Egypt has third best banking system in Arab world in terms of assets, deposits, and loans: UAB

Hossam Mounir
5 Min Read

The Union of Arab Banks (UAB) said that the Egyptian banking sector has achieved tremendous success and impressive results over the past five years.

In a statement on Tuesday, the UAB stated that the size of the banking sector in Egypt tripled during the past five years, between August 2017 and August 2022, as the volume of the sector’s combined assets increased from EGP 4.587trn to EGP 10.511trn, achieving a growth rate of 130%, which was not achieved by any of the other Arab banking sectors.

He pointed out that even in light of the spread of the Coronavirus pandemic, Egyptian banks continued to achieve very high growth rates, as the total growth rate of the sector exceeded 20% during the years 2020 and 2021, pointing out that these growth rates enabled it to advance among the Arab banking sectors, to occupy Today it ranks third among all of them in terms of assets, deposits and loans, and its assets represent 13% of the total assets of the Arab banking sector as a whole, compared to 8% 5 years ago, and while the size of the Egyptian banking sector exceeded the threshold of $500bn, it is considered one of four banking sectors whose combined assets exceed this threshold.

The union added that it is necessary to point out the large relative size of the banking sector in Egypt compared to the size of its economy, as the sector’s combined assets constitute about 135% of its GDP.

It stressed that the Egyptian banks have taken advantage of the positive economic climate and the atmosphere of confidence secured by the wise economic, financial and monetary policies of the Egyptian government and the Central Bank of Egypt, to expand their activities at all levels, especially with regard to the expansion of financial inclusion, and to provide more banking services and products that meet the needs of the economy and customers from individuals and companies, and expanding the spread base, which led to attracting large deposits from Egyptian citizens at home and abroad, so that the volume of accumulated deposits of Egyptian banks doubled in five years, to reach EGP 7.632trn by the end of August 2022, which is approximately equal to the size of Egypt’s gross domestic product, pointing to pumping the bulk of those deposits into the Egyptian economy, for both the public and private sectors.

It pointed out that despite the stability of the number of banks operating in Egypt during the past five years, the banking spread therein increased in an unprecedented way, as bank branches increased by 589 new branches to reach 4598 current branches, and automatic teller machines increased by 10,758 devices to reach 21459, and points of sale increased by 119,799 points of sale, to reach 188,429 points.

It added that in order to keep up with the growth in assets and liabilities, Egyptian banks have significantly supported their capital bases over the past few years, as the volume of the sector’s combined capital increased from EGP 314bn to EGP 711bn between August 2017 and August 2022, i.e. a growth rate of 127% during five years, which led to a gradual increase in the total solvency ratio of the banking sector represented by the capital base to risk-weighted assets from 14.5% in June 2017 to 20.9% in June 2022, while the ratio of the first tranche of capital to weighted assets increased with risk weights from 11.4% to 17.1%, and all these numbers confirm the strength of the Egyptian banks currently and their ability to withstand any pressures in the operational environment in which they operate.

The union also pointed out that the adoption of effective measures in risk management and diversification of credit portfolios led to an improvement in the quality of the assets of Egyptian banks, as the ratio of non-performing loans to total loans to the banking sector as a whole decreased from 5.5% to 3.2% between June 2017 and June 2022. The ratio of loan provisions to non-performing loans from 99.1% to 92.1%.

As for liquidity, the union announced that the data of the Central Bank of Egypt indicate that the expansion of credit by Egyptian banks was not at the expense of their liquidity from 208.3% to 231.8% between June 2017 and June 2022.

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