Financial position of banks operating in Egypt surges to EGP 17.8trn in Q1 2024: CBE
The Central Bank of Egypt (CBE) recently disclosed a substantial increase in the aggregate financial position of banks operating within the local market (excluding the CBE itself). As of March 2024, this position reached EGP 17.896trn, compared to EGP 14.2trn in December 2023—an impressive rise of EGP 3.695trn.
The CBE highlighted that, on the asset side, cash balances in banks reached EGP 175.964bn, with interbank balances within the country amounting to EGP 3.181trn. Additionally, banks’ balances with foreign banks totalled EGP 1.042trn.
The report further detailed that lending and discount balances for customers amounted to approximately EGP 6.817trn. Banks’ portfolios of securities and investments in treasury bills stood at EGP 5.490 trillion, while other unspecified assets totalled EGP 1.189trn.
On the liabilities side, the CBE reported that the banks’ capital reached around EGP 449.610bn, with reserves amounting to EGP 793.803bn. Provisions were recorded at EGP 448.678bn.
Banks’ domestic interbank obligations were approximately EGP 1.543trn, while their foreign interbank obligations amounted to EGP 565.696bn. Total deposits reached EGP 11.425trn, and long-term bonds and loans stood at EGP 842.209bn. Other unspecified liabilities were reported at EGP 1.828trn.
Non-Performing Loans
The CBE stated that the ratio of non-performing loans (NPLs) in banks declined to 2.6% in March 2024, compared to 3% in December 2023.
The CBE noted that NPLs represented 2.2% of the total loans in the 10 largest banks operating in the Egyptian market and 2% in the top five banks.
Banks have made provisions amounting to 86.3% of their total NPLs in March 2024, compared to 88.7% in December 2023. This provision coverage was 90.8% for the 10 largest banks, and for the top five banks, it was 90.3%.
The CBE report highlighted that banks formed provisions amounting to EGP 448.678bn to cover doubtful debts in March 2024. The 10 largest banks accounted for EGP 344.722bn of these provisions, while the top five banks had provisions totalling EGP 304.185bn.
Additionally, banks have accumulated reserves worth EGP 793.803bn, with the 10 largest banks holding EGP 644.025bn of these reserves, and the top five banks holding EGP 559.210bn.
Private Sector
The Central Bank revealed a decline in the private sector’s share of total loans granted by banks to their clients, dropping to 46.2% in March 2024, compared to 51.9% in December 2023.
The private sector accounted for 40.3% of total loans at the 10 largest banks in Egypt, and 36.7% at the five largest banks.
According to the Central Bank, the banks’ lending and discounting balances were approximately EGP 6.817trn in March 2024, up from EGP 5.462trn in December 2023.
Loan-to-Deposit Ratio
The Central Bank reported an increase in the loan-to-deposit ratio at banks to 59.9% in March 2024, up from 54% in December 2023. This ratio reached 59.7% at the 10 largest banks and 62.3% at the five largest banks.
The loan-to-deposit ratio in local currency increased to 51.3% from 47.1%, with the 10 largest banks recording 48.9% and the five largest banks at 49.5%.
Additionally, the loan-to-deposit ratio in foreign currencies at banks also rose to 84.4%, up from 84%. The 10 largest banks had a ratio of 91.7%, and the five largest banks had a ratio of 103.6%.
Customer Deposits
The Central Bank reported that total customer deposits in banks jumped to approximately EGP 11.425tn in March 2024, compared to EGP 10.137trn in December 2023, an increase of about EGP 1.288trn. The 10 largest banks accounted for about EGP 8.954trn of these deposits, representing 78.371% of total deposits, while the five largest banks held about EGP 7.844trn, with a share of 68.656%.
The deposit-to-asset ratio at banks was 63.9% in March 2024, compared to 71.5% in December 2023. This ratio was 63.6% at the 10 largest banks and 63% at the five largest banks.
Local Currency Liquidity
The Central Bank noted an increase in the average actual liquidity ratio in local currency at banks to 37.9% in March 2024, compared to 36.8% in December 2023. This ratio was 38.2% at the 10 largest banks and 37.8% at the five largest banks.
The average actual liquidity ratio in foreign currencies at banks rose to 79.3% in March, up from 67.5% in December. This ratio was 80.7% at the 10 largest banks and 80.1% at the five largest banks.
The Central Bank also reported a EGP 293bn increase in the banks’ investments in securities and treasury bills to approximately EGP 5.490trn in March 2024.
Investments in these instruments by the 10 largest banks amounted to approximately EGP 4.379trn, while the five largest banks had investments of about EGP 3.937trn.
According to the Central Bank, the ratio of the securities portfolio at banks, excluding treasury bills, fell to 20.4% of total assets at banks in March 2024, down from 24.3% in December 2023. This ratio was 22% at the 10 largest banks and 23.6% at the five largest banks.
Capital Base
The Central Bank reported a decline in the capital base to risk-weighted assets ratio at banks to 18.1% in March 2024, down from 18.6% in December 2023. This ratio was 18.3% at the 10 largest banks and 18% at the five largest banks.
The ratio of Tier 1 capital to risk-weighted assets at banks decreased to 14.6% in March 2024, from 15.5% in December 2024. This ratio was 14.2% at the 10 largest banks and 13.9% at the five largest banks.
The ratio of continuous core capital to risk-weighted assets at banks was 11.5% in March, down from 13% in December. This ratio was 10.9% at the 10 largest banks and 10.2% at the five largest banks.
The leverage ratio at banks increased to 7.3% in March, up from 6.9% in December. This ratio was 6.9% at the 10 largest banks and 6.7% at the five largest banks.
According to the Central Bank, the minimum required leverage ratio should not be less than 3%.
Foreign Currency Positions
The Central Bank revealed that the net open foreign currency positions reached 5.7% of the total capital base at banks operating in the Egyptian market in March 2024, compared to -1.6% in December 2024.
This ratio was 6.8% at the 10 largest banks and 7.9% at the five largest banks.
The Central Bank emphasised that the total surplus or deficit in foreign currency positions should not exceed 20% of the capital base.