The Russian-Ukrainian conflict continues to overshadow the global economic outlook. Tightening of monetary policies is being accelerated by central banks to combat the soaring inflation in most of the economies and outlook for global growth has been progressively revised down. Egypt isn’t shielded from such repercussions and the CBE has upheld its monetary tightening stance further uplifting the regulatory reserve requirements for local currency deposits to 18%, up from 14%, and on top of cumulative 300bps hikes in the reference rates since March 2022, to be effective October 2022.
Despite the headwinds, QNBAA leveraged on the robustness of its business model and has delivered solid financial performance where balance sheet and profitability continued to grow in tandem. Total Assets expanded to 446.8 BEGP, +24% YTD, backed by a strong deposits’ growth of 27% tipping a record high of 375.9 BEGP. Utilization remained decent at c. 57%, with gross loans’ growth of 17% YTD, well above the 48.4% average for the market as of Jun-22. On a different note, the SMEs maintained one of the highest SME penetration rates in the market to reach 26.55% of the total lending portfolio.
Efficiency improved as CIR declined to 22.5%, despite the inflationary pressure, helped by the strong growth of the various revenues’ components. Net Interest Income is 26% YOY on the back of NIM expansion as well as the strong growth of earning assets. Fees and Commissions recovery continued with 18% YOY growth whilst other revenues performance benefited from the depreciation of the local currency.
Conscious of the uncertainty, QNBAA continued adequate provisioning for its credit portfolio and booked EGP 2,577 million YTD to safeguard a decent coverage ratio of 138.0% versus NPL ratio of 4.18%. Yet, the consolidated net profit recorded EGP 7,332 million increasing +22% YOY realizing favourable ROAE and ROAA of 20.2% & 2.4% respectively.
The financial strength of the bank is well-looked-after as capital adequacy ratio marked 22.8%, primarily driven by Tier I capital, far above the minimum regulatory requirements and liquidity remained strong with 42.1% and 48.7% readings for CBE liquidity ratios of LCY and FCY respectively.
Mindful of its corporate social responsibility, QNB ALAHLI continued to honour its dues via furnishing support for key areas such as health, education and national initiatives like “Decent Life”.
QNB ALAHLI is well positioned to support the Egyptian economy via its comprehensive offering of financial services either directly or via the breadth of its subsidiaries’ offerings.