The ratio of non-performing loans (NPLs) at banks operating in the Egyptian market fell by the end of June 2018 to 4.3% of total loans, down from 4.5% in March 2018, and 4.9% in December 2017, according to the Central Bank of Egypt (CBE).
In a recent report on the financial soundness of banks, the CBE said that NPLs reached 3.1% of total loans in the top 10 banks in Egypt, and 2.6% in the top five.
Banks have secured provisions of 98.1% of total NPLs at the end of June 2018, noted the CBE noted, adding that the ratio reached 100% at the 10, and five biggest banks.
“The provisions secured by banks to combat speculative loans reached EGP 109.294bn at the end of June 2018. The largest five banks accounted for EGP 53.564bn, while the largest 10 banks’ provisions reached EGP 64.548bn,” the CBE’s report read.
It added that the banks created reserves worth EGP 213.732bn at the end of June 2018, of which the top five banks accounted for EGP 135.836bn, while the top 10 banks accounted for EGP 161.817bn.
According to the CBE, the ratio of loans to deposits (LDR) in banks operating in the Egyptian market rose to 44.9% in June 2018, up from EGP 44.7% in March. The ratio stood at 43.5% in the top 10 banks, and 43.5% at the top five.
The CBE noted that LDR in local currency reached 39.1% in June 2018, up from 37.5% in March. The same ratio reached 35.1% in the top 10 banks, and 35.1% in the top five.
Meanwhile, foreign currencies’ LDR fell slightly in June 2018 to 68.4%, compared to 68.5% in March 2018. The ratio registered 71.8% in the top 10 banks, and 81.3% in the top five.
“The private sector has taken over 61.8% of total loans granted by banks to their clients at the end of June 2018, stable from March 2018,” CBE said.
It added that the private sector has acquired 54% of the total loans in the top 10 banks, and 50.9% of loans in the top five banks.
“The total deposits in banks until the end of June 2018 amounted to EGP 3.553tn, including EGP 2.224tn in the top five banks, and EGP 2.617tn in the top 10,” noted the CBE.
Furthermore, the ratio of bank deposits to assets in June 2018 reached 70.2%, up from 68.1% in March. The ratio reached 69.3% in the top 10 banks, and 68.6% in the top five.
The average liquidity ratio in local currency in banks rose in June to 40.5%, up from 40.3% in March 2018, scoring 40.3% in the top 10 banks, and 38.2% in the top five.
Moreover, the average foreign currency liquidity ratio fell to 67.5% in June from 73.5% in March. This ratio fell to 68.1% in the top 10 banks, and 75.6% in the top five.
On a different note, the CBE said that banks’ securities portfolio reached about 13.3% of total assets at banks in June 2018, unvarying from March. The ratio stood at 14.4% in the top 10 banks, and 14.1% in the top five.
Moreover, according to the CBE, banks’ investments in securities and treasury bills reached EGP 1.68tn at the end of June 2018, amounting to EGP 1.098tn in the top five banks, and EGP 1.296tn in the top 10 banks.
“The total capital of banks operating in the Egyptian market amounted to EGP 149.119bn at the end of June,” the report stated.
It also highlighted that the capital of the top five banks amounted to EGP 79.466bn, while the top 10 banks’ capital reached EGP 97.741bn.
The CBE did not disclose the names of those five or 10 banks, however, the market names the National Bank of Egypt, Banque Misr, the Commercial International Bank, Banque du Caire, QNB Al-Ahli, the Arab African International Bank, HSBC, Faisal Islamic Bank, Bank of Alexandria, and Credit Agricole.
According to the CBE, the return of average assets (ROAA) of banks operating in the Egyptian market has stabilised at 1.5% at the end of June 2018, consistent from March 2018, but below the ROAA of 2% at the end of December, September, June, and March 2017. The ROAA scored 1.4% at the top 10 and top 5 banks respectively.
It added further that the return on the average equity (ROAE) of banks also stabilised at 21.5% at the end of June 2018, also constant from March 2018, but falling from 30.9% in December, September, June, and March 2017.
The ROAE scored 20.5% in the top 10 banks and 20.3% at the top five.
The net margin of return reached 3.9% in June, unvarying from March and down from 4.6% in December, September, July, and March 2017. It reached 3.6% in the top 10 banks, and 3.5% in the top five.
Regarding the banks’ capital adequacy index, the CBE explained that the capital to risk (weighted) assets ratio (CRAR) in banks declined to 15.6% at the end of June 2018, compared to 15.7% in March. The ratio scored 15.3% in the top 10 banks, and 15.5% in the top five.
The tier one capital increased to 12.6% in June from 12.5% in March, reaching 12% in the top 10 banks, and 12.1% in the top five.
The continuing capital to risk weighted assets ratio reached 9.4% in June, against 9.3% in March, reaching 8.3% in the top 10 banks, and 5.6% in the top five banks, according to the CBE.
The rate of leverage in banks reached 6.3% in June, against 6.1% in March 2018. This ratio reached 5.8% in the top 10 banks, and 5.6% in the top five banks.
The percentage is recommended starting from end of September 2015 till 2017, and is obligatory starting from 2018 with a lower margin stated by 3%, as per the CBE’s report.
