The ratio of non-performing loans (NPLs) to all loans in banks operating in the Egyptian market declined to 3.9% by the end of December 2018, down from 4.4% in September 2018, according to the Central Bank of Egypt (CBE). In its quarterly report on the financial position of banks, the CBE said that NPLs fell to 2.8% in December, from 3.2% in September 2018 in the top 10 banks, and to 2.4% from 2.7% in the top five banks. The CBE noted that banks secured provisions of 98% of total NPLs at the end of December 2018. The ratio reached 100% at the 10 and five largest banks. "The provisions secured by banks to combat bad debt reached EGP 118.18bn at the end of December 2018, of which the largest five banks accounted for EGP 62.10bn, while the largest 10 banks' NPL provisions reached EGP 74.19bn,” the CBE's report read. It added that the banks' reserves reached EGP 202.84bn at the end of September 2018, with the top five banks recording EGP 129.83bn, and the top 10 banks had EGP 156.52bn. According to the CBE, the loans to deposits ratio (LDR) in banks operating in the Egyptian market increased to 47.8% last December from 45.8% in last September. The ratio stood at 45.9% in the top 10 banks, and 47.2% at the top five. The CBE noted that the LDR in local currency reached 39.3% in December, from 39% in September 2018. While the LDR in the top 10 banks stood at 35.3%, and 35.2% in the top five. Meanwhile, foreign currencies' LDR grew slightly in December to 76.7%, compared to 69% in September 2018. The ratio registered 83.2% in the top 10 banks, and 96.3% in the top five. "The private sector has taken over 58.7% of total loans granted by banks to their clients at the end of December, against 61.8% in September, June, and March 2018,” the CBE stated. It added that the private sector has acquired 50.2% of the total loans in the top 10 banks, and 47.5% of the loans in the top five banks. "The total deposits in banks until the end of December 2018 amounted to EGP 3.8tn, including EGP 2.38tn in the top five banks, and EGP 2.8tn in the top 10," noted the CBE. Furthermore, the ratio of bank deposits to assets in December reached 70.2%, against 68.8% in September. The ratio reached 68.3% in the top 10 banks, and 67.1% in the top five. The average liquidity ratio in local currency in banks rose to 44.3% in December, up from 42.2% in September 2018, scoring 46.2% in the top 10 banks, and 46.3% in the top five. Moreover, the average foreign currency liquidity ratio fell to 59.7% in December, from 63.1% in September. This ratio fell to 58.4% in the top 10 banks, and 56.1% in the top five. On a different note, the CBE said that banks' securities portfolios reached about 16.2% of total assets in banks in December, against 12.8% in September 2018. The ratio stood at 18.1% in the top 10 banks, and 18.5% in the top five. Moreover, according to the CBE, banks' investments in securities and treasury bills (T-Bills) reached EGP 1.90tn at the end of December 2018, amounting to EGP 1.31tn in the top five banks, and EGP 1.51tn in the top 10 banks. "The total capital of banks operating in the Egyptian market amounted to EGP 150.59bn at the end of December 2018," the report stated. It also highlighted that the capital of the top five banks amounted to EGP 80.42bn, while the top 10 banks' capital reached EGP 98.70bn. 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 Alahli, 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 stabilised at 1.5% at the end of December, consistent from September, 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 stabilised at 21.5% at the end of December, also constant from September, June, and March 2018, but fell 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 December, unvarying from September, 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 banks' capital adequacy index, the CBE explained that the financial position of banks-excluding the CBE-scored EGP 5.432tn at the end of 2018, against EGP 4.813tn at the end of 2017, growing by EGP 619.3bn, or 12.8%. The figure reached EGP 4.1tn for the top 10 banks against EGP 3.6tn in December 2017. Moreover, the largest top five banks dominated 65% of the total financial position of the banking sector. The financial position of these banks has been around EGP 3.56tn at the end of December 2018, against EGP 3.14tn at the end of December 2017, growing by 13.3%. Regarding the banks' capital adequacy index, the CBE explained that the capital to risk-weighted assets ratio (CRAR) in banks increased to 16.2% by the end of December, compared to 16% in September 2018. The ratio scored 15.9% in the top 10 banks, and 16.1% in the top five. The tier 1 capital to risk-weighted assets scored 13.2% in December 2018, up from 13% in September 2018, and amounting to 12.6% in the top 10 banks, and 12.7% at the top five. The continuing CRAR reached 9.6% in December, against 9.3% in September 2018, reaching 8.9% in the top 10 banks, and 8.6% in the top five banks, according to the CBE. The rate of leverage in banks reached 6.4% in December, unchanged from September 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 until 2017 and is obligatory starting from 2018, with a lower margin of 3%, as per the CBE's report.
