CBE pays EGP 114.4bn of interest on Deposit Operation in FY 2017/18

Bank turns from profits of EGP 12.66bn in FY 2016/17 to losses of EGP 33.34bn in FY 2017/18

The Central Bank of Egypt (CBE) paid the banks operating in the Egyptian market about EGP 114.4bn of interest on Deposit Operation, according to the bank's financial statements for the last fiscal year (FY) 2017/18 released on Sunday.
The CBE raised the Deposit Operation mechanism to absorb excess liquidity in the Egyptian banking system.
The CBE's financial statements revealed that the bank suffered losses of EGP 33bn in FY 2017/18 versus profits of EGP 12.6bn in FY 2016/17.
The CBE attributed its losses to recording a net yield of EGP 10.4bn after deducting interest payments of EGP 129.2bn, while the bank's revenues reached EGP 118.8bn, including EGP 11.6bn of loans and balances at the banks, in addition to EGP 107.6bn of treasury bonds and bills.
The CBE expanded in raising Deposit Operation in the last fiscal year to absorb the excess liquidity in banks due to their high interest prices amid the growing inflation rates and the bank's initiatives to support low-income housing and SMEs.
According to the CBE, the value of interests on Deposit Operation amounted to EGP 114.4bn at the end of June 2018 compared to EGP 49.6bn at the end of June 2017.
At the same time, the CBE's financial statements revealed that it paid EGP 30.8bn in taxes on yields of its investments in government bonds.
The CBE increased its capital by EGP 7.6bn to reach EGP 21.6bn at the end of June 2018 compared to EGP 14bn at the end of June 2017.
This is the largest increase in capital by the CBE. It was applied in coordination with the Ministry of Finance as the state treasury contributed with about EGP 6bn to this hike.
The Banking Law No. 88 of 2003 stipulates that the CBE's paid-up capital amounted to EGP 4bn, and the bank's board of directors in agreement with the Minister of Finance can allocate a part of its net annual profits to increase its capital. The bank's governor shall also increase the capital with a direct contribution from the state treasury in coordination with the Minister of Finance.
The CBE's capital stood at EGP 4bn in 2012 before it was doubled to EGP 8bn in June 2013. Then an annual increase to the capital was applied, adding EGP 2bn, bringing it to EGP 14bn at the end of FY 2016/17.
The CBE's financial statements showed a total increase of its assets to about EGP 2.03tn at the end of June 2018, compared to EGP 1.83tn at the end of June 2017.
According to the CBE, the value of its contributions to several international financial institutions' capitals increased to EGP 5.02bn at the end of June 2018, compared to EGP 4.23bn at the end of June 2017.
The CBE explained that it raised its contribution to the capital of the Arab Fund for Social and Economic Development to EGP 1.4bn, compared to EGP 1.05bn. It also raised its contribution to the Islamic Development Bank's capital to EGP 3.01bn, compared to EGP 2.64bn, and the capital of the Islamic Foundation for Private Sector Development to EGP 174m, compared to EGP 109m.
The CBE has raised its contribution to the capital of the United Bank to EGP 3.5bn, compared to EGP 1bn, and to EGP 1.56bn in the African Export-import Bank's capital, compared to EGP 436m.
The CBE also contributed to the capital of the Credit Guarantee Company with EGP 90m, representing 20% of the company's capital.