Egypt’s leading banks’ Tier 1 capital rose last year on the back of significant investment in government securities and the limited impact of the Covid-19 pandemic on the domestic economy in comparison with other countries.
The nation was one of a handful that did not experience an economic contraction in 2020, and instead registered gross domestic product growth of 1.5% because of relatively limited lockdown measures and increased spending on healthcare facilities.
Buying government-backed debt has supported Egyptian banks’ key metrics in 2020 and previous years. For example, Banque Misr saw an 84% increase in Tier 1 capital over the course of 2020 to $5.5bn, while the country’s largest lender, National Bank of Egypt (NBE), saw a 28% rise to $7.3bn, according to The Banker Database.
Over the past five years, NBE has seen its holdings of Tier 1 capital increase by 120%. Other Egyptian banks have also seen their holdings of core capital steadily increase between 2016 and 2020, such as Commercial International Bank Egypt (up 349% to $3.6bn), QNB Alahli Bank (up 260% to $2.4bn) and Afreximbank (up 103% to $3.3bn).
The Central Bank of Egypt recently demanded that banks increase small and medium-sized enterprise lending to 25% of their loan books by December 2022 in a bid to boost financial inclusion, but this shift could increase credit risk in the coming years.
Trends identified using The Banker Database, an online database providing comprehensive financial data and insight for 4000 of the world's leading banks in 190 countries. Contact us.
