Egypt’s banking sector posts strong returns as assets reach $502.5 billion

Egypt’s banking sector remained financially resilient through March 2026, with strong capital and liquidity positions, rising profits and low non-performing loan levels, according to the Central Bank of Egypt (CBE), despite heightened global financial risks and geopolitical tensions.

In its latest Financial Stability Report, the CBE attributed this resilience to continued supervisory measures and improvements in banks’ risk management and governance. These supported banks’ ability to absorb shocks and finance the domestic economy, including foreign trade. The central bank also cited continued depositor confidence as a factor supporting financial stability.

The sector’s total assets reached approximately $502.5 billion in March 2026, while customer loans and credit facilities rose to $213 billion. Household deposits accounted for 59.8% of total deposits, which remained the sector’s primary funding source.

The CBE reported that non-performing loans declined to 1.9% of total loans, with strong provisioning coverage helping banks absorb expected credit losses.

Market risks accounted for no more than 2% of total risk-weighted assets and off-balance-sheet exposures in March 2026. Banks also remained within regulatory limits for net open foreign-currency positions, while the sector’s net foreign asset position reached approximately $6 billion.

Operational losses remained limited relative to total revenues, with capital allocated to operational risks accounting for 7.3% of risk-weighted assets and off-balance-sheet exposures.

Net banking sector profits rose 43% in the first quarter of 2026 compared with the same period in 2025. The net interest margin stood at 5.2%, return on average equity reached 33.9%, and return on average assets remained at 2.6%.

The capital adequacy ratio reached 18.5% in March 2026, exceeding the regulatory minimum of 12.5%. The leverage ratio stood at 7.6%, also above the 3% minimum requirement.

Liquidity indicators remained strong, with liquid assets accounting for 47.1% of total assets. The average actual liquidity ratio reached 42.3% in local currency and 73.4% in foreign currencies. The liquidity coverage ratio stood at 519.9% in local currency and 209.3% in foreign currencies, while the net stable funding ratio reached 171.9% and 158%, respectively. Both measures exceeded the regulatory minimum of 100%.

The loan-to-deposit ratio rose to 68.4% in March 2026 as lending growth outpaced deposit growth.

The number of domestic systemically important banks fell to four in March 2026, from five a year earlier. These banks accounted for 65.6% of the sector’s total financial position, 68.8% of customer loans and credit facilities, 62% of deposits and approximately 67.7% of net profits. The CBE requires these institutions to maintain additional capital buffers ranging from 0.25% to 1.25% to mitigate systemic risks.

The CBE also identified cybersecurity as a priority, citing its Financial Sector Computer Emergency Response Team and electronic connectivity with banks, financial institutions and the Egyptian Credit Bureau (I-Score). It is developing a second cybersecurity regulatory framework covering areas including artificial intelligence security, governance, risk and compliance, and cloud computing security.

To support fintech development, the CBE launched the fourth cohort of its regulatory sandbox to test an I-Score credit-scoring model that uses alternative data and customer behavior to assess repayment capacity.

The central bank also continued its Digital Academy and FinYology initiatives with the Egyptian Banking Institute to strengthen banking employees’ digital skills and introduce university students to fintech careers.

On anti-money laundering and counter-terrorist financing, the CBE said it continued risk-based supervision in cooperation with the Egyptian Money Laundering and Terrorist Financing Combating Unit, in line with Financial Action Task Force (FATF) standards and domestic regulations.

Measures include annual sector-wide risk assessments, ongoing monitoring of emerging threats, evaluations of banks’ controls and governance frameworks, and corrective action plans where necessary.