Assets of the Egyptian banking sector have increased by 11.6% during the first nine months of 2015 to about $250bn, according to the Union of Arab Banks (UAB).
The union issued a report last week explaining that the expected economic downturn in the Arab region and the Gulf States in particular would have negative effects on the performance of private banks, especially in the Gulf, on the medium-term. Escalating conflict in the region and a drop in global oil prices are likely contributors to the downturn.
UAB believes banks in other Arab countries such as Egypt, Lebanon, Jordan, Morocco, Palestine, and Sudan will not face serious risks, having adapted to volatile political situations through conservative fiscal strategies and the diversification of their credit portfolios.
The report stated that big regulatory efforts taken by the central banks of these countries to promote stability, such as multiple measures adopted by the Central Bank of Egypt (CBE) to stop the manipulation of the price of exchange, fight the black market and increase foreign exchange reserves would protect the banking sector.
According to UAB, assets of the Arab banking sector stood approximately at $3.3tr by the end of September 2015 compared to about $3.05tr at the end of 2014, which amounts to a growth rate of 7%.
“Assets held by Arab banks amount to 135% of the size of the GDP of Arab countries combined,” according to the report. Deposits in Arab banks recorded $2.1tr, equivalent to nearly 85% of the size of the Arab economy.
On the other hand, loans given by Arab banks reached $1.7tr, equivalent to 67% of the Arab economy. According to the report, assets of banks in Saudi Arabia and the UAE are more than $0.5tr while in Egypt, Qatar, and Iraq, they amount to $250bn.
The report explained that assets of the Egyptian banking sector increased during the first nine months of 2015 by 11.6%. Meanwhile in the UAE, they increased by 5.1%. In Saudi Arabia assets increased by 4.3% and in Oman by 12.6%. Qatar’s banking sector’s assets increased by 6.3%, versus 5.5% for Jordanian banks and 6.3% for Sudanese ones.
“We noticed a decline in the growth of deposits of most Arab banks,” the report said. “In Egypt, during the first nine months of 2015, deposits increased by 8.2% compared to 15.3% throughout 2014. In the UAE, they increased by 1.1%, versus 11.1% the previous year. In Saudi Arabia, 4.9% compared to 12.4%. Qatari deposits increased by 5.9% compared to 9.6% in 2014. In Oman, they increased by only 5% versus 13.9% in 2014. In Lebanon, 3.2% compared to 6.1%, and Jordanian deposits increase rate dropped to 5.3% from 9.5%.”
During the first nine months of 2015, loans of Egyptian banks increased by 12% compared to a ratio of 11.1% during 2014. Emirati loans increased by 17.5% versus 11%, Kuwait by 2.3% versus 1%, and Bahrain by 6.7% compared to a decline of 0.3%.
In contrast, the increased rate of credit provided by Saudi banks declined to 6.7% from 11.3%, Oman by 7.5% versus 11.3%, Qatar by 8.1% versus 10%, Lebanon by 1.8% from 4.5%, while Algeria had a rate of 4.8% compared to 10.2% in 2014.
However, the report also mentioned that 83 Arab banks were listed in the world’s biggest 1000 banks with a Tier 1 capital ranking.
The list included 19 Emirati banks, 12 Saudi banks, nine banks in Qatar, Lebanon, and Bahrain each, eight Kuwaiti banks, five banks from Egypt, five banks from the Sultanate of Oman, four Moroccan banks, two banks in Jordan, and one bank in Libya.