Business News, Daily News Egypt’s parent company, issued its eighth edition of its composite index to measure the performance of Egypt’s banking sector, naming the National Bank of Egypt (NBE) the country’s Bank of the Year.
The index is issued annually, basing its measures on the efficiency of bank performance, rapid growth, customer satisfaction, and community service.
The NBE maintained its top spot for customer satisfaction, thanks to its large number of corporate clients and spending on technological infrastructure and its geographic presence, especially its ATM network, which is the biggest in Egyptian’s banking sector.
The floatation of the pound in 2016 increased the size of the bank by 94%.
This put the NBE in second place in the fastest growth category, while denominating, on its own, 31% of the banking sector, rising from 24% last year.
Yet, the floatation also had some negative impact, which lowered its ranking in the most efficient index, due to an increased proportion of non-performing loans, despite the allocation of over EGP 7bn to cover them. This slowed down the growth in the bank’s net profit to just 8%, despite operational revenues increasing by more than 50%.
The bank continued to be the largest spender on social responsibility in the banking sector, both as an absolute value or as a percentage of net profits, and its expenditure on social responsibility last fiscal year was 7.2% of net profit.
Business News’ main indicator for Bank of the Year consists of four indices across 17 sections.
The four main indices are: highest efficiency, which gets a high relative weight among the other indicators; the fastest growing index; the customer satisfaction index; and the community social responsibility index.
AlexBank returned to top the most efficient index, having fallen last year, after the bank supported its capital adequacy rates and realised the strongest profit margin to average assets in the market.
Its Tier 1 capital scored 17.4%, which is the highest across the 24 banks in the market. The net interest margin (NIM) also was highest at AlexBank at 7%, while it came in second in the return on assets (ROA) indicator, scoring 4%, following Credit Agricole.
Credit Agricole came in second place on the efficiency index with the highest return on equity (ROE) in the sector at 36%, ROA at 4.3%, and third among all banks in NIM at 6%.
The National Bank of Kuwait (NBK) came third, with the highest rate of loans to deposits (LTD) in the banking sector at 86%.
As for customer satisfaction, Banque Misr came second after the NBE, after spending on technology last year and driven by one of the highest penetration rates in the market. The bank alone has 4.3% of the total ATMs in Egypt. On the net promoter score, Banque Misr scored positively, with a positive impression from 34% of all votes.
The Commercial International Bank (CIB) came in third, with the second highest positive recommendations in the net promoter category after the NBE. Among 260 companies surveyed by Business News, 95 said they deal with the CIB, making it the second largest bank in terms of number of clients following the NBE. The bank has the highest number of channels of communication with customers in the banking sector, but it is also equal to several banks.
The Industrial Development & Workers Bank of Egypt (IDWBE) topped the survey’s fastest growing category, after it restructured its unbalanced financial positions. The bank’s loans accounted for 144% of deposits, which the bank rectified and doubled its deposits twofold, reflecting on its financial position that grew 133%. Its market share increased from 0.22% two years ago to 0.44%.
It also achieved a profit growth rate of 157.17% to EGP 473.13m, up from EGP 183.97m.
The bank achieved the highest growth rate in the net return at 62.01% scoring EGP 554.5m at the end of last year, compared to EGP 342m in the previous year. It was second in net revenue growth ratio at 52%.
Unusually, public banks topped the Business News growth index, thanks to the floatation of the pound, which placed the NBE as the second fastest growing bank last year, while Banque Misr came in fourth.
In third place for the fastest growing banks was the Housing and Development Bank, after its market share expanded. The bank’s financial position last year increased by 62%.
As for social responsibility, the NBE topped the list with 7.2% of its profits spent on community development, followed by Banque Misr with 4.3%, the Suez Canal Bank with 3.2%, the Housing and Development Bank with 2%, and Audi Bank with 2%.
Data collected by Business News showed that supporting capital adequacy was most prominent last year. Aside from several challenges facing some of the banks, most of the banking sector supported their Tier 1 capital.
Over the past year, banks have worked to address concentration in the portfolios of their largest 50 borrowers, while some of them stopped granting credit to companies to comply with the directives of the Central Bank of Egypt.
The budgets show the continued and even increasing spending on technology in the banking sector to reach customers and facilitate the provision of services and expand in the provision of new services that require intensive technology and fewer human elements.
Banks this year will have to deal with the already low interest rates, which could be reflected in lower interest margins and a lower ROE, which recovered last year.
