Corporates' failure to repay EGP 505 mn raises the non-performing loan rate at Alex Bank to 6.87%

The non-performing loan rate at Alexandria Bank experienced a slight increase during the first quarter of the current year, reaching 6.87% by the end of March 2023, compared to 6.09% at the end of 2022, with an increase of 0.77% in just 3 months.

This increase is primarily due to the rise in the value of defaulted loans at the bank by 14.32%, reaching EGP4.15 bn by the end of March 2023, compared to EGP3.63 bn at the end of 2022, with an increase of EGP520.23 mn.

This increase is mainly attributed to the higher default rate of corporates, as evidenced by the increase in their default value to EGP2.15 bn by the end of March 2023, compared to EGP 1.65 bn at the end of 2022, with a growth rate of 30.66% and an increase of EGP 505.18 mn.

The value of defaults by medium-sized companies also increased from EGP682.13 mn at the end of 2022 to EGP731.6 mn by the end of the first quarter of 2023, with a growth rate of 7.25% and an increase of EGP49.5 mn.

On the other hand, Alex Bank succeeded in reducing the value of defaults by small and micro-sized companies to EGP598.2 mn by the end of March 2023, compared to EGP610.5 mn at the end of 2022.

The value of defaults by individuals also declined to EGP669.54 mn by the end of the first quarter of 2023, compared to EGP691.69 mn at the end of 2022.

The main risk lies in the defaults of medium-sized companies, given the significant increase in their default rate, which reached 21.71% of the bank's total financing for medium-sized companies by the end of March 2023, a very high rate.

As for the default rate of corporates, it rose to 9.22% by the end of last March, compared to 7.72% at the end of 2022.

Meanwhile, the default rate for small and micro-sized companies marginally decreased to 8.87% of the bank's total financing for them by the end of the first quarter of 2023, compared to 9.17% at the end of 2022.

Regarding the default rate for individuals, it slightly increased from 2.43% at the end of 2022 to 2.48% by the end of last March.

Based on the aforementioned data, Alex Bank needs to reconsider its credit policy, especially for medium-sized companies and corporates, which were key factors in surpassing the bank's non-performing loan rate of 6.87% by the end of March 2023, compared to the banking sector's non-performing loan rate of 3.4% at the end of 2022, according to the latest available financial data on the official website of the Central Bank of Egypt.