CBE Confirms Ability to Absorb 2nd Wave of Financial Shocks

The Central Bank of Egypt (CBE) confirmed that the financial system in Egypt has shown its ability to absorb shocks that may result from a second wave of coronavirus.

In a recent report on Tuesday, CBE stated that the results of shock analysis showed the ability of the capital base of the banking sector represented by the 15 largest banks, which represent 84.2% of the total assets of the banking sector, to absorb losses resulting from a scenario of macroeconomic and financial risks that may result from the second wave of the pandemic.

CBE added that the capital adequacy ratio continued at a level higher than the minimum set in accordance with Basel III monitoring instructions of 10.5%, as well as the minimum set by the CBE of 12.5%, and the banking sector's liquidity ratios continued at a level higher than the established regulatory limits, so that banks could enjoy the level of sufficient liquid assets.

The central bank stressed that the results of stress tests showed the strength of the financial position of companies and institutions of the non-banking financial sector and their ability to face potential risks, whether from the repercussions of the current corona pandemic or in the event of unexpected crises.

It pointed out that the application of these tests showed an assessment of potential losses in light of the risks of the corona pandemic, and an assessment of the extent to which the solvency and capital base of companies and institutions would be affected by the risks arising from the precautionary measures to prevent the spread of the deadly virus.