Significant achievement in 10 years, Banking sector loans rise by 910% and distress rate declines to 2.7%

The Egyptian banking sector has seen a marked decline in the rate of non-performing loans over the last 10 years, with stumbling levels reduced by a range of economic and financial policies aimed at enhancing financial stability and increasing banks' ability to cope with risks. The rate fell from 7.6% by the end of June 2015, to 2.7% by the end of June 2024, a decline of 4.9%

This decline reflects intensive efforts by banks that have successfully directed their retail and corporate loans with high financial suitability and the efforts of the Government and the Central Bank of Egypt, which have played a pivotal role by launching several initiatives that have provided loan on flexible terms to support the private sector and SMEs projects, such as the Small and Medium Enterprises Financing Programme, with low benefits, which has contributed to increasing corporates’ ability to sustain business and meet their financial obligations, thereby reducing distress rates in this sector

Although the sector's distress rate declined, the sector's total loan portfolio grew strongly during the period under analysis, rising by 910%, from EGP 713.66 bn by the end of June 2015, reaching 7.21 tn by the end of June 2024, bringing an increase of EGP 6.50 tn.

As for the employment rate of total deposits to grant loans in the banking sector, it jumped to 60.12% by the end of June 2024, compared to 41.01% by the end of June 2015, marking an increase of 19.11% during the period under analysis

In terms of liquidity, the local currency's liquidity coverage ratio rose by a record 837.1% at the end of June 2024, compared to 63.1% at the end of June 2015, while the foreign currency coverage ratio rose to 179.8% at the end of June 2024, compared to 49.7% at the end of June 2015.

In terms of profitability indicators, CBE’s reports revealed that the average return on assets rose to 2% during the first half of 2024, compared to 1.3% during the same period in 2015.

Return on average equity rose to 32.2% during the first half of 2024, compared to 18.9% during the same period in 2015, and net return margin jumped to 5.2% during the first half of 2024, compared to 3.7% during the same period in 2015.