By Mohamed Al-Agamy Non-performing loans ratio in Egypt's banking sector decreased by 0.5%, while provisioning coverage increased to 99%, Gamal Negm, deputy governor of the Central Bank of Egypt confirmed to Zawya in an exclusive report. "The non-performing loans ratio decreased 0.5% to 9.5% in the second quarter of 2013 compared to the first quarter, after a bank executed one of its distressed debt portfolios," said Negm. "It is met with corresponding allocations, after fulfilling all the legal proceedings, which shows the budget in a better light without inflation."
He added that non-performing debt is not causing any problem in the domestic banking sector because the loan loss provisioning coverage ratio has increased to 98.9% compared to 97% in July 2012 and 94.5% in June 2011. The central bank also asks banks to provision the loans of various sectors in addition to their clients' allocations.
"Egyptian banks are considerably safe despite the hardships the country has undergone since the revolution in January 2011," said Negm. "Banks are following all the specifications of the Basel Committee [by] keeping the capital adequacy ratio at 13.4%, compared to the recommended 10%."
Liquidity in Egyptian banks has likewise increased. Loans to deposits ratio jumped 46.3% in the second quarter of 2013 compared to 47% in the first quarter. The deposit to asset ratio, meanwhile, reached 76.2% compared to 75.1% previously.
By June 2013, the total loans in Egyptian banks excluding the central bank reached EGP 549 billion (USD 80 billion), the total deposits EGP 1 trillion and 187 billion, provisions EGP 61.3 billion, assets EGP 1 trillion 564 billion and capital of banks EGP 72 billion.
"There is a strict monitoring system on the banking sector including a yearly inspection plan covering 20 banks," added Negm. "The control department office is also following up with the correction plan in collaboration with the central bank's management."
The banks are selected based on practical considerations such as a decrease in their ranking, a significant growth rate, or their noncompliance with the correction plan.
© Zawya 2013
© Copyright Zawya. All Rights Reserved.
