, including foreign bank branches, so that the value of the surplus or deficit at the centre of a foreign currency would not exceed 10% of the capital base.
The value of the total surplus or deficit in currency positions should not exceed (foreign or domestic) 20% of the capital base.
