The Central Bank of Egypt (CBE) has revealed the most important financial safety indicators for banks operating in the Egyptian market, including the quality of credit, the strength of their financial positions, and the profits achieved by the end of 2019.
In its quarterly report on financial safety indicators, the CBE stated that non-performing loans (NPLs) amounted to 4.2% of the total loan portfolio of banks operating in the Egyptian market by the end of December 2019, compared to 4.5% at the end of September 2019.
It explained that the ratio of NPLs amounted to 3.3% of the total loans at the top 10 banks operating in the Egyptian market, and reached 2.7% at the top five banks.
The CBE indicated that banks secured 97.6% of the provisions for their total NPLs by the end of September 2019, with the percentage of these allocations reaching 100% at the top 10.
According to the CBE, the volume of allocations that banks created to face doubtful debts amounted to EGP 127.473bn by the end of December 2019. The top 10 banks, alone, accounted for EGP 83.24bn, with the top five banks holding EGP 66.294bn.
It added that the banks formed reserves worth EGP 245.112bn by the end of September 2019. The share of the top ten reached EGP 157.716bn, while the volume of reserves at the top five banks amounted to EGP 142.821bn.
The CBE said that the loan-to-deposit ratio (LDR) in Egyptian market banks increased to 44.8% by the end of December 2019, compared to 44.1% in September of the same year. This percentage reached 43% at the top 10 banks and 43.6% at the top five banks.
It explained that the LDR in local currency rose to 39.2%, compared to 38.9% at the end of September. The ratio reached 36.3% with the top 10 banks, and 35.8% with the largest five banks.
It added that foreign currency LDR also increased to 71.4% in December, compared to 67% at the end of September, with this ratio recording 76.6% at the top 10 banks, and 80.8% at the top five banks.
The private sector accounted for 63.3% of the total loans granted by banks to their customers until the end of December 2019, compared to 64% at the end of September, the CBE said.
It explained that the private sector acquired 56.5% of the total loans at the top 10 operating banks in Egypt, while the top five banks acquired 53% of the loans.
The CBE also said that the 10 largest banks held about 74.98% of total deposits in the Egyptian banking sector at the end of 2019.
The total deposits in banks at the end of December 2019 amounted to about EGP 4.222tn. Of this figure, the top 10 banks held EGP 3.166tn, including EGP 2.699tn in the top five bans, accounting for 63.92% of the total deposits.
It added that the deposits to asset ratio in banks reached 71.4% at the end of December 2019, compared to 46.5% at the end of June, with this ratio reaching 70.8% at the top 10 banks and 69.9% at the top five banks.
The CBE pointed out that the average real liquidity ratio in the local currency at banks in December recorded 45.8%, which remains unchanged from September. This ratio recorded 47.5% at the top 10 banks and 47.3% at the top five banks.
This comes at a time when the average real liquidity ratio in foreign currencies at banks increased to 74% in December, compared to 73.9% in September and 68.6% at the end of June. This ratio reached 75.5% with the top 10 banks and 76.3% in the top five banks.
The CBE said that Egyptian banks’ securities portfolios, not including treasury bills investments, reached about 20.5% of total bank assets by the end of December 2019, compared to 19.2% at the end of September. This percentage reached 22.6% with the top 10 banks, and 24. 2% at the largest five banks.
According to the CBE, the volume of banks’ investments in securities and treasury bills amounted to EGP 2.071tn at the end of December 2019, compared to EGP 1.995tn at the end of September. The volume of investments of the top 10 banks was about EGP 1.643tn, reaching roughly EGP 1.421tn at the top five banks.
The CBE said that the total capital of banks operating in the local market amounted to EGP 156.236bn at the end of December 2019.
It added that the capital of Egypt’s top 10 banks stands at about EGP 100.306bn, while the capital of the top five banks stands at about EGP 82.506bn.
While the CBE did not reveal the names of the top major banks in Egypt, the National Bank of Egypt (NBE) and the Commercial International Bank (CIB) are known as leading banks in Egypt, alongside Banque du Caire, QNB ALAHLI, the Arab African International Bank, HSBC, Faisal Islamic Bank of Egypt, Alexandria Intesa San Paolo, and Credit Agricole.
The CBE has said, though, that locally operating banks achieved a net profit of EGP 83.18bn at the end of 2019, compared to EGP 60.758bn at the end of September 2019.
It added that the top five banks accounted for about 50.1% of the total profits achieved by the banks, as their profits amounted to EGP 41.679bn.
The top 10 banks made profits amounting to EGP 58.791bn, equivalent to about 70.67% of the banks’ total profits.
Topping this list are the NBE, CIB, Banque du Caire, QNB-ALAHLI, Credit Agricole – Egypt, Faisal Islamic Bank of Egypt, and the Housing and Development Bank.
According to the CBE, the net revenue achieved by banks operating in Egypt at the end of 2019 amounted to EGP 154.952bn. Of this, the top 10 banks achieved net revenues of EGP 107.665bn, equivalent to 69.494%, with the top five banks reaching EGP 80.467bn, equivalent to 51.93% of the total revenues of banks.
The CBE said that the return on average assets (ROAA) in banks operating in the Egyptian market reached 1.4% at the end of December 2019, unchanged from September of the same year.
It added that the ROAA at the top 10 banks recorded 1.3% and 1.1% in the top five banks.
The CBE also said that the return on average equity (ROAE) reached 19.2% in December, also unchanged from September, or 18.4% for the top 10 banks, while reaching 16.3% for the top five banks.
The net margin of return reached 3%, at the same time recording 2.7% at the top 10 operating banks in Egypt, while this yield recorded 2.3% at the top five banks.
It added that the net operation income in banks reached about EGP 189.785bn by the end of December 2019, with the top 10 banks acquired EGP 130.744bn, equivalent to 68.89%. The shares of the top five banks reached EGP 97.964bn, equivalent to 51.618%.
On the other hand, bank expenses amounted to EGP 106.601bn at the end of 2019, of which about EGP 71.953bn was spent by the top 10 banks, equivalent to 66.559%, and about EGP 56.286bn by the largest five banks, equivalent to 52.8%.
The CBE said that the capital-to-risk weighted assets ratio increased to 18.4% at the end of December 2019, compared to 18.1% at the end of September of the same year. This was a ratio of 18.4% with the top 10 banks, and 18.5% at the top five banks.
Tier 1 capital-to-risk weighted assets ratio also increased by risk weights to 15.9% at the end of December, compared to 15.5% at the end of September, with the ratio 15.9% at the top 10 banks and 15.8% at the top five banks.
The CBE said that the tier 1 capital-to-risk weighted assets ratio plus the prudent pillar should not be less than 6.625% for 2016, 7.25% for 2017, 7.875% for 2018, and 8.5% for 2019.
It added that the ratio of continuous capital-to-risk weighted assets ratio reached 11.7% at the end of December 2019, compared to 11% at the end of September, with a ratio of 11.2% at the top 10 banks and 10.7% at the top five banks.
The CBE stipulated that the figure must not be less than 5.125% for 2016, 5.75% for 2017, 6.375% for 2018 and 7% for 2019.
The percentage of leverage in banks increased to 7.4% at the end of December, compared to 7.2% in September, and this ratio reached 6.9% in the top 10 banks and 6.7% in the top five banks.
According to the CBE, the minimum set for this percentage should not be less than 3%.
In another context, the CBE revealed that the net open positions of foreign currencies decreased to 2.9% of the total capital base of banks operating in the Egyptian market by the end of December 2019, compared to 3.5% in September.
The CBE indicated that this percentage reached 4% at the top 10 banks, while it recorded 4.5% at the largest five banks.
