The Central Bank of Egypt (CBE) affirmed the continued robustness of Egypt’s financial system, across both banking and non-banking institutions, throughout fiscal year (FY) 2024 and the first quarter (Q1) of 2025. The sector maintained its pivotal role in financial intermediation, supplying credit to diverse segments of the economy and offering an expanding array of financial products. This performance was anchored by the household sector’s stable deposit base, which remains the system’s primary funding source.
According to the CBE’s latest Financial Stability Report, Egypt’s Financial Stability Index registered a notable increase, reflecting broad-based improvements across all underlying components. The gains came against the backdrop of a stable exchange rate, a monetary policy stance that effectively reined in inflationary pressures, and an unprecedented inflow of foreign investments.
The report highlighted the banking sector’s sustained ability to provide foreign-currency financing, supported by a significantly lower probability of systemic risks stemming from abrupt capital outflows. This resilience is attributed to ample foreign-currency liquidity within the banking system, underpinned by higher non-oil exports, solid tourism receipts, remittances from Egyptians working abroad and rising long-term foreign direct investment. As a result, net international reserves climbed to $47.8bn as of March 2025, comfortably covering short-term external debt obligations and more than six months of merchandise imports.
The CBE added that the overall credit environment strengthened amid continued coordination between monetary, fiscal and macroprudential policies. Macroprudential measures maintained the cap on total debt service for consumer loans at 50% of monthly income, including a 40% limit for mortgage repayments, reinforcing household debt sustainability.
The report also noted that banks continued to finance private-sector expansion cautiously but effectively, broadly in line with the real GDP growth rate of 4.2% recorded during July to March of FY 2024/25, up from 2.3% a year earlier. This acceleration was driven mainly by improved performance across key real-economy sectors, notably manufacturing.
A reduced likelihood of fiscal-related systemic risks was also observed, as the government pressed ahead with fiscal consolidation targets and diversified its funding base through new domestic financial instruments. The share of government securities in total banking-sector assets declined, while foreign investors’ holdings of local treasury bills surged to 44.7% by March 2025, supported by a broader and more resilient domestic investor base.
The CBE praised the sector’s ability to absorb recent shocks while maintaining public confidence. Deposits grew by 25.3% in March 2025, largely fuelled by household balances. Meanwhile, total banking-sector assets jumped 45.8%, representing 93.5% of total financial-system assets and 125.4% of nominal GDP in FY 2024.
Backed by the CBE’s prudential policies, the banking sector recorded strong financial soundness indicators, surpassing both domestic regulatory standards and Basel Committee benchmarks. The capital adequacy ratio reached 18.3% in March 2025, well above the regulatory minimum of 12.5%. Liquidity ratios in local and foreign currencies stood at 37.1% and 73.7% respectively, exceeding the 20% and 25% required thresholds. Profitability remained solid, with returns on average assets and equity at 2.6% and 39% respectively in FY 2024.
On the non-banking side, the report highlighted steady expansion driven by new financial products and services. The adoption of Basel III standards for non-bank financial institutions strengthened their risk-management capabilities. Non-banking-sector assets grew by 22.7% in FY 2024, accounting for 6.5% of total financial-system assets and 8.8% of nominal GDP. The EGX30 index rose 19.5% in 2024 and maintained upward momentum through March 2025, reflecting continued investor confidence.
Stress tests conducted jointly by the CBE and the Financial Regulatory Authority (FRA) confirmed that Egypt’s financial system remains resilient, facing only low to moderate levels of solvency and liquidity risk even under adverse macroeconomic, financial, environmental and geopolitical scenarios. This underscores the strength of Egypt’s macroprudential framework.
The report also highlighted progress on financial inclusion, with the inclusion rate rising to 74.5% by March 2025. Digital transformation continued at speed, with mobile-wallet accounts expanding by 26% year-on-year, driven by secure and efficient digital financial solutions. The CBE continued to implement proactive consumer-protection measures to reinforce trust in the banking system, supporting wider financial stability.
In a major institutional development, the CBE published Egypt’s official macroprudential policy framework for the first time. The central bank described this as a significant step toward greater transparency in policy objectives and interventions, improved coordination between policy tools and enhanced awareness among financial institutions and customers. Ultimately, the framework aims to strengthen Egypt’s long-term financial stability by embedding a more structured approach to risk mitigation across the system.
