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CBE reveals most prominent indicators of financial viability in Egypt's banking sector during 3Q 2021 Banking system records EGP 80.103bn net profits, with top 10 banks accounting for 85.9%
The Central Bank of Egypt (CBE) has revealed the most prominent financial viability indicators for banks operating in the Egyptian market during the third quarter (3Q) of 2021. According to CBE, the total financial position of banks operating in the local market increased to about EGP 8.484trn in September 2021, compared to about EGP 7.948trn in June 2021. Regarding assets, total cash balance in banks amounted to about EGP 63.891bn, compared to about EGP 65.190bn in the comparison period. Balances with banks in Egypt recorded about EGP 1.275trn, while balances with banks abroad amounted to EGP 232.204bn. The loans and discounts for customers recorded about EGP 2.948trn, while the securities and investments in treasury bills reached EGP 3.018trn. Regarding liabilities and equity, the CBE stated that total bank capital amounted to about EGP 198.583bn in September 2021, compared to EGP 185.357bn in June. Besides, reserves recorded EGP 349.543bn, while provisions amounted to about EGP 178.080bn. Obligation to banks in Egypt amounted to about EGP 297.941bn, while obligations to banks abroad recorded EGP 116.381bn, and the total deposits reached EGP 6.059trn, while bonds and long-term loans settled at EGP 236.421bn. As for asset quality, the CBE said that non-performing loans to total loans amounted to 3.6% in September 2021, compared to 3.5% in June 2021. The CBE revealed that the 10 largest banks operating in the Egyptian market accounted for 2.7% of the total non-performing loans, while the percentage reached 2.3% in the five largest banks. Banks' loan provisions covered 92.8% of their total non-performing loans in September 2021, compared to 94% in June 2021. Meanwhile, the loan provisions of the 10 largest banks operating in the Egyptian market covered 100% of their non-performing loans. "The volume of provisions that banks allocated to cover doubtful debts amounted to about EGP 178.08bn in September 2021, and the share of the 10 largest banks from those provisions was EGP 122.232bn, while it amounted to EGP 103.004bn at the five largest banks," according to the CBE. Banks in Egypt reported reserves worth EGP 349.543bn in September 2021, of which the share of 10 largest banks accounted for EGP 264.389bn, while the volume of reserves at the five largest banks amounted to about EGP 222.725bn. In addition, the CBE said that the loans to deposits ratio in banks operating in the Egyptian market decreased to 48.8% in September 2021, compared to 50.8% in June 2021, and this ratio reached 48.8% in the 10 largest banks and 49.6% in the five largest banks. The ratio of loans to deposits in local currency amounted to 45.3% in September 2021, compared to 47.9% in June 2021, and this ratio reached 44.6% in the top 10 banks, and recorded 44.7% in the top five banks. The ratio of bank loans to deposits in foreign currencies increased to 71.9% in September 2021, compared to 68.8% in June 2021, and this ratio reached 78.5% in the top 10 banks and 88.4% in the top five banks. "The private sector accounted for 58.2% of the total loans granted by banks to their clients in September 2021, compared to 57.1% in June 2021," according to the CBE. The private sector acquired 49.7% of the total loans in the top 10 banks operating in Egypt, compared to 45.5% in the top five banks. The CBE said that the total deposits in banks amounted to about EGP 6.059trn in September 2021, of which about EGP 4.720trn was in the top 10 banks, while the volume of deposits in the five largest banks operating in Egypt is about EGP 4.157trn. The ratio of deposits to assets in banks amounted to 71.65% in September 2021, compared to 72.2% in June 2021, and this ratio reached 70.9% at the top 10 banks and 70.4% at the top five. The CBE noted that the liquidity ratio in local currency in banks increased to 45.6% in September 2021, compared to 45.5% in June 2021, and this ratio was 45.7% at the top 10 banks, and 44.6% at the top five banks. Meanwhile, the liquidity ratio in foreign currencies in banks decreased to 65.5% in September 2021, compared to 73.2% in June 2021, and this ratio reached 62.7% at the top 10 banks and 61.1% at the top five. The CBE said that the volume of investments of banks operating in the local market in securities and treasury bills amounted to about EGP 3.018trn in September 2021, compared to about EGP 2.871trn in June 2021. The investments of the top 10 banks in these instruments amounted to about EGP 2.379trn, compared to about EGP 2.094bn at the top five. The stock portfolio of banks, excluding treasury bills, reached 24.8% of the total assets of banks in September 2021, compared to 23.8% in June 2021. This percentage reached 26.7% in the top 10 banks, and 27.6% in the top five. The CBE said that the ratio of the capital base to risk-weighted assets in all banks slightly increased to 19.03% in September 2021, from 19% in June 2021, and this ratio reached 18.9% in the top 10 banks and 18.4% in the top five. The ratio of the tier 1 capital to risk-weighted assets increased to 17.1% in September 2021, compared to 16.8% in June, and this ratio reached 16.7% in the top 10 banks and 16.3% in the top five. According to CBE, the ratio of common equity to risk-weighted assets amounted to 13.1% in September 2021, compared to 13.2% in June 2021, and this ratio reached 12.3% in the largest 10 banks and 11.6% in the top 5. In addition, the leverage ratio in banks decreased slightly to 6.7% in September, from 6.9% in June 2021, and this ratio reached 6.1% in the largest 10 banks and 5.8% in the top five. According to the CBE, the percentage with a lower margin is stated by 3%. In another context, the CBE revealed that the net open position in foreign currencies to capital base reached -2.2% in all banks operating in the Egyptian market during September 2021, compared to -2.4% in June 2021. This percentage amounted to -3.4% in the top 10 banks and -3.9% in the top five. The total net open (short or long) positions for all foreign currencies shouldn't exceed 20% of the capital base. Meanwhile, the CBE revealed that the banks operating in Egypt recorded net profits of about EGP 80.103bn in September 2021. They achieved a net return of EGP 213.260bn, while net revenues amounted to EGP 265.537bn, and the total expenditures amounted to EGP 185.434bn. According to the CBE, the top 10 banks accounted for about 85.9% of the total profits, as they achieved about EGP 68.877bn in September 2021. The top 10 banks achieved net revenues of EGP 212.051bn, net returns of EGP 169.280bn, and spent total expenses of EGP 143.174bn. As for the top five banks, they accounted for 74% of the total profits in the sector, recording EGP 59.333bn, achieving net revenues of EGP 184.531bn, and a net return of EGP 146.013bn, as well as total expenses of EGP 125.198bn. The CBE said that the return on average assets in banks recorded 1.2% in September 2021, while the return on average equity was 14.9%, and the net return margin reached 3.7%, unchanged from June and March 2021. In the top 10 banks, the return on average assets recorded 1.2% in September, while the return on average equity reached 15.9%, and the net return margin reached 3.6%. The return on average assets in the top five banks was 1%, while the return on average equity was 14.5%, and the net return margin reached 3.3%.
