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Financial positions of banks in Egypt rise by EGP 532bn in Q1 of 2021: CBE Capital at banks amounts to EGP 177.92bn, reserves register EGP 347.826bn, provisions score EGP 165.588bn
The Central Bank of Egypt (CBE) has revealed that the total financial position of banks operating in the local market, other than itself, increased to about EGP 7.554trn at March 2021 end. This compared to the EGP 7.022trn recorded in December 2020, reflecting an increase of about EGP 532bn. The CBE said, in its quarterly report on the financial safety indicators of banks, that on the assets side, cash balances in banks amounted to EGP 54.189bn in March 2020. Their balances with banks in Egypt amounted to EGP 1.066trn, while their balances with banks abroad amounted to about EGP 335.934bn. It added that credit facilities recorded about EGP 2.648trn, whilst the stock portfolio and banks' investments in Treasury bills (T-bills) recorded EGP 2.838trn. On the level of liabilities, the CBE stated that the capital of banks amounted to EGP 177.920bn in March 2021. Meanwhile, reserves recorded EGP 347.826bn, while the balance of provisions amounted to about EGP 165.588bn. The liabilities of banks towards each other in Egypt amounted to about EGP 307.012bn, while their obligations to banks abroad recorded EGP 111.968bn. The total deposits amounted to about EGP 5.496trn while the balances of bonds and long-term loans amounted to EGP 228.977bn. The CBE also revealed that the total financial position of the 10 largest banks operating in the local market increased to EGP 5.930trn in March 2021. This compared to EGP 5.509trn recorded in December 2020. Meanwhile, the total financial position of the top five banks rose to about EGP 5.254trn in March 2021, compared to EGP 4.858trn in December 2020. Topping the list of those banks are: the National Bank of Egypt (NBE); the Commercial International Bank Egypt (CIB); Banque Misr; QNB Alahli; the Arab African International Bank (AAIB); HSBC Egypt; the Faisal Islamic Bank of Egypt; the AlexBank; and Crédit Agricole Egypt. In an important indicator of the quality of the loan portfolio at banks in the local market, the CBE said that the percentage of non-performing loans decreased to 3.5% of the total loan portfolio in March 2021. This compared to 3.6% in December 2020. The CBE also said that the percentage of non-performing loans amounted to 2.6% of the total loans of the 10 largest banks operating in the Egyptian market, and amounted to 2.2% of the largest 5 banks. It indicated that banks built provisions amounting to 94.5% of their total non-performing loans in March 2021. This compared to 96% in December 2020. The percentage of these allocations reached 100% at the 10 largest banks and the 5 largest banks operating in the Egyptian market. The volume of provisions that banks formed to face doubtful debts amounted to about EGP 165.588bn by the end of March 2021. The share of the top 10 banks in those provisions was EGP 111.656bn, while the volume of provisions in the five largest banks amounted to EGP 93.791bn. The CBE added that banks had created reserves worth EGP 347.826bn by the end of March 2021. Of this, the share of the big ten amounted to EGP 260.825bn, while the volume of reserves with the five largest banks amounted to about EGP 212.678bn. In the same context, the CBE said that the percentage of loans to deposits in banks operating in the Egyptian market rose to 48.4% in March 2021, compared to 44.2% in December 2020. This ratio reached 47.6% at the largest 10 banks, and recorded 48.2% at the largest 5 banks. The CBE added that the percentage of loans to deposits in local currency amounted to 45.1% in March 2021, compared to 44.5% in December 2020, and this ratio reached 43.5% at the top 10 banks, and recorded 43.3% at the largest 5 banks. The percentage of loans to deposits in foreign currencies in banks decreased to 68.2% in March 2021, compared to 70.3% in December 2020. This ratio recorded 74.4% in the largest 10 banks, and reached 83.2% in the largest 5 banks. The private sector accounted for 59% of the total loans granted by banks to their clients until the end of March 2021. This compared to 60% in December 2020, according to the CBE. It added that the private sector acquired 50.8% of the total loans from the 10 largest banks operating in Egypt, while it reached 46.5% of the loans with the 5 largest banks. The CBE said that the total deposits at banks amounted to about EGP 5.496trn by the end of March 2021, of which the ten largest banks accounted for about EGP 4.291trn. Meanwhile, the volume of deposits with the five largest banks operating in Egypt stood at about EGP 3.768trn. It added that the deposit-to-asset ratio in banks amounted to 72.9% in March 2021, compared to 73.9% in December 2020. This ratio reached 72.5% for the top 10 banks and 71.8% for the five largest banks. It also indicated that the average actual liquidity ratio in local currency with banks in March 2021 decreased to 47.2%, compared to 49.9% in December 2020. This ratio recorded 47.6% in the largest 10 banks and reached 46.3% in the largest 5 banks. The average actual liquidity ratio in foreign currencies with banks increased to 76.8% in December 2020, compared to 74% in December 2019. It reached 76.4% at the top 10 banks, and recorded 77.6% in the five largest banks. The CBE said that the volume of investments by banks operating in the local market in securities and T-bills amounted to about EGP 2.838trn in March 2021. The volume of investments of the top 10 banks in these instruments reached about EGP 2.249trn, it noted, adding that it amounted to about EGP 1.970trn in the 5 largest banks. The CBE also pointed out that the securities portfolio, excluding T-bills, reached about 23.7% of the total assets in banks by the end of March 2021, compared to 24.2% in December 2020. This percentage reached 25.5% for the 10 largest banks, and 26.3% for the 5 largest banks. With regard to the capital adequacy index in banks, the CBE clarified that the ratio of the capital base to risk-weighted assets in banks amounted to 19% in March 2021. This compared to 19.5% in December 2020, with the ratio reaching 18.7% for the 10 largest banks, and 18.2% for the largest 5 banks. The ratio of the first tranche of bank capital to risk-weighted assets decreased to 16.7%, compared to 17.1%, and this ratio reached 16.5% for the 10 largest banks and 16.1% for the 5 largest banks. According to the CBE, the ratio of common equity to risk-weighted assets amounted to 13.4% in March 2021, compared to 12.6% in December 2020. This ratio reached 12.8% for the largest 10 banks, and 12% for the largest 5 banks. The financial leverage ratio in banks also decreased to 6.9% in March 2021, compared to 7.3% in December 2020. This ratio reached 6.3% in the largest 10 banks and 6% in the largest 5 banks. According to the CBE, the minimum set for this percentage should not be less than 3%. In another context, the CBE revealed that the net open positions of foreign currencies reached -0.8% of the total capital base of banks operating in the Egyptian market in March 2021, compared to 0.4% in December 2020. It clarified that this percentage amounted to -1.5% in the largest 10 banks, while the percentage reached -1.7% in the largest 5 banks. The CBE stressed that the value of the total surplus or deficit in foreign currency positions should not exceed 20% of the capital base.
