The total financial position of banks operating in Egypt, with the exception of the Central Bank of Egypt (CBE), increased by about EGP 339.3bn from July to December 2019, to reach about EGP 5.8561trn.
The CBE said in a recent report on bank performance indicators at the end of 2019, that the capital of banks operating in the local market declined to about EGP 155.972bn in December, compared to EGP 156.101bn in November.
Banks’ total reserves recorded about EGP 155.972bn in December, compared to EGP 242.731bn in November, while the allocations amounted to EGP 127.473bn compared to EGP 126.941bn.
According to the CBE, the total bonds and long-term loans in banks reached EGP 160.122bn in December, compared to EGP 159.741bn in November.
The local bank obligations towards each other were about EGP 181.622bn in December, compared to EGP 196.201bn in November, while the obligations of banks operating locally towards banks abroad reached about EGP 120.077bn compared to EGP 115.27bn in the same comparative period.
Moreover, the CBE added that the cash balance at banks reached about EGP 54.869bn in December, compared to EGP 56.376bn in November.
It added that the total investment of banks in securities and local treasury bills rose in December to about EGP 2.072trn, compared to about EGP 2.03trn in November.
Also, banks’ interbank deposits in the local market amounted to EGP 1.1416trn compared to EGP 1.1267trn, while interbank deposits in foreign banks amounted to EGP 283.899bn compared to EGP 283.996bn.
According to the CBE, the loans and discount balances to customers amounted to EGP 1.890trn in December, compared to about EGP 1.841trn in November.
The credit facilities granted by banks operating in the local market to their customers reached EGP 1.8906trn in December, an increase of EGP 36.2bn (2%) from July to December.
The CBE attributed this increase to the increase in the size of non-government credit facilities by about EGP 55.3bn (4.2%), while the facilities granted to the government decreased by EGP 19.1bn.
The increase in credit facilities granted to the non-government sector was a result of the increase in facilities in local currency by EGP 63.4bn, while facilities in foreign currencies decreased by EGP 8.1bn.
Credit facilities refer to loans granted by banks to their customers, in addition to letters of credit, which they open to cover import operations.
The CBE indicated that the private business sector obtained about 58.9% of total non-government credit facilities granted by banks to the various economic sectors.
It pointed out that the industrial sector came in the forefront of sectors funded by banks, as it alone received about 32% of these facilities, followed by the services sector which acquired 26%, and then the trade sector with 10.8%. As usual, agriculture received the lowest percentage of credit facilities granted by banks, as it acquired only 1.9% until December.
According to the CBE, there are other sectors that were not mentioned in detail, especially the household sector, which received about 29.3% of the facilities.
The household sector holds a large share of bank loans, and this is likely to increase in the coming period, after the CBE raised the maximum debt-to-income monthly ratio for personal and auto loans to 50% from 35%.
Last year, the government and the CBE launched an initiative to finance the industrial sector with EGP 100bn.
According to the CBE, the loan portfolio of banks operating in the local market increased by EGP 48bn in December to EGP 1.873trn compared to EGP 1.825trn in November.
Bank loans to the government sector increased by about EGP 37bn, to reach EGP 521bn in December, compared to EGP 484bn in November.
Total loans to the private sector in local and foreign currencies increased by EGP 11bn to EGP 1.352trn in December, compared to EGP 1.340trn in November; loans in Egyptian pound increased to EGP 1.089trn against EGP 1.077trn, while foreign currency loans stood at EGP 263bn.
On a different note, the CBE said banks’ investment in securities rose to EGP 2.071trn in December, compared to EGP 2.029trn in November. The securities in local currency increased to EGP 1.722trn against EGP 1.673trn, while the securities in foreign currency increased to EGP 349bn against EGP 356bn.
In a related context, the CBE revealed that banks reduced their investments in government treasury bills (T-Bills) by about EGP 28.9bn to EGP 647.7bn in January 2020, compared to EGP 676.6bn in December 2019.
According to the CBE, this decline came as a result of public banks decreasing its investments by about EGP 42.4bn to EGP 265.33bn in January 2020.
On the other hand, the investments of specialised banks increased by about EGP 1.5bn to EGP 27.9bn. The investments of foreign banks’ branches in Egypt increased by EGP 3.2bn to EGP 34.9bn, and the private sector banks’ investments also grow by about EGP 8.8bn to EGP 319.5bn.
The investments of the state-owned National Investment Bank reached EGP 325.25bn in January 2020, compared to EGP 313.24bn in December 2019.
The existing balances of T-Bills recorded about EGP 1.549trn in January 2020, compared to EGP 1.512tn in December 2019, an increase of EGP 37bn.
On the other hand, the CBE said the household sector held 81.3% of the total deposits in banks until December 2019, seizing 83.9% of total deposits in local currency, and 69.8% in foreign currencies.
According to the CBE, customer deposits in banks increased by about EGP 52.6bn to about EGP 4.23trn in December, compared to about EGP 4.18trn in November.
The bank indicated that government deposits recorded EGP 613.040bn in December, compared to EGP 612.575bn in November, an increase of EGP 465m.
The government deposits in the local currency amounted to EGP 537.933bn and deposits in foreign currencies EGP 75.107bn.
The CBE indicated that non-governmental deposits recorded an increase of EGP 52.2bn to EGP 3.6229trn in December, compared to EGP 3.5707trn in November.
Non-governmental deposits in the local currency amounted to about EGP 2.960trn in December, up from EGP 2.901trn in November; the share of the public business sector reached EGP 65.932bn, the private business sector by EGP 409.511bn, the household sector by EGP 2.4729tn, and external by EGP 12.055bn.
Non-governmental deposits in foreign currencies recorded about EGP 662.541bn in December, compared to EGP 668.988bn in November 2019; the share of the public business sector reached about EGP 36.017bn, the private business sector by EGP 162.075bn, the household sector by EGP 457.110bn, and external by EGP 7.455bn.
According to the CBE, the growth rate in total bank deposits increased to 13.07% in December, compared to 13.01% in November. The CBE pointed out that the growth rate of deposits in local currency rose to 20.7% in December, compared to 20.1% in November, while the growth rate in deposits in foreign currencies reached -11.9% in December, down from -10.1% in November.
According to the CBE, the share of foreign currencies in total bank deposits declined to 18.18% in December, compared to 18.82% in November.
Banking expert and Board Member of the Suez Canal Bank Mohamed Abdel Aal said the current deposit structure in the banking sector is not healthy, given that the household sector controls more than 80% of it.
He pointed out that the special circumstances that the state went through and continued for years led the household sector to search for a safe haven to invest and save their money in, and only found banks with especially high-interest rates.
Abdel Aal said that in a healthy market, the household sector should not control more than 30% of deposits, and that the largest share should go to the private and investment sectors that lead development.
On the contrary, banking expert Tarek Metwally believes that the control of the household sector over local bank deposits is an advantage for deposit structure.
Most of the household sector is individuals, which distinguishes deposits by stability, and enables banks to enter into long-term investment projects, unlike companies whose deposits are characterised by high volatility depending on their investment plans.
He explained that it is natural for a society with more than 100 million people that deposits are controlled by individuals, especially in light of the decline witnessed by the private sector in recent years in terms of investments due to political and economic turmoil.