The ratio of non-performing loans (NPLs) at banks operating in the Egyptian market grew at the end of September to 4.4% of total loans, down from 4.3% in June 2018, according to the Central Bank of Egypt (CBE). In a recent report on the financial soundness indicators of banks, the CBE said that the NPLs reached 3.2% of total loans at the top 10 banks in Egypt and 2.7% at the top five. The CBE noted that banks have secured provisions of 98.1% of the total NPLs at the end of September. The ratio reached 100% at the five and 10 biggest banks. "The provisions secured by banks to combat speculative loans reached EGP 114.602bn at the end of September. The largest five banks accounted for EGP 58.279bn, while the largest 10 banks' provisions reached EGP 69.446bn," the CBE's report read. It added that the banks created reserves worth EGP 212.223bn in this period, of which the top five banks accounted for EGP 130.858bn, while the top 10 banks accounted for EGP 156.52bn. According to the CBE, the ratio of loans to deposits (LDR) in banks operating in the Egyptian market slightly declined to 45.8% in September, down from EGP 435.9% in June 2018. The ratio stood at 43.4% in the top 10 banks, and 44.4% at the top five. The CBE noted that LDR in local currency reached 39% in September, from 39.1% in June. The same ratio reached 34.9% in the top 10 banks, and 35% in the top five. Meanwhile, foreign currencies' LDR grew slightly in September to 69%, compared to 68.4% in June 2018. The ratio registered 72.7% in the top 10 banks, and 82.4% 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 September, stable from June March 2018," CBE said. It added that the private sector has acquired 53.7% of the total loans in the top 10 banks, and 50.7% of loans in the top five banks. "The total deposits in banks until the end of September amounted to EGP 3.627tn, including EGP 2.256tn in the top five banks, and EGP 2.656tn in the top 10," noted the CBE. Furthermore, the ratio of bank deposits to assets in September reached 68.8%, unchanged from June. The ratio reached 67.8% in the top 10 banks, and 67.2% in the top five. The average liquidity ratio in local currency in banks rose in September to 42.2%, up from 40.5% in June 2018, scoring 42.8% in the top 10 banks, and 41.3% in the top five. Moreover, the average foreign currency liquidity ratio fell to 63.1% in September from 67.5% in June. This ratio fell to 62.5% in the top 10 banks, and 60.3% in the top five. On a different note, the CBE said that banks' securities portfolio reached about 13.5% of total assets at banks in September, against 14.1% in June 2018. The ratio stood at 13.9% in the top 10 banks, and 13.5% in the top five. According to the CBE, the banks' investments in securities and treasury bills reached EGP 1.755tn at the end of September, amounting to EGP 1.173tn in the top five banks, and EGP 1.368tn in the top 10 banks. "The total capital of banks operating in the Egyptian market amounted to EGP 150.588bn at the end of September," the report stated. It also highlighted that the capital of the top five banks amounted to EGP 80.420bn, while the top 10 banks' capital reached EGP 98.707bn. 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, Alex Bank, and Credit Agricole. According to the CBE, the return on average assets (ROAA) of banks operating in the Egyptian market has stabilised at 1.5% at the end of September, consistent from June and 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 five and 10 banks. It further added that the return on average equity (ROAE) of banks also stabilised at 21.5% at the end of September, also constant from June and 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 September, unvarying from June and 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 increased to 16% at the end of September, compared to 15.6% in June 2018. The ratio scored 15.5% in the top 10 banks, and 15.6% in the top five. The tier one capital increased to 13% in September from 12.6% in June, reaching 12.2% in the top 10 banks, and 12.2% in the top five. The continuing CRAR reached 9.3% in September, against 9.4% in June 2018, reaching 8.4% in the top 10 banks, and 5.6% in the top five banks, according to the CBE. The rate of leverage in banks reached 6.4% in September, against 6.3% in June 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 the 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.
