The Central Bank of Egypt (CBE) has confirmed that the latest Financial Soundness Indicators (FSIs) reflect the resilience and robustness of the country’s banking sector, which continues to serve as a crucial pillar for achieving economic, financial, and monetary stability. These indicators underscore the banking sector’s capacity to support national economic growth, increase investment, and create job opportunities for citizens.
As of the third quarter of 2024, the banking sector has shown significant strength. The capital adequacy ratio stood at a healthy 19.1%, surpassing the minimum regulatory requirement of 12.5% by 0.5%. This strong capital position allows Egyptian banks to continue financing key economic sectors, contributing to a higher Gross Domestic Product (GDP) growth rate and job creation.
The asset quality of Egypt’s banks has also seen improvements. The ratio of non-performing loans (NPLs) decreased to 2.4% of total loans, a positive sign of credit risk management, while the provisions coverage ratio for NPLs reached 87.4%, demonstrating that banks are well-prepared for potential risks.
In terms of liquidity, the sector has maintained high and stable levels. The liquidity ratio for local currency stood at 32.1%, and for foreign currencies, it reached 77.7%, both well above the minimum regulatory requirements of 20% and 25%, respectively. These strong liquidity positions ensure that banks are capable of meeting their obligations and continuing to support economic activity.
Moreover, the loan-to-deposit ratio marked 61.3% at the end of Q3 2024, indicating a healthy balance between loans extended to customers and deposits, reinforcing the stability of the banking system.
The financial resilience of Egypt’s banking sector is further reflected in its profitability, with a return on equity (ROE) of 32.2% by the end of the 2023 fiscal year. This profitability is a clear indication of the sector’s efficiency in managing its resources and its ability to deliver sustainable returns.
The CBE’s stringent regulatory framework, which ensures that all banks adhere to international best practices, plays a key role in maintaining this financial resilience. By closely monitoring the performance of banks, the CBE guarantees that they remain well-capitalized, solvent, and able to continue supporting Egypt’s economic growth.
In conclusion, these financial soundness indicators demonstrate that the banking sector in Egypt remains strong, adaptable, and capable of supporting the country’s ongoing economic development while ensuring financial stability and resilience in an increasingly complex global economy.
