Beginning of 2022, the global economy was on the verge of recovering from the pandemic’s repercussions that slowed down growth despite the buildup of unfulfilled demand given the interruption of the supply chain and the lockdowns experienced in large parts of the globe. This recovery couldn’t maintain its course as a result of the Russo-Ukrainian military conflict. The inflation that resulted from the opening of the economies was fueled further with soaring energy and commodity prices. Risk aversion increased specially with the start of an aggressive monetary tightening in the US, which put extreme pressure on most currencies (including Egypt).
The EGP lost 36% of its value throughout 2022 as the CBE turned to a more flexible exchange rate regime while using its tools in pursuit of combating the cost-push inflation. The CBE reference discount rate cumulatively increased by 800 bps, to 16.75%, and the regulatory reserve requirements for LCY deposits increased by 400 bps, to 18%, to absorb the liquidity in the market. Toward the end of the year, the CBE pulled out from the subsidized lending programs, handing the management of those programs to the relevant governmental bodies, which marked the completion of another milestone that would secure another IMF 4 years support program, of USD 3 billion, with the first disbursement of USD 347 million before end of 2022.
QNBAA has navigated well through such choppy waters to deliver a very strong performance in terms of profitability and growth alike. Balance sheet grew by 34% YTD fueled by a 37% spike in its deposits to 406 BEGP. As a leader in commercial lending, gross loans moved up to 228 BEGP, +25%, to maintain a utilization of 56.1% well above the latest market readings of 47.2%. Despite the spillover effect of the pandemic slowdown, higher inflation, higher interest rates and the disruption of supply asset quality remain solid with NPL ratio of 5.05% and cushioned by a coverage ratio of 120.6% as management consciously opted to increase provisioning to safeguard against the increased uncertainty.
Net profit growth soared to 36%YOY to reach 10,350 MEGP as gains from devaluation impact has primarily served the massive provisions allocated in addition to the improved margins, that helped to pump up NII growth to +30% YOY to 19,968 MEGP, and fees & commissions growth of +21% YOY. Efficiency improved to 22.4% with a more prudent cost control that was helped further by revenue growth.
This performance served the expansion of ROAE and ROAA to 20.6% & 2.46% respectively. The capital strength is conserved, with a CAR of 22.99% far above the minimum regulatory requirements. CBE liquidity ratio stands at 49.1% & 42.6% for LCY & FCY respectively.
