EGP 2.8trn increase in total financial position of banks during 2023: CBE

Hossam Mounir
7 Min Read

The Central Bank of Egypt (CBE) has disclosed a significant increase in the total financial position of banks operating in the local market. In 2023, this position reached approximately EGP 14.2trn, compared to EGP 11.399trn in December 2022—an impressive surge of about EGP 2.8trn.

In a recent report issued on Tuesday, the CBE provided insights into the assets side of these banks. Cash balances in banks amounted to EGP 116.385bn in December 2023. Additionally, bank balances within the local market were recorded at EGP 2.606trn, while balances in banks abroad reached EGP 323.372bn.

Loan and Debit Balances for Customers

The customer lending and debit balances totalled EGP 5.462trn. Simultaneously, the securities portfolio and bank investments in treasury bills accounted for EGP 5.183trn. Furthermore, the volume of other assets stood at EGP 508.073bn.

Liabilities and Obligations

On the liabilities side, the CBE reported that banks’ capital amounted to EGP 410.877bn. Reserves were recorded at EGP 476.473bn, while the balance of allocations reached EGP 346.922bn. Locally, banks had obligations toward each other amounting to EGP 781.917bn, whereas their obligations to banks abroad totalled EGP 429.275bn. The balances of bonds and long-term loans amounted to EGP 566.388bn, and other liabilities (not specified in detail by the CBE) reached EGP 1.051trn.

Hike in Customer Deposits

In December 2023, customer deposits in banks witnessed substantial growth, reaching about EGP 10.163trn—compared to EGP 8.580trn in December 2022, reflecting an increase of EGP 1.582trn.

According to the CBE, government deposits in banks totalled EGP 2.277trn. Of this, EGP 1.965trn was in local currency, and the equivalent of EGP 311.815bn was in foreign currencies. Non-governmental deposits amounted to EGP 7.885trn, with EGP 6.287trn in local currency and approximately EGP 1.598trn in foreign currencies.

Sector Distribution of Deposits

The household sector played a significant role, accounting for 74.7% of the total deposits in banks operating in the Egyptian market until the end of December 2023. Specifically, the household sector acquired about 78.4% of the total deposits in local currency, while its share of deposits in foreign currencies amounted to 60%.

The growth rate in total deposits in banks during December 2023 reached 18.8%. Notably, the growth rate in deposits denominated in local currency recorded 15.4%, while the growth rate of foreign currency deposits reached 34.6%. The CBE also projected that the share of deposits in foreign currencies would reach 20% of bank deposits by December 2023.

Credit Facility Balances

Regarding bank investments, the CBE highlighted that the balances of credit facilities granted by banks to their customers increased to EGP 5.462trn in December 2023, compared to EGP 4.093trn in December 2022—an impressive increase of EGP 1.368trn. These credit facilities include loans granted by banks to customers, as well as documentary credits and letters of guarantee to cover import operations.

The increase in balances granted to the government resulted from higher balances in local currency (EGP 274.4bn) and foreign currencies (equivalent to EGP 156.6bn). The private business sector obtained 61.9% of the total non-governmental credit facility balances in December 2023. Among economic sectors, the industry sector held 28.9% of these balances, followed by the services sector (27.6%), trade sector (9.5%), and agriculture sector (2%). Undistributed sectors accounted for 32%, including 31.8% attributed to the household sector.

The Volume of Local Liquidity

The Central Bank of Egypt (CBE) has revealed an increase in the volume of domestic liquidity within the banking sector. Between July and December 2023, the liquidity reached approximately EGP 8.877trn, growing at a rate of 7.6%. This surge is reflected in the expansion of quasi-money by EGP 320.2bn (at a rate of 5.2%) and the money supply by about EGP 309.2bn (at a rate of 15%).

The rise in quasi-money is attributed to increased deposits in foreign currencies, equivalent to EGP 45.2bn (3%), and non-current deposits in local currency, totalling EGP 275bn (5.9%). Meanwhile, the growth in the money supply results from an increase in current deposits in local currency, amounting to EGP 2494bn (23.7%), and an additional EGP 59.8bn in cash circulation outside the banking system (at a rate of 5.9%).

This overall increase in domestic liquidity during the specified period is driven by changes in net domestic and foreign assets within the banking system.

Net Domestic Assets

CBE’s data reveals a substantial increase in the net domestic assets of the Egyptian banking sector. Between July and December 2023, these assets grew by about EGP 636.2bn (a rate of 7%). This growth is primarily due to an expansion in domestic credit, which surged by EGP 1.357trn (15.5%), coupled with a decrease in net budget items by approximately EGP 721bn.

Domestic credit saw significant increments across various sectors. Net liabilities from the government increased by EGP 1.084trn, while liabilities from the private business sector rose by EGP 152.8bn. Additionally, the public business sector contributed EGP 17.4bn, and the household sector added about EGP 102.8bn.

Conversely, the net foreign assets of the banking system experienced a decline of EGP 6.8bn during the same period. This reduction was influenced by an increase in net foreign assets at CBE (amounting to EGP 36.5bn) and a corresponding increase in banks (by EGP 29.7bn).

Reserve Money

Within the context of these changes, CBE also noted an increase in reserve money. Between July and December 2023, reserve money surged by EGP 160.7bn (at a rate of 10.5%), reaching a total of EGP 1.689trn. This growth was driven by several factors: bank deposits in local currency at CBE increased by about EGP 98bn (22%), and cash circulating outside CBE rose by EGP 62.7bn (5.8%). Simultaneously, net liabilities from the government saw a staggering 496.3% increase, while net liabilities from banks contributed about EGP 169bn. On the other hand, net foreign assets at CBE decreased by EGP 36.5bn, and net budget items decreased by EGP 468.1bn.

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