Egypt’s NSGB says Q3 profit strong despite economy

National Societe Generale Bank (NSGB) , Egypt's second-biggest private bank by market capitalization, shrugged off domestic economic and political woes to boost its performance in the third quarter, the lender said on Wednesday.

"Despite the fact that Egypt is in … a transitional period that has an impact on the performance of various sectors of the economy, NSGB has successfully managed to maintain the growth of its balance sheet as well as its bottom-line profitability," it said in a statement.

The bank posted a 10.7 percent rise in third-quarter net income to LE354 million (US$183 million), though the improvement was flattered by the ending of a LE90 million quarterly amortization charge it had been taking following its 2005 purchase of Egypt's MIBank.

"The results are good, given the country's current circumstances," said Nancy Fahmy, a banking analyst at brokerage Beltone Financial. "Margins are still strong and provision coverage is 100 percent."

Egyptian banks were hurt by the January uprising that toppled President Hosni Mubarak, pushed the economy into recession, prompted investment to slow and caused capital to flee abroad.

However the sector has benefited from increased borrowing by the government, which is trying to shore up a widening budget deficit in the wake of the uprising. Since January, the average yield on 91-day treasury bills has jumped by 3 percentage points to more than 12 percent.

NSGB, owned 77 percent by France's Societe Generale , said net interest income in the third quarter rose 9.5 percent to LE543.5 million.

Fahmy said one concern was a slowdown in lending by NSGB, whose gross loans grew by only 1 percent on a quarterly basis.

"There are still some challenges. Growth on the balance sheet has been slowing quarter on quarter," she said.

NSGB said that on an annual basis it had increased lending by 9 percent.

NSGB was the second of Egypt's big private banks to post results. Earlier this week, Credit Agricole Egypt said last week nine-month net profit fell 25 percent from a year earlier.

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