Banks operating in Egypt showed significant growth in financial position to LE 17.8trn in March

Cairo – July 7, 2024: In its latest data release, the Central Bank of Egypt revealed that the combined financial position of banks operating within the Egyptian market, excluding the central bank, rose to LE 17.896 trillion in March, a significant climb from LE 14.2 trillion recorded in December 2023 - an increase of LE 3.695 trillion.

The CBE also shared that the net open foreign currency positions as a percentage of total capital base improved significantly to 5.7 percent in March 2024, from -1.6 percent in December 2023.

It emphasized that banks should ensure their total surplus or deficit in foreign currency positions does not exceed 20 percent of their capital base.

Assets and Liabilities

Banks operating in Egypt’s cash balances recorded at LE 175.964 billion in March, with interbank balances within Egypt totaling LE 3.181 trillion.

Balances with foreign banks reached LE 1.042 trillion.

Lending and discount balances for customers were approximately LE 6.817 trillion, and bank’s securities portfolios and investments in treasury bills stood at LE 5.490 trillion. Other unspecified assets totaled LE 1.189 trillion.

Liabilities included bank capital which stood at around LE 449.610 billion, with reserves at LE 793.803 billion and provisions recorded at LE 448.678 billion.

Domestic interbank obligations reached LE 1.543 trillion, according to the CBE, with foreign interbank obligations recorded at LE 565.696 billion.

Total deposits reached LE 11.425 trillion, with other unspecified liabilities totaling LE 1.828 trillion. Long-term bonds and loans stood at LE 842.209 billion.

Non-performing loans decline while loan-to-deposit ratios increase

The CBE highlighted a decrease in non-performing loans (NPLs) to 2.6 percent in March 2024, down from 3 percent in December 2023.

NPLs represented 2.2 percent of total loans in the 10 largest banks and 2 percent in the top five banks. Provision coverage for NPLs stood at 86.3 percent nationwide in March, with higher coverage of 90.8 percent for the 10 largest banks and 90.3 percent for the top five banks.

The private sector’s share of total loans granted by banks fell to 46.2 percent in March, compared to 51.9 percent in December 2023.

Egypt’s 10 largest banks accounted for 40.3 percent of the private sector loans, with 36.7 percent from the 5 largest banks.

According to the central bank, the banks’ lending and discounting balances were approximately LE 6.817 trillion in March, up from LE 5.462 trillion in December 2023.

The loan-to-deposit ratio at banks rose to 59.9 percent, up from 54 percent in December 2023. This ratio was 59.7 percent for the 10 largest banks and 62.3 percent for the 5 largest banks.

In local currency, the ratio increased to 51.3 percent in March, with the 10 largest banks recording 48.9 percent and the 5 largest banks at 49.5 percent. In foreign currencies, the ratio reached 84.4 percent, with higher ratios at the largest banks at 91.7 percent, and 103.6 percent in the 5 largest banks.

Total customer deposits surged to LE 11.425 trillion in March 2024, up from LE 10.137 trillion in December 2023, marking an increase of LE 1.288 trillion.

The 10 largest banks accounted for 78.371 percent of these deposits at around LE 8.954 trillion, while the five largest banks held 68.656 percent, around LE 7.844 trillion.

The deposit-to-asset ratio at banks was 63.9 percent in March 2024, compared to 71.5 percent in December 2023. This ratio was 63.6 percent at the 10 largest banks and 63 percent at the five largest banks.

Capital and Liquidity Positions

Banks operating in the Egyptian market accumulated reserves worth LE 793.803 billion, with liquidity ratios improving slightly to 37.9 percent in local currency and 79.3 percent in foreign currencies.

Investments in securities and treasury bills amounted to LE 5.490 trillion, with the 10 largest banks holding the majority of these investments.

Investments in these instruments by the 10 largest banks amounted to approximately LE 4.379 trillion, while the 5 largest banks had investments of about LE 3.937 trillion.

The ratio of the securities portfolio at banks, excluding treasury bills, fell to 20.4 percent of total assets at banks in March 2024, according to CBE data. This ratio was 22 percent at the 10 largest banks and 23.6 percent at the five largest banks.

The capital base to risk-weighted assets ratio declined slightly to 18.1 percent in March 2024. Tier 1 capital to risk-weighted assets also decreased to 14.6 percent, while the leverage ratio increased to 7.3 percent. The minimum required leverage ratio, as per CBE regulations, stands at 3 percent.