Nonperforming loans drop by 5.7% in Egypt’s banks at end-March: CBE

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The ratio of non-performing loans at banks operating in the Egyptian market fell to 5.7 percent of the total loan portfolio at the end of March 2017, compared with 5.8 percent 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 percent of the total loans in the top ten banks operating in the Egyptian market, while the ratio reached 3.3 percent among the top five banks.

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

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

Moreover, the CBE stated that the banks have set up reserves of 198.296 billion pounds at the end of the first quarter of 2017. The share of the top ten banks amounted to 161.718 billion pounds.

The volume of reserves in the top five banks reached  139.968 billion pounds.

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 two percent by the end of the fist quarter , compared with 1.5 percent in December 2016. The indicator hit 1.9 percent in the top ten banks and 1.8 percent in the top five alone.

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

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

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

The average foreign currency liquidity ratio in all banks fell to 64.5 percent at the end of March 2017, compared with 66.8 percent in December 2016. The ratio rose to 65.8 percent in the top 10 banks and 65.2 percent 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 percent in March 2017, compared with 47.2 percent in December 2016, and fell to 43.8 percent among the top 10 banks and 44.8 percent among the top 5.

Source: Daily news

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