Total financial position of Egyptian banking sector increases in Q1 2024

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The Central Bank of Egypt (CBE) recently reported a significant surge in the total financial position of banks operating in the domestic market (excluding CBE). In March 2024, this position reached approximately EGP 17.896trn, compared to EGP 15.429trn in February 2024—an impressive increase of about EGP 2.467trn.

According to a recent report from the central bank, on the assets side, cash balances at banks amounted to about EGP 175.964bn, while balances at banks domestically reached approximately EGP 3.181trn. Balances at foreign banks amounted to around EGP 1.042trn.

The report added that lending and discount balances to customers amounted to about EGP 6.817trn, while the portfolio of securities and banks’ investments in treasury bills totalled EGP 5.490trn. Other unspecified assets amounted to approximately EGP 1.189trn.

Bank Capital

Regarding liabilities, the central bank noted that capital reached approximately EGP 449.610bn, and reserves stood at EGP 793.803bn. Provisions amounted to about EGP 448.678bn.

Banks’ liabilities to each other domestically amounted to approximately EGP 1.543trn, while liabilities to foreign banks stood at EGP 565.696bn. Total deposits were about EGP 11.425trn, long-term bonds and loans amounted to EGP 842.209bn and other unspecified liabilities totalled approximately EGP 1.828trn.

Customer Deposits

In the same context, the central bank revealed that customer deposits in banks increased in March 2024 to about EGP 11.534trn, compared to EGP 10.617trn in February 2024, an increase of approximately EGP 917bn.

According to the central bank, government deposits in banks amounted to about EGP 2.592trn, including around EGP 2.06trn in local currency and approximately EGP 531.98bn in foreign currencies. Non-government deposits totalled about EGP 8.942trn, including around EGP 6.491trn in local currency and approximately EGP 2.450trn in foreign currencies.

The report detailed that the public business sector held about EGP 184.613bn of the total non-government deposits in local currency in banks in March 2024, while the private business sector held EGP 1.138trn, the household sector EGP 5.129trn, and non-residents EGP 38.567bn.

The public business sector held the equivalent of EGP 138.597bn in foreign currency deposits, the private business sector the equivalent of EGP 827.198bn, the household sector the equivalent of EGP 1.451trn, and non-residents the equivalent of EGP 33.629bn.

Foreign Currency Deposits

According to the central bank, the growth rate of foreign currency deposits in banks operating in the local market surged to 62% in March 2024, up from 7.5% in February.

The growth rate of total deposits in banks recorded 24.8% in March, compared to 14.4% in February. The growth rate of local currency deposits was 14.9% in March, down from 16.2% in February.

The central bank noted that the share of foreign currency deposits increased to 27.25% of total deposits in banks in March 2024, up from 19.6% in February.

Household Sector

The central bank reported that the household sector accounted for 74.2% of total deposits in banks operating in the Egyptian market in March 2024.

The household sector held about 79.5% of total local currency deposits, amounting to EGP 5.129trn, and about 60% of foreign currency deposits, totalling the equivalent of EGP 1.451trn.

Credit Facilities

Conversely, the central bank stated that banks’ credit facility balances to their customers increased to EGP 6.818trn in March 2024, an increase of EGP 2.019trn since July 2023.

Credit facilities refer to loans provided by banks to their customers, along with documentary credits and guarantees issued to cover import operations.

The central bank attributed this increase to a rise in credit facilities provided to the government by EGP 1.396trn, a 67.3% increase, and non-government credit facilities by EGP 622.5bn, a 22.9% increase.

The increase in government credit facilities was a result of a rise in local currency balances by EGP 589.2bn and foreign currency balances equivalent to EGP 807.4bn.

The private business sector obtained 63.3% of the total non-government credit facilities in March 2024. By the economic sector, the industrial sector received 31.4% of these facilities, followed by the services sector with 27.1%, the trade sector with 9.6%, and the agriculture sector with 1.9%. Unallocated sectors received 30%, with 29.8% going to the household sector.

Local Liquidity

In parallel, the central bank revealed an increase in local liquidity in the banking sector by about EGP 1.74trn from July 2023 to March 2024, reaching approximately EGP 9.988trn, with a growth rate of 21.1%.

The central bank stated that this increase reflected the growth of quasi-money by EGP 1.333trn, a growth rate of 21.6%, and the money supply by EGP 406.6bn, a growth rate of 19.7%.

The rise in quasi-money resulted from an increase in foreign currency deposits equivalent to EGP 901bn, a growth rate of 59.4%, and an increase in non-current local currency deposits by EGP 432.9bn, a growth rate of 9.3%. The rise in the money supply was due to an increase in current local currency deposits by EGP 297.1bn, a growth rate of 28.2%, and an increase in currency in circulation outside the banking system by EGP 109.5bn, a growth rate of 10.8%.

The central bank noted that the increase in local liquidity from July 2023 to March 2024 was the result of a rise in net domestic assets and net foreign assets in the banking system.

Net Domestic Assets

The central bank reported a significant rise in net domestic assets in the Egyptian banking sector during the same period, increasing by about EGP 1.105trn, a growth rate of 12.2%. This increase was driven by a rise in domestic credit by EGP 2.241trn, a growth rate of 25.6%, and a decrease in net budget items by EGP 1.135trn.

The rise in domestic credit was due to an increase in net liabilities to the government by EGP 1.566trn, liabilities to the private business sector by EGP 455.2bn, liabilities to the public business sector by EGP 60bn, and liabilities to the household sector by EGP 160.1bn.

Net Foreign Assets

Additionally, the central bank reported an increase in net foreign assets in the banking system by the equivalent of EGP 635bn from July 2023 to March 2024.

This increase resulted from a rise in net foreign assets at the central bank by the equivalent of EGP 239.5bn and a rise at banks by EGP 395.5bn.

Reserve Money

CBE also noted an increase in reserve money by EGP 154.6bn, a growth rate of 10.1%, from July 2023 to March 2024, reaching about EGP 1.683trn.

This increase was driven by a rise in banks’ local currency deposits at the central bank by about EGP 37.3bn, a growth rate of 8.4%, and an increase in currency in circulation outside the central bank’s vaults by EGP 117.3bn, a growth rate of 10.8%. The rise in reserve money was a result of an increase in net foreign assets at the central bank by the equivalent of EGP 239.5bn, an increase in net liabilities to banks by EGP 183.7bn, and an increase in net liabilities to the government by EGP 64.7bn, offset by a decrease in net budget items by EGP 333.3bn.