Egypt’s banking sector to be 2nd fastest growing in region

On a quarterly basis, earnings for eight listed banks leveled up 3% in Q1 2021

  
An employee counts Egyptian pounds in a foreign exchange office in central Cairo, Egypt, November 3, 2016. Image used for illustrative purpose.

An employee counts Egyptian pounds in a foreign exchange office in central Cairo, Egypt, November 3, 2016. Image used for illustrative purpose.

REUTERS/Mohamed Abd El Ghany

ArabFinance: Egypt’s banking sector looks set to be the second-fastest-growing across the region during the first quarter (Q1) of 2021, according to a recent report by EFG Hermes.

The review reflects the anaemic bottom-line growth in 2020, as lenders were forced to shore up loan loss provisions in 2020 amid worries over pandemic-linked bad loans.

On a quarterly basis, earnings for eight listed banks leveled up 3% in Q1 2021, the report estimated.

The report noted that higher net interest income driven by higher credit volumes offset lower central bank rates, determined by the Central Bank of Egypt (CBE).

A diminishing need for loan loss provisions as the economy recovers from covid-19 will also drive growth, with the aggregate cost of risk expected to fall to 130 base points in Q1 2021, down from 198 base points in Q4 2020.

Loan activity for Egypt’s banks is forecast to have grown 9% year on year over the quarter and 2% quarter on quarter.

“We expect retail credit and working capital financing to be the key drivers of credit growth during 2021,” EFG said in the report.

The report covers Commercial International Bank, Qatar National Bank, Credit Agricole, Al Baraka Egypt, Faisal Islamic Bank, the and Development Bank, Abu Dhabi Islamic Bank, and Egyptian Gulf Bank.

Copyright © 2021 Arab Finance Brokerage Company All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

Disclaimer: The content of this article is syndicated or provided to this website from an external third party provider. We are not responsible for, and do not control, such external websites, entities, applications or media publishers. The body of the text is provided on an “as is” and “as available” basis and has not been edited in any way. Neither we nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this article. Read our full disclaimer policy here.

More From Financial Services