The Central Bank of Egypt (CBE) has revealed the financial soundness indicators (FSI) for banks operating in the Egyptian market, including asset quality, capital adequacy, and earnings in the first half (H1) of 2021.

In its quarterly FSI report, CBE stated that the total financial position of banks operating in the local market increased to about EGP 7.948trn in June 2021, compared to EGP 7.554trn in March 2021.

As for bank balance, the cash position of banks amounted to EGP 65.190bn in June 2021, compared to EGP 54.189bn in March 2021. Interbank deposits in Egypt amounted to EGP 1.066trn, while they reached EGP 307.5bn with banks abroad.

The lending and discount balances recorded about EGP 2.903trn, while the stock portfolio and banks’ investments in treasury bills recorded EGP 2.871trn.

Moreover, CBE stated that the total capital of banks in Egypt amounted to EGP 185.357bn in June 2021, compared to EGP 177.920bn in March 2021, with reserves recording EGP 362.183bn, while the balance of allocations amounted to about EGP 170.349bn.

Liabilities of banks towards each other in Egypt amounted to EGP 304.598bn, while their liabilities to banks abroad amounted to EGP 100.469bn. Total deposits amounted to about EGP 5.731trn, while the balances of bonds and long-term loans amounted to EGP 243.973bn.

In an important indicator of the quality of the loan portfolio in banks, CBE said that the percentage of non-performing loans (NPLs) amounted to 3.5% of the total loan portfolio of banks operating in the Egyptian market in June 2021.

CBE explained that the percentage of NPLs amounted to 2.6% of the total loans at the top 10 banks operating in the Egyptian market, and amounted to 2.2% at the top five banks.

CBE also indicated that loan provisions to total NPLs reached 94.5% in June 2021, compared to 96.5% in March 2021, and the percentage was 100% at both top 10 and 5 banks operating in the Egyptian market.

The volume of provisions that banks created to face doubtful debts amounted to about EGP 170.349bn in June 2021. The top 10 banks’ share of those allocations was EGP 115.467bn, while it reached EGP 96.73bn at the top five banks.

Total bank reserves reached EGP 362.183bn in June 2021, of which the share of the big 10 amounted to EGP 273.288bn, while it amounted to EGP 226.847bn at the big five.

The net profit of banks operating in the Egyptian market recorded about EGP 51.006bn in June 2021.

The report issued by CBE revealed that the net return amounted to EGP 150.746bn, activity revenues stood at about EGP 185.113bn, and total expenditures recorded about EGP 134.107bn.

The top five banks accounted for 73.74% of banks’ net profits, recording EGP 37.613bn. They also accounted for 70.6% of net revenues, achieving about EGP 130.792bn. The five banks’ revenues amounted to EGP 105.902bn, while their expenditures amounted to EGP 93.179bn.

The top 10 banks accounted for 85.7% of the total net profits. They also accounted for 80.3% of the total revenues, with a value of EGP 148.823bn. The net return at the big 10 amounted to EGP 121.177bn, while their total expenses amounted to EGP 105.061bn in June 2021.

CBE said that the ratio of loans to deposits in banks operating in the Egyptian market increased to 50.8% in June 2021, compared to 48.4% in March 2021, and this ratio reached 50.8% at the top 10 banks, and 51.8% at the top five.

CBE explained that the ratio of loans to deposits in local currency amounted to 47.9% in June 2021, compared to 45.1% in March 2021, and this ratio reached 47.3% at the top 10 banks, and 47.5% at the top five.

Loans to deposits ratio in foreign currencies increased to 68.8% in June 2021, compared to 68.2% in March 2021, and this ratio recorded 74.5% in the top 10 banks, and 83.8% at the big five.

The private sector accounted for 57.1% of the total loans granted by banks to their clients until the end of June 2021, compared to 59% in March 2021, according to CBE.

The private sector also accounted for 48.5% of the total loans granted by the top 10 banks operating in Egypt, and 44.2% of the loans provided by the top five banks.

CBE said that the volume of investments of banks operating in the local market in securities and treasury bills amounted to about EGP 2.871trn in June 2021.

It pointed out that the volume of investments at the top 10 banks in these instruments amounted to about EGP 2.265trn, while and about EGP 1.985trn at the top five banks.

Bank’s securities portfolio, excluding treasury bills, reached about 23.8% of the total assets in banks in June 2021, compared to 23.7% in March 2021, and this percentage reached 25.4% at the top 10 banks, and 26.3% at the top five.

In the same context, CBE said that the total deposits in banks reached EGP 5.731trn in June 2021. The top 10 banks accounted for EGP 4.490trn of that amount, while the volume of deposits in the top five banks operating in Egypt was about EGP 3.946trn.

The ratio of deposits to assets in banks amounted to 72.2% in June 2021, compared to 27.9% in March 2021, and this ratio reached 71.7% at the top 10 banks and 71.2% at the top five.

CBE indicated a decrease in the liquidity ratio in local currency in June 2021 to 45.5%, compared to 47.2% in March 2021, and this ratio was recorded at 45.6% at the top 10 banks, and reached 44.2% at the top five banks.

The liquidity ratio in foreign currency also decreased to 73.2% in June 2021, compared to 76.8% in March 2021, and this ratio reached 72.1% at the top 10 banks, and 72.4% at the top five. 

CBE said that the capital base to risk-weighted assets ratio amounted to 19% in June 2021, unchanged from March, and this ratio reached 18.7% at the top 10 banks, and 18.3% at the top five.

Meanwhile, the tier 1 capital to risk-weighted assets ratio increased to 16.8%, compared to 16.7% in the comparison period, and this rate reached 16.5% at the top 10 banks and 16.1% at the top five.

According to CBE, the ratio of common equity to risk-weighted assets amounted to 13.2% in June 2021, compared to 13.4% in March 2021, and it reached 12.4% at the top 10 banks and 11.7% at the top five. 

In addition, the leverage ratio stabilized at 6.9% in June 2021, unchanged from March, and this ratio reached 6.3% at the top 10 banks and 6% at the top five. According to CBE, the leverage percentage is with a lower margin stated by 3%. 

On the other hand, CBE revealed that the net open position in foreign currencies to capital base reached -2.4% in June 2021, compared to -08% in March 2021. This percentage amounted to -3.5% at the top 10 banks, and -4% at the top five banks.

CBE stressed that the total net open (short or long) positions for all foreign currencies shouldn’t exceed 20% of the capital base.