Commenting on HDB’s results for the year, Chairman and Managing Director Hassan Ghanem said: “The past nine months have seen turbulent market conditions hamper the Egyptian economy, from rising inflationary pressures, global supply chain constraints, to the floatation of the Egyptian Pound. However, despite a suboptimal economic backdrop, HDBK has been able to deliver on its three-pronged strategy and book growth across various fronts, thanks to its modernized business model, enhanced visibility, and focus on digitalized technology. Our solid results for the period have not only continued to reflect the success of HDB’s strategy, which focuses on expanding the Bank’s commercial banking activities, but further cements our position as one of Egypt’s leading banking institutions. During the 9M-2022 period, the Bank’s net income grew by 22.2% y-o-y to EGP 1,753 million on the back of a 32.8% y-o-y increase in standalone operating income to EGP 4,379 million.

Over the course of the period, we have also maintained our steady focus on improving the quality of the Bank’s loan portfolio, and on this front, we have successfully reduced the Bank’s NPL ratio to 8.5% in 9M-2022 versus 10.2% in the comparable period last year. Additionally, I would like to reiterate our commitment to further reducing the Bank’s NPL ratio in our efforts to align with the Egyptian market average going forward. Meanwhile, the Bank has continued to deliver solid returns and achieved strong ROAA and ROAE figures, at 2.6% and 24.6%, respectively, in 9M-2022. 

Meanwhile, the past nine months has seen us further elevate the Bank’s services and overall customer experience to drive increased growth across our corporate and retail deposits. Corporate deposits contributed to nearly two-thirds of all customer deposits, in line with the Bank’s strategic direction to cater to a wide variety of businesses across the nation and further deliver on our mission of becoming the bank of choice in Egypt and play our role in bolstering the Egyptian economy. 

I would also like to highlight our commitment to the Central Bank of Egypt’s initiatives to support Egypt’s SME space and we have made strong progress in meeting the CBE’s requirement for Egyptian banks to dedicate 25% of their loan portfolios towards SMEs. The Bank recognizes the vital role Egypt’s SME space plays in driving economic growth and we are keen to continue supporting the sustainability of this segment going forward. On the financial inclusion front, the Bank has continued catering to the needs of SMEs, which resulted in our SME loan portfolio to exceed the EGP 4 billion mark during the period. 

Parallel to these developments, I would also like to note that the Bank has distributed free shares of 2.5 shares per share to our shareholders, and we have continued to adhere to all requirements for banks set by the CBE. On this front, I am pleased to report that the Bank has successfully aligned with the CBE’s new minimum capital requirements of EGP 5 billion in paid-in capital where fully funded from internal bank resources. 

As we near the end of 2022, I am confident that the Bank will be able to maintain its growth trajectory and close out 2022 on a strong note. Looking further ahead, we will remain steadfast in our efforts to expand and enhance our commercial banking activities and leverage our nationwide footprint and our growing investments in advanced technological infrastructures to fuel our growth and deliver value to our shareholders.” 

Standalone net interest income (NII) increased by 16.3% q-o-q to EGP 1,311 million in Q3-2022. On a YTD basis, NII grew by 39.1% EGP 3,408 million in 9M-2022, on the back of increases across the Bank’s earnings assets instruments, including a 27.3% increase in gross customer loans, a 27.4% increase in bank placements, and a 43.5% increase in investments. Moreover, optimal management of the Bank’s funding portfolio and funding costs has allowed the Bank to further optimize its net interest margins.

Standalone net non-interest income grew by 15.7% q-o-q and 14.3% YTD driven by increased financing activities coupled with growth in customer fees and commissions recorded during the period. It is worthy to note that this performance was further supported by the removal of the CBE’s waiver on fees and commissions for cash withdrawals from ATMs and bank transfers during the onset of the COVID-19 pandemic.

Standalone net operating income grew by 16.1% q-o-q to EGP 1,645 million in Q3-2022 and by 32.8 % YTD to EGP 4,379 million. This was driven by the Bank’s growing commercial banking operations driving an increase in core banking income, which grew by 16.2% q-o-q and 33.1% YTD. 

Commercial banking activities contributed the majority of the Bank’s standalone total revenues at 95% YTD 2022. Net non-interest income, which includes income from legacy real estate activities, recorded EGP 317 million in 9M 2022, which was primarily comprised of EGP 243 million generated from the sale of real estate units, as well as YTD Net operating income include EGP 162 million generated from dividend income during the period. On a YTD basis, standalone net operating income grew by 32.8% to EGP 4,379 million in 9M-2022 due to a 33.1% increase in core banking income during the period.   

Standalone administrative expenses booked EGP 1,551 million, reflecting a 24.0% YTD increase primarily driven by high inflation rates and ongoing investments in technology systems and infrastructures. The Bank’s cost to income ratio stood at 34.2% in 9M-2022.  

Standalone non-performing loans (NPL) improved marginally to 8.5% as at 30 September 2022, down from 8.8% in Q2- 2022 and 10.2% in the comparable financial period in 2021. This reflects HDB’s successful focus on managing and maintaining a trend of NPL reduction in an effort to align with market average. HDB’s NPL coverage ratio currently stands at 90.0%. Credit loss impairment increased to EGP 361 million in 9M-2022 compared to EGP 109 million in 9M-2021.