With a global state of economic tension, because of the military conflict between Russia and Ukraine after the world’s economy demonstrated early signs of recovery, Egypt is facing the setbacks and effects on tourism, energy and commodities prices which didn’t only push inflation to 8.8% as of Feb-22 and 10.5% later for March 2022 but also started to weight down on NIR. The Central Bank of Egypt started to reign by allowing more flexible currency exchange rate that acts as a “shock absorber” accompanied by a 100bps hike in the corridor rate to push-down inflation while improving Egypt’s attractiveness to foreign investments.
Walking through such uncertainty, QNBAA showed a resilient performance and managed to secure a net profit of 2,208 MEGP representing a growth of +12% YOY and rolling on ROAE and ROAA of 19.1% & 2.4% respectively. Cost-to-Income continued its progressive improvement to 22.3% at the end of 1Q22 compared to 24% in 1Q21.
Balance sheet growth was assured as well. Deposits increased by 9% undeterred by the intense rivalry, and correspondingly assets stretched by 8% YTD. Gross loans reached 198 BEGP, +8% YTD, to preserve QNBAA ranking with one of the highest loan-to-deposit ratios in the market, that stands at 61.2% as of Mar-22. Worth to mention that the SMEs loans is still maintaining a prominent share of the total bank portfolio, accelerating to 26.62%, after achieving the CBE’s minimum required of 25% back in Dec-21, one full year ahead of the mandated time frame.
Motived by its conservative approach, the management leveled up the provisioning to maintain a decent coverage ratio of 142% despite the demonstrated resilience of credit portfolio quality with the NPL ratio at 3.91%. The financial strength of the bank is well maintained in terms of capital adequacy ratio that marked 22.5% with a decent CBE liquidity ratio for LCY and FCY at 43.4% and 42.9%.
QNBAA didn’t overlook its corporate social responsibility and spared no efforts to serve the society through the ongoing projects, mainly focusing on villages related to “Hayah Karima” initiative, while following a scheme that combines social aides with awareness sessions to bring in sustainability. In pursue of youth empowerment, the bank joined key sponsors of the World Youth Forum’s 3rd edition which is one of the largest youth driven events in the Middle East.