Egypt’s top 100 borrowers hold $17.23bln in credit facilities: CBE

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Egypt - Outstanding credit facilities extended to the top 100 borrowers in Egypt reached EGP 821bn as of June 2023, according to the Central Bank of Egypt’s (CBE) semi-annual Financial Stability Report for the first half of the year. This marks an 18.4% increase from December 2022 and a 15% increase from June 2022.

The construction sector accounted for the largest share of these facilities, at 22.2%. It was followed by petroleum, natural gas, and petrochemicals (18.2%); real estate development (10.2%); non-banking financial sector (9.6%); telecommunications and information technology (7.4%); and iron and steel (6.8%). These six sectors collectively received 74.4% of the total credit facilities.

The CBE report highlighted the resilience of these sectors, noting their positive performance indicators throughout the second half of the 2022/2023 fiscal year despite various external shocks.

The banking sector, the largest component of Egypt’s financial system, also demonstrated resilience against global and local challenges.

The sector’s total assets reached EGP 13.8 trillion by June 2023, representing 135.9% of the nominal GDP and 92.6% of the financial system’s assets.

This growth was driven by a 21% increase in the first half of 2023, surpassing the 16.3% growth rate in the same period of 2022.

Profitability in the banking sector saw a significant increase, with a 123% growth rate in June 2023 compared to the same period the previous year.

Return on equity rose to 17.7% in June 2023 from 16.1% in June 2022, while return on assets remained stable at 1.2%. However, the net interest margin decreased to 3.8% from 4.2%.

The report also noted a decrease in the number of domestically systemically important banks (D-SIBs) from five in December 2022 to three in June 2023. These banks hold a significant 62.5% share of the banking sector’s total balance sheet, 65.3% of the total customer loan portfolio, and 61.1% of deposits.

The CBE outlined several future projects related to electronic payment systems and services. These include the development of an electronic Know Your Customer (e-KYC) system, enabling digital lending through mobile wallets, and exploring the implementation of central bank digital currencies (CBDCs).

The e-KYC system aims to provide a secure electronic method for financial service users to create a digital financial identity, allowing them to open bank accounts remotely. The digital lending initiative will enable customers to borrow electronically in real-time through their mobile wallets, based on their evaluation behavior. The CBE is also studying the implementation of CBDCs as a safe and stable alternative to other cryptocurrencies.