CBE says Banking system shows strong recovery indicators from COVID-19 repercussions in 2021

The Central Bank of Egypt (CBE) announced last week the most prominent financial safety indicators for banks operating in the Egyptian market in 2021.

The CBE report showed that banks are recovering from the repercussions of the Coronavirus pandemic.

According to the CBE, the total financial position of banks operating in the local market increased to about EGP 8.627trn in December 2021, compared to about EGP 8.484trn in September 2021, an increase of about EGP 143bn.

The CBE explained that on the assets side, cash balances in banks amounted to EGP 61.327bn, and balances in some of them locally were about EGP 1.613tn, while their balances in banks abroad amounted to EGP 178.967bn.

It added that the lending and discount balances of customers recorded about EGP 3.099trn, while the securities portfolio and banks’ investments in treasury bills recorded EGP 3.324trn.

On the level of discounts, the CBE stated that the banks’ capital amounted to about EGP 215.356bn, and reserves recorded EGP 408.531bn, while the balance of provisions amounted to about EGP 188.515bn.

The liabilities of banks towards each other in Egypt amounted to EGP 426.120bn, while liabilities to banks abroad recorded EGP 148.232bn.

The total deposits amounted to EGP 6.433trn, while the balances of bonds and long-term loans amounted to EGP 358.985bn.

The CBE said that non-performing loans decreased to 3.5% of the total loan portfolio in December 2021, compared to 3.6% in September 2021. The percentage reached 2.5% at the top 10 banks operating in the Egyptian market, and 2.2% of the top five banks.

The CBE indicated that banks have provisions that cover 92.2% of their total non-performing loans in December 2021, compared to 92.2% in September 2021. The percentage of these provisions was 100% at the top 10 banks in the Egyptian market.

“The volume of provisions that banks formed to face doubtful debts amounted to EGP 188.515bn in December 2021. The share of the top 10 banks of those provisions was EGP 129.383bn, while the volume of provisions in the top five banks amounted to EGP 110.493bn,” according to the CBE.

Total banks’ reserves recorded EGP 408.531bn, with the share of the top 10 amounting to EGP 298.325bn, and the top five amounting to EGP 260.796bn.

The CBE said that the ratio of loans to deposits in banks operating in the Egyptian market decreased to 48.3% in December 2021, compared to 48.8% in September 2021. This percentage was 48.6% at the top 10 banks, and recorded 49.5% at the top five.

The CBE explained that the ratio of loans to deposits in local currency amounted to 44.2% in December, compared to 45.3% in September, and this ratio reached 43.6% at the top 10 banks, and recorded 43.7% at the top five.

The ratio of loans to deposits in foreign currencies in banks jumped to 77% in September, compared to 71.9% in September, and this ratio recorded 85.3% in the top 10 banks, and 97.2% in the top five

“The private sector accounted for 57.6% of the total loans granted by banks to their customers until the end of December 2021, compared to 58.2% in September 2021,” CBE said.

It explained that the private sector acquired 49.1% of the total loans in the top 10 banks operating in Egypt, compared to 45% of the loans in the top five.

The CBE said that the total deposits in banks amounted to about EGP 6.433trn in December 2021, compared to EGP 6.059trn in September. It pointed out that about EGP 5bn belong to the top 10 banks. The volume of deposits in the top five banks is about EGP 4.415tn.

The ratio of deposits to assets in banks amounted to 74.7% in December, compared to 71.6% in September, and this ratio reached 74.1% in the top 10 banks and 73.5% in the top five.

The CBE indicated that the average effective liquidity ratio in local currency in banks in December 2021 decreased to 45.4%, compared to 45.6% in September. This ratio was 46.2% in the top 10 banks, and 45.7% in the top five.

On the other hand, the average ratio of actual liquidity in foreign currencies in banks increased to 67.9% in September, compared to 65.5% in September. This ratio reached 66.3% at the top 10 banks, and recorded 64.7% in the top five.

The CBE said that the volume of investments of banks working in the local market in securities and treasury bills amounted to about EGP 3.324tn in December 2021, compared to about EGP 3.018tn in September.

The CBE indicated that the volume of investments of the top 10 banks in these instruments amounted to EGP 2.667tn, and about EGP 2.384tn in the top five.

Banks’ securities portfolio, excluding treasury bills, reached about 28.1% of the total assets in banks in December, compared to 24.8% in September. This percentage reached 30.6% in the top 10 banks, and 31.7% in the top five.

The CBE said that the ratio of the capital base to risk-weighted assets in banks increased to 22.5% in December 2021, compared to 19.3% in September 2021, and this ratio reached 21.9% in the top 10 banks, and 22% in the top five.

The ratio of the first tier of capital in banks to risk-weighted assets increased to 18.2%, compared to 17.1%. This ratio reached 17.1% in the top 10 banks and 16.9% in the top five.

According to the CBE, the ratio of continuous capital in banks to risk-weighted assets amounted to 12.9% in December, compared to 13.1% in September. This ratio reached 11.9% in the 10 banks and 11.3% in the top five.

The financial leverage ratio in banks increased to 7.3% in December, compared to 6.7% in June 2021. This ratio reached 6.6% in the top 10 banks and 6.4% in the top five.

According to the CBE, the minimum set for this percentage is 3%.

The CBE also revealed that the net open foreign exchange positions reached -1.9% of the total capital base of banks operating in the Egyptian market by the end of December 2021, compared to -2.2% in September.

The CBE explained that this percentage amounted to -3.1% in the top 10 banks, and -3.7% in the top five.

The total value of the surplus or deficit in foreign exchange positions should not exceed 20% of the capital base.

Reflecting the recovery of banks operating in the Egyptian market from the repercussions of the Coronavirus, the CBE revealed that banks’ net profits increased to EGP 107.132bn in December 2021, compared to EGP 88.103bn in September 2021.

The CBE report revealed that there is an increase in the net interest of banks worth EGP 286.084bn in December, compared to EGP 213.260bn in September. The net operating income amounted to EGP 352.734bn, compared to EGP 265.537bn.

On the other hand, total expenses of banking sector units also increased to EGP 245.603bn in December, compared to EGP 185.434bn in September.