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Nonperforming loans drop to 5.7% of total loans at banks by March end: CBE - Daily News Egypt

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Nonperforming loans drop to 5.7% of total loans at banks by March end: CBE

Ratio of loans to deposits in local currency rose to 40.2%, ratio of loans to deposits in foreign currencies fell to 62.8% in March


The ratio of non-performing loans at banks operating in the Egyptian market fell to 5.7% of the total loan portfolio at the end of March 2017, compared with 5.8% in December 2016, according to the Central Bank of Egypt (CBE).

In a recent report on the financial soundness of banks, the CBE stated that the ratio of non-performing loans amounted to 3.9% of the total loans in the top 10 banks operating in the Egyptian market, while the ratio reached 3.3% among the top 5 banks.

According to the CBE, the banks made provisions of 99.1% of the total non-performing loans in March, unchanged from December 2016. The ratio of these provisions amounted to 100% in the top 10 banks and the largest five of those operating in the Egyptian market.

The report also noted that the total volume of provisions amounted to EGP 109.784bn at the end of March 2017. The top 10 banks in Egypt had a share of EGP 65.093bn of these provisions, while the top five banks alone accounted for EGP 55.95bn.

Moreover, the CBE stated that the banks have set up reserves of EGP 198.296bn at the end of the first quarter (Q1) of 2017. The share of the top 10 banks amounted to EGP 161.718bn. The volume of reserves in the top five banks reached EGP 139.968bn.

However, while the CBE refrained from naming the top ten banks in Egypt, it is known that they include the National Bank of Egypt, Banque Misr, the Commercial International Bank, the Arab African International Bank, QNB ALAHL, HSBC, Faisal Islamic Bank, Alexandria Intesa San Paolo, and Crédit Agricole.

In the report, the CBE also pointed out that the return on average assets of banks operating in the Egyptian market rose to 2% by the end of Q1 2017, compared with 1.5% in December 2016. The indicator hit 1.9% in the top 10 banks and 1.8% in the top 5 alone.

It added that the return on average bank equity jumped to 30.9% by the end of March 2017, compared to 24.4% at the end of December 2016 and reached 32.1% among the top 10 banks, and 33.2 percent among the top 5.

Furthermore, the net interest margin increased to 4.6% at the end of March 2017 compared to 4% at the end of December 2016. This was the same level as the top 10 banks operating in Egypt, while the ratio fell to 4.5% in the top 5 of these.

The average local bank liquidity ratio in March 2017 fell to 49.7% from 52.2% in December 2016. The ratio rose to 50.7% in the top 10 banks and 48.3% in the top 5.

The average foreign currency liquidity ratio in all banks fell to 64.5% at the end of March 2017, compared with 66.8% in December 2016. The ratio rose to 65.8% in the top 10 banks and 65.2% in the top 5.

In addition, the CBE noted that the ratio of loans to deposits in banks operating in the Egyptian market fell to 47.1% in March 2017, compared with 47.2% in December 2016, and fell to 43.8% among the top 10 banks and 44.8% among the top 5.

The ratio of loans to deposits in local currency rose to 40.2% in March 2017 from 38.5% in December 2016. It also fell to 35.7% in the top 10 banks and 36.5% in the top 5.

The ratio of loans to foreign currency deposits in banks fell to 62.8% in March from 66.5% in December. The same indicator reached 62.3% in the top 10 banks and 65% in the top 5.

According to the CBE, the total deposits at banks until the end of March 2017 reached EGP 2.856tn, including EGP 2.114tn in Egypt’s top 10 banks and EGP 1.755tn in the top 5 alone.

It explained that the private sector accounted for 66.1% of the total loans granted by banks at the end of March 2017 compared to 66.3% at the end of December 2016.

The private sector also accounted for 58.8% of loans granted by Egypt’s top 10 banks and 55.3% of loans granted by the top 5.

The CBE added that the deposits to assets ratio in March 2017 fell to 68% from 69.8% in December 2016. The ratio stood at 66.7% for the top 10 banks and 65.7% for the top 5.

In another matter, the CBE said that banks’ securities portfolio reached 16.6% of total banks assets in March 2017, compared with 18% in December 2016. This ratio was 18.1% for the top 10 banks and 17.6% for the top 5 of these.

It also pointed out that the banks’ investments in securities and treasury bills amounted to EGP 1.557tn by the end of March 2017. The investments of the top 10 banks in securities and bills amounted to about EGP 1.228tn, against about EGP 1.015tn among the top 5.

Regarding banks’ capital adequacy index, the CBE explained that the ratio of capital base to risk-weighted assets in banks rose to 14.7% by the end of Q1 2017 compared to 14.1% in December 2016. This ratio was 14.4% among the top 10 banks and 15.2% in the top 5.

The ratio of the tier 1 capital to risk-weighted assets rose to 11.9% in March 2017 compared to 11.7% in December 2017. The ratio was 11.3% for the top 10 banks and 11.9% for the top 5 of these.

The report also noted that the common equity to risk-weighted assets declined to 8.6% in March 2017, compared with 9% in December 2016, with 7.3% in the top 10 banks and 6.8% in the top 5.

Banks’ leverage ratio also rose to 6% in March from 5.1% in December. The ratio stood at 5.6% in the top 10 banks and 5.4% in the top 5.

The CBE said that the percentage has become recommendatory since the end of September 2015 and will be so until 2017. This percentage will be obligatory from 2018 with a lower margin stated by 3%.

Finally, the CBE’s report said that the total capital of the banks operating in the Egyptian market amounted to EGP 114.561bn, with the capital of the largest 10 banks amounting to EGP 68.954bn and EGP 50.59bn in the top 5.

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https://wwww.dailynewssegypt.com/2017/07/02/nonperforming-loans-drop-5-7-total-loans-banks-march-end-cbe/
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